USEA was awarded the work to carry out a study establishing what a local carbon offset fund may look like in Southampton.

The primary objectives of the study commissioned by Southampton City Council were to look at mechanisms by which contributions can be made to the fund, how carbon neutrality could be defined, and establish an appropriate price per tonne of CO2 applicable locally.

In addition, the report was to propose a management structure for the fund. It was also to suggest ways in which the Southampton fund could work harmoniously within the emerging Green Deal and in tandem with other government backed funding mechanisms to support the uptake of energy efficiency measures locally.

Southampton City Council recently undertook an Infrastructure Study and Delivery Plan which identifies the infrastructure requirements of the city and includes a proposal for the introduction of the Community Infrastructure Levy (CIL).

This, in combination with a strong commitment to the reduction of carbon emissions and adaptation to climate change, demonstrated in for example Southampton City Council (SCC) Core Strategy policy CS20: Tackling and Adapting to Climate Change, led the Council to consider establishing a local carbon offset fund with the aim to allow flexibility for developers when new developments will be required to be zero carbon.

Since its establishment in 2008, USEA has successfully managed the first local carbon offset fund of its kind in the UK, the Milton Keynes Carbon Offset Fund.

The study carried out for Southampton City Council was delivered with support from Milton Keynes Council, who shared their experience in the development of the Milton Keynes Offset Fund.

In short, the study showed that a local carbon offset fund provides valuable flexibility and reduced development costs compared to a strict zero carbon standard for new developments, without compromising the overall carbon savings achieved.

The Carbon Compliance standard proposed would reduce the emissions from a new home by a minimum percentage compared to current regulations. The remaining emissions would be offset through the local carbon offset fund, which in turn allows for additional benefits locally such as reduced energy bills, reduced fuel poverty, job creation and possibly levering in other sources of funding to the local area.

Main conclusions in the study were:

• the s106 regulations, rather than the CIL, would be the appropriate mechanism for collecting contributions from developers 
• the definition of carbon neutral homes in Southampton would tie in with the likely Building Regulations 2016 to facilitate calculations for developers and reduce administration costs
• the appropriate cost per tonne of CO2 would be based on the range of carbon saving measures and projects available locally, and take into consideration the cost of management and marketing. Other considerations may include support for innovative local carbon saving projects, where the cost per tonne of CO2 could be higher  
• in order to maintain the cost per tonne of CO2 at an acceptable level for developers while still large enough to make a difference to householders, carbon offset fund contributions would be matched with other funding streams, for example by offering an addition to the Green Deal ECO fund.

The Southampton City Carbon Offset Fund Study is available here.