Milton Keynes’ pioneering Carbon Offset Fund – six years on

Author: 12/12/2014

The Milton Keynes Carbon Offset Fund (which is administered by the National Energy Foundation as one of our services to local authorities) pioneered the way when it was launched by Milton Keynes Council in 2008. The city has always been famous – infamous, really – as an innovator in the design and construction of new buildings and the methods and approaches supporting them. Therefore, it seemed natural that it should be the location for a model of carbon financing not yet seen elsewhere in the UK.

What does the Carbon Offset Fund do?

The principle of the fund is simple. A new home's ‘as-designed’ energy statement is used to specify the anticipated level of carbon which will be emitted by the home within its first year of use. For each tonne of carbon indicated, the developer pays £200 per tonne into a pot. 

The scheme – just covering domestic properties, but across all building and builder types – created an overall income which the council could use according to the principles it set out.

These principles were pretty clear. Only domestic properties would be able to receive the support. As with the incoming funding, outgoing funding would be across all tenure types but would only apply to existing buildings. Measures would have to demonstrate the potential to be delivered at a carbon price below £176.50 (although just covering the first year) and they had to have a 20-year lifespan.

Within that, as long as the case was well-evidenced, the council would consider any suggestions for using the funding to lower carbon across the city.

Carbon Offset Fund success

It’s been remarkably successful and not only achieved direct carbon benefits but has responded to broader social and economic objectives too.

Take one scheme in which the Carbon Offset Fund has collaborated with Age UK Milton Keynes. Funding provided through the scheme has been used to target support at older people within the city, offering them a visit from a qualified energy expert offering advice can and up to £70 in kit to help them use energy better.

Running since 2008, the scheme has helped over 8,000 households in Milton Keynes to receive measures such as free energy-efficient CFL light bulbs, and subsidised loft and cavity wall insulation. Residents report great success.

Another approach, the MK ‘boiler cashback’ scheme, has proved extraordinarily popular within the authority. Residents are offered £150 towards the cost of a new boiler, wherever an existing boiler rated at D or below is replaced with a new ‘A’-rated one.

Rough calculations would suggest that approximately 15-20% of the boilers replaced in the period since the scheme was launched have benefitted from the funding, creating a crucial incentive for many residents to invest in new appliances.

Why has the Carbon Offset Fund worked?

The scheme has been fortunate to benefit from committed support from the local authority. Milton Keynes Council was, and has always remained, the driving impetus behind its creation and sustenance. This has been crucial in achieving the scheme’s outcomes.

Perversely, however, the scheme has flourished during a period in which, despite occasional claims and noise to the contrary, the government has not put in place a national scheme to price embedded carbon within new domestic properties.

With the new discussions around Allowable Solutions underway – with remarkably similarities to the Carbon Offset Fund in many respects – the future is uncertain. Whatever the outcome, the original and unique work done in this city will serve as a reminder of its enduring position as a born-and-bred pacesetter.

The challenges of the Carbon Offset Fund

The scheme – fundamentally simple but aiming at a significant change in the building of new homes – has had its challenges.

In particular, its funding requirements have proved to be a barrier to some potentially innovative deployments. Initially, the requirement for a 20-year lifespan for implemented measures created a limit to the opportunities to use funding from the Carbon Offset Fund, particularly with the cessation in 2012 of the Government CESP funding for loft and cavity wall measures.

In addition, some measures with prohibitive costs are difficult under the scheme. The obvious contenders – solid wall insulation and hard-to-treat cavity walls – are traditionally much more expensive than the required cost per tonne under the Carbon Offset Fund.

More recently, however, the scheme’s partners have begun to find ways around these challenges. A fund for solid wall insulation should be made available in coming months, with £500 provided towards the cost of measures.

The future of the Carbon Offset Fund

As the scheme goes into a seventh year and hopefully beyond, there’s time to reflect on this trailblazing approach.

The fund has been a tremendous success for the city – not only in demonstrating that carbon should be costed and accounted - but also in supporting a wide range of measures which have benefited residents.

Perhaps the ultimate demonstration of the project’s success has been its ability to inspire others; the National Energy Foundation often receives requests to support schemes in other areas and which closely resemble the Carbon Offset Fund.