COMMENT There is a big problem with carbon offsetting for new-build data centres in London.
I believe that many millions of pounds per development may have been paid out incorrectly under the London Plan and its requirement for a carbon offset. This a big problem for a number of reasons.
Firstly, the market for data centres is growing. The data centre market in London has seen significant growth as an investment class, driven by the digital transformation across industries. London’s strategic location and robust digital infrastructure make it a preferred choice for data centre investments.
According to CBRE, in 2022 the London data centre market represented about 80% of the UK total and was on track for a record year. JLL, in its EMEA Data Centre Report Q3 2023, advised that although there was a slowdown in new supply in 2023, London had the largest colocation market in Europe.
All new major development in London is subject to the London Plan. From a data centre perspective, this mandates an energy hierarchy as part of a trajectory to a zero-carbon target. Where it is clearly demonstrated that the zero-carbon target cannot be fully achieved on-site, any shortfall should be provided, either through a cash-in-lieu contribution to the borough’s carbon offset fund, or off-site, provided that an alternative proposal is identified and delivery is certain.
Many developers opt for the offset payment. The London Plan’s recommended offset is calculated as £95 per tonne for 30 years (£2,850 per tonne), but some boroughs set it much higher.
This offset is calculated using the GLA’s carbon emission reporting spreadsheet but the calculation itself is based on the Building Regulations (2010) Approved Document Part L Volume 2 (2021 edition incorporating 2023 amendments) and its “regulated” emissions. While “unregulated” emissions should also be calculated, they are reported in the “EUI & space heating demand” sheet, and this does not inform the offset calculation.
But here’s the interesting bit.
Many, maybe even most, engineers, work out these calculations to include emissions from computer room air conditioning. But based on guidance from government and advice received by the author from CIBSE, only HVAC loads associated with thermal comfort are classified as regulated. Otherwise, it is classified as a process load and is therefore unregulated.
Not surprisingly this has been disputed by a representative of the GLA. They argue that this cooling should be treated as regulated, based on guidance found in its Energy Assessment Guidance (2022) document. While there is a footnote covering data centres in this guidance, it is a footnote to a statement which says that the baseline building must be compliant with Building Regulations Part L. And the same guidance note goes on to reinforce that unregulated loads must be reported as part of the “be seen” stage, which falls outside of the carbon offset calculation process.
To put it another way, it is impossible to comply with the London Plan’s carbon emission reporting spreadsheet while also complying with Part L (and the resultant EPC) if one were to include CRAC loads. And that means that any assessor in question would probably fail a compliance audit.
Andrew Cooper is managing director at Edge APM
