London’s local authorities are holding over £130 million that ought to be directed towards climate initiatives, as reported by the Guardian.

Since its inception in 2016, more than £170 million has been raised through the carbon offset fund established by the mayor of London, which developers must contribute to in order to offset emissions from new developments. However, the 33 councils in London have collectively utilized less than £40 million of these funds. Several councils have indicated that they lack the necessary resources, expertise, or time to decide how to allocate the funds.

The funds generated are intended to be used for various carbon reduction strategies within local communities. These strategies encompass enhancing energy efficiency in council housing and other structures to decrease energy costs for tenants, as well as investments in renewable energy projects and district heating systems. These funds can also provide community grants, with some councils using them to support educational initiatives, planting trees, and establishing community gardens.

Data obtained through freedom of information inquiries reveals significant disparities in how councils have spent the funds up until the end of last year. While some councils have exhausted their allocated developer contributions, others have spent none at all, with the predominant number having utilized less than 20% of the available budget.

The Guardian has learned from various councils that approximately £15 million of the unspent funds has been earmarked for projects but has not yet been utilized. On top of this, figures provided by the Greater London Authority indicate that councils are set to receive an additional £150 million from developers.

Zack Polanski, deputy leader of the Green Party and chair of the London Assembly’s environment committee, criticized the slow and inconsistent progress, stating, “Thousands of Londoners are enduring frigid, damp, and moldy accommodations while their expenses continue to rise. It’s astonishing that, having access to funds to remedy this issue, councils choose to hoard the money year after year, leaving the most vulnerable individuals to bear the burden.”

Polanski described the situation as indicative of complacency, holding London Mayor Sadiq Khan responsible for the lack of a definitive plan for achieving net zero emissions.

The councils receiving the largest offsets from developers include Tower Hamlets (£20 million), Islington (£18.5 million), and Westminster (£16.1 million). Tower Hamlets has utilized just over a quarter of its allocation at £5.3 million, while Westminster has spent around £2.4 million, approximately 15%. Both councils report having additional funds designated for upcoming projects. In contrast, Islington has spent £12.1 million, the highest of any borough, accounting for about 65% of its total.

Isaac Beevor, a partnerships director at Climate Emergency UK, which tracks councils’ climate action efforts nationwide, emphasized that Khan must “gain control” of his policies to meet the goal of a net zero London by 2030. He stated, “These funds could have been used for retrofitting council homes, planting trees, and enhancing our boroughs or supporting community-driven energy solutions. Some councils have made effective use of the fund, so councils that have spent the last decade not tapping into these resources have no valid justification.”

He added, “This scenario underscores flaws within these programs: when funds remain unspent, emissions from new developments continue to go unmitigated.”

A spokesperson from City Hall informed the Guardian that “urgent discussions” were ongoing with local authorities to expedite project execution. They noted that the amount collected and expended by councils has been steadily increasing; however, they acknowledged the challenge lies in identifying feasible projects for funding.

London Councils, an organization representing the city’s boroughs, acknowledged that there are “undoubtedly challenges to overcome” and cited that the price of £95 per tonne of carbon dioxide set by Khan has diminished in value since its establishment in 2021.

“Boroughs find that carbon offset funds often fall short of covering the expenses of the necessary projects aimed at mitigating operational emissions produced by new developments,” a spokesperson stated. Councils informed the Greater London Authority that they not only faced funding shortages but also lacked the time, knowledge, or resources to initiate these projects.

In response, London Councils has initiated a series of workshops to guide boroughs on how to allocate the funds effectively.

While the majority of London councils impose the recommended £95 per tonne CO₂ fee on developers, this amount is merely an advisory figure. As of the previous year, three Labour-led councils began charging developers higher rates—not to garner more funds, but as a means to discourage reliance on offsets, as emphasized by the Climate Change Committee, which argues that such offsets should not be the primary strategy for decarbonizing buildings.

Additionally, another 15 councils are reportedly considering increasing offset fees. Beevor has urged all councils to pursue this route, asserting that it would motivate developers to meet net zero emissions on-site, thereby eliminating the need for mitigation efforts.

Merton Council, which pioneered the “Merton Rule” in 2003 that mandates new developments generate 10% of their energy from renewable sources, currently charges £300 per tonne of CO₂. Lewisham has implemented a new rate of £104, while Westminster now charges £330 for electric-driven projects and £880 for those based on gas.

In February, Haringey Council allocated all its outstanding carbon offset funding to various initiatives, including the Haringey Community Carbon Fund, which provides grants for community-led decarbonization efforts like solar panel installations, upcycling workshops, school uniform exchanges, and recycling programs for sports equipment.

Of London’s 33 local authorities, 28 declared a climate emergency in 2019 or 2020, setting ambitious net zero targets and committing to significant reductions in private vehicle use, divesting pension funds from fossil fuel industries, and improving the energy efficiency of council housing.

According to a report from the Local Government Association last year, two-thirds of councils expressed skepticism about achieving their net zero targets, attributing the stagnation in climate action to a complex array of difficult-to-access funding provisions from the government.