Where £510 comes from
The threshold is set by Salix Finance on behalf of DESNZ as the Grant Carbon Cost cap on lifetime emissions reduction [Salix]. It is the operational expression of HM Treasury value-for-money guidance: a public-sector spending decision should not pay more per tonne of CO2e abated than the appraised social cost of carbon would justify. Phase 4 set the maximum acceptable application Grant Carbon Cost at £510/tCO2e for grant-funded measures.
How it is calculated
£/tCO2e = grant capital cost / lifetime tCO2e displaced. The lifetime convention used by Salix in award lists is 20 years for heat-pump and fabric measures. Fossil-fuel kWh × grid carbon factor × proportion displaced × asset life = lifetime kgCO2e [DESNZ].
What passes and what fails
| Measure | Lifetime kgCO2e | Capital £ | £ / tCO2e | vs £510 |
|---|---|---|---|---|
| Loft and cavity insulation | 850,000 | £140,000 | £165 | PASS |
| LED relamp (bundled) | 320,000 | £85,000 | £266 | PASS |
| Fabric-first package | 1,100,000 | £310,000 | £282 | PASS |
| ASHP with fabric | 1,500,000 | £480,000 | £320 | PASS |
| ASHP without fabric | 900,000 | £420,000 | £467 | PASS |
| GSHP small site | 720,000 | £430,000 | £597 | FAIL |
Note the ceiling level matters: the ASHP-without-fabric example above passes the £510 Phase 4 ceiling but would have failed Phase 3's tighter £325 threshold. Fabric-first works pull a scheme well clear of the ceiling either way.
Has the threshold changed across phases?
Yes. Phase 3 (including 3b and 3c) applied a £325/tCO2e Grant Carbon Cost threshold. Phase 4 raised the maximum acceptable application Grant Carbon Cost to £510/tCO2e over the project lifetime for grant-funded measures [Salix], and moved from the first-come-first-served queue used in Phase 3 to a targeted-allocation model that ranks applications by Grant Carbon Cost. No public confirmation exists of a Phase 5 ceiling; treat the Phase 4 £510 figure as the most recent reference until DESNZ states otherwise [DESNZ].
See: GCC threshold, grant-size estimator, fabric-first, case awards.