The UK building industry has today expressed confidence that its new definition for "zero carbon" homes will be endorsed by the government, removing one of the key barriers to the development of more environmentally sustainable buildings.

The government last year announced a goal of all new homes being "zero carbon " by 2016; however work towards that target has been hampered by the lack of an official definition for the term "zero carbon".

The construction industry argues that to ensure the target is met in a cost effective manner, buildings using renewable energy generated offsite through wind farms or local biomass facilities should be allowed to qualify as "zero carbon".

But, some environmentalists claim such a move would effectively water down the target, allowing building firms to invest less in onsite renewable energy technologies such as solar panels or ground source heat pumps that they claim could make homes genuinely self sufficient.

Now the UK's Green Building Council (GBC) has attempted to deliver a compromise with the publication of a new report arguing that "zero carbon" should be allowed to use offsite renewable energy, but only where every effort has been made to first install onsite renewables.

The report, called The Definition of Zero Carbon, was produced by the GBC's zero carbon task group and argues that a broader definition of "zero carbon" is essential if the government is to meet its target of all homes being zero carbon by 2016.

It sets out an alternative definition requiring all new buildings to meet strict energy efficiency standards and obliging developers to attempt to generate energy on or near the development.

However, it also argues that offsite renewable energy projects should be allowed, "provided that they are demonstrably additional and have been built specifically to deliver the energy needs of the development".

As a further incentive for building firms to focus first on onsite or localised renewable energy projects, the report recommends that where developers opt for funding offsite renewable capacity they should pay into a "community energy fund" at a rate above the cost of community scale solutions.

The recommendations were welcomed by Andrew Cooper of the Renewable Energy Association who accepted that it was unrealistic to expect all new buildings to generate all energy requires onsite. "When you look at buildings such as blocks of flats, they don't have the roof space to generate enough power onsite and we can't expect them to be grid independent," he said.

"However, we want to see really robust standards to ensure that all offsite renewable energy [projects] used by zero carbon homes are " additional" and would not have been built anyway."

A spokeswoman for WWF, which contributed to the GBC taskforce, agreed that under the new definition building firms must be obliged to prove that the renewable energy projects they are funding generate enough energy and are truly "additional".

Paul King, chief executive of the GBC, insisted the proposed definition would ensure that onsite and local-scale renewable energy projects were prioritised. "The solutions we are pointing to are designed to ensure energy demand reduction always comes first and on or nearsite renewables should be the focus for meeting energy needs," he said.

He added that the focus on community scale clean-energy projects such as local biomass power plants would also help cut carbon emissions from the existing housing stock "by enabling the distribution of low or zero carbon heat through district networks" .

Mark Clare, chief executive of Barratt Developments and head of the GBC taskforce, said he was hopeful that the report would feed into the government's consultation on an official definition, which is expected to run this summer.

"The value of this report is reflected in the high degree of consensus reached by many different stakeholders, who come at this complex issue from different angles," he said.