That looks quite funky. The houses themselves are not traditional, but have a contemporary look, which IMO makes that flue fit in nicely.
If you can't argue the case now, then I would certainly refuse to amend or withdraw the app and let it go to appeal.
Have a look at the council's eco policies and how it will encourage sustainability. Then make your case on that basis, not just on the visual aspect.
Putting a chimney there would be a much worse option visually than that flue.
Have a look at what the council are doing on their own buildings to make them sustainable in terms of energy use, and look at the council housing or housing association to see what they have been fitting under recent grant work.