Climate change: a local solution to a global problem

15 Sep 17

A special facility could advise and support local authorities to invest in integrated and replicable clean energy projects, says Polly Billington. 

Local leaders have enough on their plates right now without asking them to heavily invest in the country’s infrastructure and tackling climate change – right?

The received wisdom is that tighter budgets make it too difficult for city leaders to be ambitious or think too far ahead.

Which is why the report by UK100 out this week is so startling. Commissioned by the network’s co-chairs (the leaders of Labour Leeds and Conservative Peterborough), it outlines a proposal for how local leaders could seize the combined opportunities of the plummeting costs of renewables and the devolution agenda to make the shift to clean energy a reality across Britain.

They insist the growing consensus is that “Clean energy is not only compatible with economic growth, it is a driver of it.” The news this week that offshore wind costs hit a record low underlines the point.

The real challenge is money – or rather access to it. Local authorities are not in the business of investing in offshore wind farms (yet – though their pension funds ought to be). They are deemed to be low risk so can borrow money comparatively cheaply, especially from PWLB.

This actually works against the kind of investment needed for clean energy projects at scale: cheap money for business-as-usual means anything more ambitious (expensive) is less likely to get past the finance team. The other benefits of clean energy currently don’t feature on the balance sheet.

Local leaders’ naturally cautious approach to borrowing is being tested as they search for new income streams and identify how to maximise their assets. This has driven innovation in a number of cities, from Nottingham to Stoke, from Leeds to Peterborough, where developing new energy assets or maximising existing ones, has engendered a whole new energy strategy that brings benefits beyond an income stream.

The report highlights Nottingham for its wide range of projects that have social and economic benefits, some of which are working towards a subsidy-free model for community energy, most of which combine a range of proven technologies that help keep bills down, reduce strain on the grid and contribute to tackling air pollution.

Cornwall has an energy plan that will reduce energy bills by 20%, create 4,000 jobs and meet 100% of Cornwall’s electricity demand from renewable and low carbon sources – all by 2030.

But they are not alone in their ambition. The UK100 network embraces more than 70 local leaders who have made a commitment to shift their communities to 100% clean energy, and they know scale is required to make this a reality. Many projects are successful but small, and so hardly float the boat of private finance, which won’t get out of bed for projects below £100m.

Many are still therefore heavily dependent on significant amounts of public funding, especially from the EU. Although the government has pledged to retain or match the Horizon 2020 money, many other pots could disappear come 2019, leaving a huge gap into which local authority ambitions on this agenda might fall.

But this offers an opportunity, to shape a fund and a facility that can meet the unique situation of the UK post-Brexit and fulfil the international obligations on climate change. A new pot of money could be specifically made available for integrated, replicable, scaleable projects, as the patient capital that leverages in the big private finance guys. Many of these technologies should no longer be dependent on public finance if there is a business model that makes them commercially viable.

Designing those models, and accessing private finance is not in local authorities’ skill set. But a facility that is a critical friend to local authorities, guiding them through the available money and putting together viable bids could have a multiplier effect.

Working together in Clean Energy Action Partnerships, local and national government could turn small, subsidy-dependent projects into commercially viable ones at scale. If Whitehall wants its potential allies in local government to help build the clean energy of the future, this is a pretty good suggestion for a government that believes in an industrial strategy and rebalancing the economy.

  • Polly Billington
    Polly Billington
    director of UK100, a network of cities and communities committed to 100% clean energy by 2050

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