As the plans for the National Infrastructure Bank are announced, Mareike Schmidt asks what do we need to do to encourage the growth of smarter, cleaner local energy systems across the UK.
Footprints on the Moon - Reaching net zero
One of my all-time favourite books is “Footprints on the Moon” by Seth Godin. He wants everyone to step up, level up and make a difference. And, as usual, he's telling us stories we won't forget that easily. He describes how the moon landing was a remarkable effort by a whole team – one with the willpower to make John F. Kennedy's commitment to land a man on the Moon a reality.
I often think of this when I look at the global challenges of climate change. What will it take to get to net zero, and how do we go about it given the urgency?
Coronavirus has taught us that we can act on an unprecedented level, if it is deemed necessary. And that a mixture of local and national action can bring better results for everyone, as with the Covid-19 vaccination programme.
In the UK, the Prime Minister’s 10-point plan, the Energy White Paper and the 6th carbon budget from the Climate Change Committee (CCC) have set the road map for our net zero journey. It is good that there has recently been much more recognition of the ‘local’ dimension of delivering net zero projects.
National Infrastructure Bank - Achieving net zero carbon
But the question is: what practical interventions will help local net zero projects become reality? And how can we provide the right support consistently and at all levels?
When I joined Innovate UK in 2020, I was tasked to work out how we could encourage the scale-up of the type of smart local energy systems supported by the Prospering from the Energy Revolution programme. I soon saw that once projects reached the advanced planning stage, they met local challenges in developing and delivering them.
Amongst other things, mobilising private sector investment was clearly an issue. The support structures needed to de-risk these projects in the wider eco-system are lacking, preventing a joined-up approach to finance. So, how can we move this forward?
Six steps to help local net zero projects flourish
Here are our steps to helping net zero projects to scale.
1. Increase capacity for local energy delivery
Over 282 local authorities have declared a climate emergency and are keen to support this with practical action. But many tell us that there is a capacity issue, with resources diverted into other key service delivery areas.
Brexit has also removed other major sources of help for them, such as the European Regional Development Fund (ERDF) and the ELENA Technical Assistance Programme. It is estimated that over the past 10 years £23 million of ELENA support has led to £800 million of investment in local energy efficiency and renewables in the UK.
A solution could be providing extra local resources dedicated to net zero projects – for example through a technical assistance programme run by the National Infrastructure Bank, including a project development unit. Grants from the programme could be linked to loans from the National Infrastructure Bank to ensure commitment to delivering these projects.
2. Develop new financial products and services
There is huge potential for innovative finance products to help local net zero projects. Smart local energy systems, such as the ones funded by the Prospering from the Energy Revolution Programme, could be supported through government guarantees or cornerstone investment, offsetting risk and helping mobilise private sector investment. If the early-adopter risks faced by our projects can be reduced, some of the new technology solutions are likely to become mainstream.
3. Increase expertise and skills
A recent study by the Energy Systems Catapult showed that private sector investors are interested in these projects, but expertise is lacking, for example, on preparing a pipeline of investments for local financing. Again, a project development unit could help local authorities to build in-house expertise and get projects ‘investment ready’. Building this into the National Infrastructure Bank would align financing experience with practical project delivery.
4. Strengthen the work of the Energy Hubs and the Energy Systems Catapult with local authorities
Many national grant funding programmes are competitive, so best practice is often not shared for the benefit of all. If we could further build the capabilities of the UK’s regional Energy Hubs they could help - integrating projects at local and national level and providing “critical friend” support for technology and financing decisions.
The Energy Systems Catapult is working on a toolkit to support local authorities developing smart local energy systems. It would be useful to strengthen this by setting up training courses as part of a long-term training academy approach. We also need to help local authorities just starting net zero programmes to develop their Local Area Energy Master Plans within a coherent delivery framework. Local area energy plans are something that the Energy Systems Catapult already offers and could be scaled quickly.
5. Using local authority expertise for local energy projects
Local authorities are often highly experienced in practical programme delivery. For net-zero programmes to succeed on a large scale, national policy frameworks must recognise the operational practicalities at regional and local levels. So rather than seeing local authorities solely as delivery bodies for national policy, there needs to be an effective partnership approach between national and local government, with regular feedback loops built into delivery programmes.
6. A strategic delivery task force
You might ask yourself what all of this has to do with the moon landing?
Delivering local net zero projects across the UK is a complex task with a great prize at the end. To work out strategically how to do this, I think it will take a dedicated task force from across different Government-sponsored initiatives – drawing on the great talent and experience of the teams at the Green Finance Institute, the Infrastructure and Projects Authority, BEIS, HM Treasury, the Catapults, Innovate UK and Local Partnerships LLP.
A net zero future
If we can make this happen, the result will be huge long-term benefits for us all - not just in terms of reduced carbon emissions, but in new jobs and growth, and reduced dependence on the public purse. And to help tackle the challenge, we must all step up and make a difference in our local communities, supporting the national journey to net zero.
You can go to the Innovate UK website
You can go to the Innovate EDGE website
You can go to the UKRI website