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How to drive green growth in UK cities

This is a guest post by Zach Wilcox, an analyst at the Centre for Cities

Policy discussions on green growth and smart cities often centre on the details of which targets to pursue, how to measure CO2 emissions, and how urgently action is needed.

This is important, but in the meantime we also need progress on the ground. At Centre for Cities we are focusing on how UK cities can help drive, and meet, the growing demand for green products and services.

Research suggests that long term economic growth can go hand in hand with greening our urban economies. Yet, all too often, policies don’t consider how government and business can work together for mutual benefit.

Drawing on interviews with businesses, government and academics, the Centre has developed a framework for thinking about how the public and private sectors can join forces to drive green growth. The key lessons from our work are:

1. What local government can do
Central and local government not only set a framework for the green market; they are also a big part of that market for sustainable goods and services – total local government capital budgets were over £22 billion in the financial year ending in 2011—and play an important role in encouraging behavioural change. Local governments should:

  • Develop a comprehensive plan, setting out how each city can meet their emissions reduction targets, such as mini-Stern reviews conducted by cities including Leeds and Manchester.
  • Make the economic case for green investments. The Leeds Stern Review highlighted those cost effective and cost neutral measures which can be brought forward. Many cost effective measures included more energy efficient home electronics (such as televisions, ovens and cold appliances), providing a clear market signal for businesses.
  • Find new ways to finance green investment, to invest in innovative businesses and stimulate demand for green goods and services. Birmingham is planning to invest up to £1.5 billion on retrofitting non-domestic buildings, stimulating demand for the retrofitting industry.

2. What Whitehall can do
The most important roles for central government are to:

  • Set standards and the policy framework. For example, emissions reductions targets are well-defined and businesses know that these will increase demand for energy-efficient products. But, the strategies for achieving those targets (eg assurances on feed-in tariff policies) must be clearer to help businesses know how low carbon markets will change.
  • Provide the incentives and financial resources that support green policies. Government provides some funding mechanisms for local government—either through Enterprise Zones, business rates retention or the Green Investment Bank (GIB)—which can support investment in cities to meet green objectives.  However, the government needs to focus on cross-cutting policies that give business and local government certainty around the incentives and funding offered in the longer term, including giving more teeth to the GIB.

3. What business can do
Businesses play a critical role in developing innovative goods and services that respond to rapidly changing markets. Advertising campaigns can also play a role in influencing behavioural change, which can grow the ‘green market’. Businesses need to:

  • Gather more market intelligence, including staying up to date with government policies, to meet growing demand for green goods and services.
  • Build partnerships, and share knowledge
    • Business must understand how Whitehall policies and incentives will create demand for green goods and services and provide more certainty for business. A one stop shop for business to get policy and funding information from government would be a good way to achieve this.
    • Firms should also work with each other, to exchange knowledge and best practice that can support growth of the green industries as a whole. In fact, a range of ‘green business networks’ have been set up around the UK.

Figure: A Framework for Low Carbon Cities

Working together for change
Getting Whitehall, local government and business to work together can often be like herding cats. But, opening a dialogue will help give businesses the certainty and financial resources they need to ensure the UK meets its low carbon targets. This framework of collaboration and co-operation will serve as the basis the Centre for Cities’ future research on how can stimulate demand for and benefit both economically and environmentally from the green economy.

Written by

Green Alliance is a charity and independent think tank focused on ambitious leadership and increased political support for environmental solutions in the UK. This blog provides space for commentary and analysis around environmental politics and policy issues as they affect the UK. The views of external contributors do not necessarily represent those of Green Alliance.

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