How to make City Deals greener
Eight core English cities including my own have now signed City Deals to boost their economies. Work is already underway on putting the deals into practice, but there are many ways we can strengthen and build on what has been achieved so far.
The low carbon emphasis of the deals, for example, would be be much stronger if a number of things were to change:
- The Department of Energy & Climate Change needs to co-design the ideas and the shaping of the deals – they can do this through earlier engagement. Their role is key, because so much of the money in the system is a product of their policies and how revenue is generated, ultimately from consumers.
- It’s not just DECC! There are many government departments whom have influence over this agenda. Some of them, such as Treasury and the Department for Transport, have been involved but we need active engagement from DEFRA and CLG too.
- Policy stability. DECC is 4 years old now and we need some policy stability so that we can plan longer term. We cannot afford another about-face as we experienced with the feed in tariff.
If we manage to achieve this, there is a strong belief that not only can cities benefit from taking control on this, but we are extremely well placed to help Government deliver several of its key environmental strategies:
- Heat Strategy – this will be launched in March this year and will almost certainly recognise the important enabling role local authorities will play in delivering new heat networks in urban areas
- Green Deal – Ed Davey has made it very clear that local authorities will have a key role to play in building the market for the Green Deal. We believe that starts with the Energy Company Obligation (ECO) across social and private sector housing.
- Adaptation to climate change – anticipated for summer 2013, the national adaptation plan will be published and will almost certainly have a clear ask of local government and, in particular, cities.
Making it happen
The opportunity here is for the City Deals to embrace the needs of the cities and deliver the priorities government has identified. Remember, the eight ‘Core Cities’ have been actively involved in the shaping of these three policies and we share Government’s ambition to deliver all of this.
Having set out these ideas what might we need to deliver them? Inevitably it’s finance and long term thinking. For example, heat networks can be developed more quickly and strategically with the local authority having a stake in their success. Cities like Sheffield and Nottingham, which have the largest heat networks in the UK, are leading the way but each of the Core Cities is developing its plans. But we need to find ways of making these plans bigger, more cost effective and lower carbon – moving from natural gas to alternatives such as biogas, biomass, synthetic gas and geothermal.
Innovation is good, but incurs costs and risks – so how can re-incentivise innovation? One of our early ideas is that local authorities could retain 100% of business rates on low carbon heat generation and distribution (rather than 50%, with the rest going to the Treasury). This could encourage local authorities to take the lead and help to create a localised, circular economy, retaining value in the urban areas and communities they are developed in and helping to generate new income streams for further investment.
We now watch as the second wave of city deals are shaped, and learnings from all 28 cities in the process can be shared. These aren’t one-off deals, but an on-going process that needs to be adequately resourced both by cities, their city regions and government. I believe this mechanism can be a positive way of agreeing how local, city-region and national priorities can be delivered, and this remains a central component of the Core Cities work programme.