…and Manchester, and Rhondda Cynon Taff, and … wherever you live. Actually there’s very little about Devon in this post, I just wanted to use the title, admits Alex Rathmell.
I really want to talk about all local authorities, and Devon County Council happens to be a good example. It’s an authority we know pretty well, having supported them for several years on low energy initiatives including the European-funded FINERPOL and ZEBCat projects (links below). And we’re now supporting them via the South West Energy Partnership (SWEP) – an ELENA-funded alliance with Plymouth and Bristol City Councils to deliver a range of projects across the South West – advising on how to finance deep retrofits of council buildings.
Devon declared a Climate Emergency earlier in 2019. As a responsible authority it is convening local stakeholders, developing a specific action plan, and increasingly applying a climate change lens to decision making.
Many authorities’ first response to these declarations is to address the energy performance of their own buildings. This takes place in the context of estates and budgets that have been decimated by nearly a decade of cuts. Despite favourable returns from energy efficiency programmes, raising the capital funding needed is very challenging, particularly for the sort of deep retrofits demanded by the realities of climate science. But for authorities that succeed in finding funds, eco-friendly building refurbishment projects set a powerful example for local communities, and improve the built environment for staff and clients. Many authorities use the successful RE:FIT programme and similar schemes, which offer a combination of compliant procurement and support in project development.
In another recent example, a panel of architects in fashionable eyewear have awarded the prestigious 2019 Stirling Prize to a 100-home Passivhaus development for Norwich City Council. Again, leadership from a pioneering Local Authority, and great recognition for the idea that social housing residents should have comfortable, climate-resilient homes with low energy costs.
In the US, this trend towards cities and states taking matters into their own hands is occurring because the national government doesn’t support action on climate change.
In the UK meanwhile, the government is happy to trumpet past successes (or those achieved in spite of, not because of, its policies), but appears to think that simply declaring a net zero target for three decades’ time makes it a global leader on climate change. Meanwhile there is a glaring and increasingly embarrassing lack of effective policies to get us there.
With no disrespect to Norwich City Council or the team that delivered that fantastic Passivhaus development, they shouldn’t be winning prizes for this in 2019….
Because it should be the norm.
We shouldn’t be building houses that don’t meet this standard. Not so long ago, we had the Zero Carbon Homes Plan, which would have ensured that all new dwellings from 2016 would generate as much energy on-site as they would use in heating, hot water, lighting and ventilation. This was to be supported by tighter energy efficiency standards and a scheme which would allow housebuilders to deliver equivalent carbon savings off site.
The government withdrew the plan in 2015 following lobbying from the construction industry. During the same period, the ECO energy efficiency programme was vastly reduced, CRC was scrapped, renewable subsidies slashed, etc etc.
None of these will go down in history as the most stupid thing the 2010-16 government did, but then they did set the bar pretty high for themselves.
We are still living with the legacy of this toxic bonfire of regulations, and the even nastier turn taken by UK politics since you-know-what in 2016 has meant virtually nothing of substance has come in to fill the policy vacuum. Even the MEES (Minimum Energy Efficiency Standards) was watered down in favour of landlords. The current government is clearly leaning towards ‘deregulation’ in the name of helping business, when most businesses are asking for clear leadership on climate change and a clear trajectory for tightening regulation.
We need government
As this vacuum extends into its fourth year, the climate crisis has returned to the forefront of public consciousness, driven by Extinction Rebellion, Greta Thunberg and Sir David Attenborough. But however empowering and gratifying it is to see the rise in local and community action, the inconvenient truth is: we need government to be on-side.
Within the last week we have seen an example of what happens when government is not. Amid the political maelstrom of recent days (/weeks/years) you might be forgiven for missing the news of a “shock interest rate rise imposed on cheap Treasury loans” (according to The Guardian.)
Essentially what has happened here is that the Treasury has increased the rate at which public bodies can borrow money for public works from 1.81% to 2.82%. This ‘Public Works Loan Board’ is the facility that enables local authorities to develop social housing projects and to invest in improving the estates used for delivering public services. Energy efficiency projects and other climate change mitigation projects often use PWLB borrowing, and for many authorities it is the only viable alternative to using internal funds for deep retrofit projects. Public sector bodies can still access Salix Finance, but the restriction to initiatives with a 5-year payback period is increasingly incompatible with the deep retrofit projects demanded by the climate emergency.
According to the Guardian, the Treasury appears to have a problem with some authorities’ use of PWLB money for ‘property investments’ – i.e. schemes that deliver returns that offset budget cuts from central government. To some of us, this sounds like exactly the sort of wild west capitalism the government would be in favour of. Faced with uncertainty about future government funding, but with a strong moral and social (and legal) obligation to continue providing basic services and dealing with issues like climate change, resourceful local authorities have taken matters into their own hands.
But apparently this is the wrong answer. And the above announcement means the plans of many authorities for climate-friendly investments to be financed by PWLB lie in ruins, at the stroke of a Treasury pen. Few investment proposals can survive a 50% increase in cost of capital. Just another small way that the government’s hostile environment for the public sector is making it harder for the grown-ups (and, increasingly, children) who take the future seriously. Surely the Treasury could have come up with another way of restricting pure property investments by local authorities and encouraging massive investment into deep energy retrofits?
Policies and support, please
The current life expectancy of the UK government is measured in weeks (or even days). So to whichever unfortunate persons end up inhabiting ministerial positions at BEIS, Defra, MHCLG or indeed Treasury, the messages need to be really clear:
- Climate change is not interested in the size of the deficit or any other arbitrary self-imposed metric. It operates in the real world. Maybe you should too?
- Climate change mitigation and adaptation happens in the workplaces, communities and homes in which people live. If you starve these of funding, cut off the lifelines of European programmes that have positively impacted so many communities, and systematically stymie the attempts Local Authorities’ attempts to do the right thing because of a political ideology, you will not get the outcome you say you want: net zero by 2050.
- Our buildings are in a poor state, meaning they waste energy and are not resilient to climate change. This doesn’t have to be the case, it is a product of political decisions made by your predecessors. Austerity has led to underinvestment in public buildings and a crisis in backlog maintenance in the NHS, and a failure to tackle the housing crisis and greedy landlords means we have among the worst-performing privately rented building stock in Europe.
- Historically low interest rates, coupled with growing interest from institutional investors in high impact investments such as energy efficiency, must make it possible to implement financial instruments that help to accelerate investment into deep energy retrofits and work for the consumer, the Treasury and the private sector – after all enough examples and techniques exist in the world including first loss reserve funds, guarantee funds, and Property Assessed Clean Energy to name just a few.
- As well as facilitating the financing of projects it is essential to provide assistance for local authorities, all of which have had their technical capacity reduced through austerity measures, to develop sound bankable projects – some kind of project development assistance funding is essential.
- Net zero is impossible without a clear roadmap, actual policies, regulation and enforcement. Markets and private finance are also essential and there is huge economic value to be created, but you need to take the lead or it won’t happen fast enough. This means you need to learn to say no to those lobbyists in the housing, real estate and energy lobbies who say this is all too difficult and expensive and start listening to the technical and business model innovators and the financial sector who are saying a) it isn’t actually more expensive than ‘business as usual’ b) it is an investment opportunity and c) not doing it is catastrophically expensive. That would be real leadership. Just saying.
But for now, even if you can’t actively support local authorities trying to do the right thing, please at least stop making it harder for them.
Alex Rathmell is managing director, consultancy at EnergyPro. This article – which is his personal opinion – was first published on LinkedIn.
Images of 2019 RIBA Stirling Prize winner ©TimCrocker
Links and references:
Devon Climate Emergency: https://www.devon.gov.uk/energyandclimatechange/devon-climate-emergency
Councils declaring climate emergency: https://www.campaigncc.org/councils_climate_emergency#Councils_taking_climate_action
IPCC 1.5 deg C report: https://www.wri.org/blog/2018/10/8-things-you-need-know-about-ipcc-15-c-report
RE:FIT national: https://localpartnerships.org.uk/our-expertise/refit/
Government accused of wrecking plans to build more social housing (The Guardian): https://www.theguardian.com/society/2019/oct/11/government-accused-wrecking-plans-build-more-social-housing