Local net zero progress meeting Whitehall stymie

There is a groundswell of believers in the need for a locally-led energy transition, but central government remains nervous of delegating authority or resource to city and regional leaders. This was the consensus of industry, policy, consumer advocacy and academic leaders at a round table hosted by Utility Week.

Key points:

• Diversity in local and regional pathways to net zero is increasingly considered key for legitimising net-zero investments and engaging the public in their role in future energy markets
• Advocates for locally-designed and led transition plans feel central government is reluctant to hand over authority and funding to enable this
•  Better coordination is needed between a national framework for net-zero and local/regional plans
• There is a need for better assurance of local and regional decarbonisation plans to ensure they are realistic and affordable
• There is a need to think carefully about how to mitigate the potential for new and exaggerated forms of regional inequality which might arise from localities having autonomy over the pace and shape of their net-zero transition

This week, local energy network UK100 launched a major new campaign to boost the ambition and rigour of locally focused decarbonisation plans. At the launch event an impressive array of leaders from industry and local government were united in their firmly held belief that the UK’s race to deliver its 2050 net-zero transition can only be achieved through greater empowerment of communities and regions to develop plans which are tailored to maximise their own geographic, economic and social characteristics.

These leaders, including COP26 climate action champion Nigel Topping, Bristol major Marvin Rees and Siemens UK & Ireland CEO Carl Ennis, do not represent an isolated community. In the year and a half since the UK legally bound itself to achieving net-zero greenhouse gas emissions by 2050 the drumbeat from advocates of local energy has become steadily stronger, with influential individuals and institutions adding weight to the message that achieving a more sustainable future for the nation and society as a whole, needs to begin “in places”.

The reasoning for this is clear. A “bottom-up” transition which allows communities to devise their own pathways and set their own pace towards a commonly held net-zero target, has better chances of gaining buy-in from local citizens, giving legitimacy to the necessary investments involved and preparing the ground for consumers to play a more pro-active role in tomorrow’s energy system where supply and demand side capacity have equal value.

Then too, locally devised decarbonisation plans, created by those with a close understanding of the technology choices which will play best to the area’s existing natural, industrial and skills attributes are more likely to succeed in triggering meaningful economic and social benefits from decarbonisation.

But despite having the backing of august institutions like the National Infrastructure Commission, the Institute for Civil Engineering and the Energy Systems Catapult, central government is yet to take any meaningful measures to empower local and regional authorities to fight their own climate battles – or so said the group of senior leaders gathered by Utility Week and Scottish Power at a recent virtual round table discussion on the role of local energy in a “fair” low carbon transition.

At Utility Week’s Build Back Better Forum in October 2020, energy minister Kwasi Kwarteng shared warm words about the essential part local authorities have to play in achieving net zero. But participants at this round table event said, in practice, central government remains resistant to the devolution of powers or finance to local and regional authorities to help support the creation and delivery of rigorous decarbonisation strategies.

They also claimed there remains a predilection in central policy making for devising market mechanisms and incentives to promote investment in big infrastructure, rather than developing frameworks to boost the role of small scale or less tangible low carbon technology areas like demand side response, which are needed to create meaningful change at local level. Participants pointed to the emphasis on off-shore wind in the Prime Minister’s recent 10-point plan for a green industrial revolution as a demonstration of this point.

An energy policy specialist representing central government at the event acknowledged this broad criticism of government’s approach saying it was “fair” to say national government has been traditionally “not very good at thinking in a meaningful and joined up way” about local and regional ownership of energy strategy. And they assured that there is now greater understanding that the next phase of decarbonisation cannot, as another contributor phrased it “be off-shored to windfarms in the North Sea”. Instead, it will need to “take place in places.”

Having made this assurance however, our energy policy expert also pushed back on the assumed wisdom within the group that a local approach to energy transition necessarily translates to a fairer energy transition. “There are local and regional approaches which could be more unfair that a national one” they cautioned.

This comment opened up an extensive debate around the advantages and potential unintended consequences for regional and social equity which greater decarbonisation autonomy for localities might given rise to. Key to this discussion was the role of Ofgem in either facilitating or hampering local efforts through its approach to energy network regulation.

Several debate participants highlighted that the current approach to setting network spending allowances is leading to a situation in which local and city-region ambitions for decarbonisation are being undermined by an inability to influence the pace or scale of investment in critical network infrastructure.

Some attendees advocated a “decentralisation of regulation” to combat this challenge, while others worried that this might create too much complexity and increase the risk for inequality between regions with the intellectual and financial resources to move quicker than others on delivering their net zero goals.

Whatever the answer to this challenge and the many others covered during the course of this lively and though provoking debate, there was a resounding consensus from those involved that the scale and urgency of the climate emergency means that solutions will need to emerge through a process of adaptation and evolution in our existing policy and energy system architectures – rather than through the creation of new entities to coordinate local and national decarbonisation. Unanimously, our participants agreed that the latter approach would be too time consuming. Progress, however imperfect, cannot be delayed.

Quotes from debate participants:

“The understanding that local is essential in order to meet net zero is not really fully accepted in Whitehall.”

“Local is important in terms of legitimacy and accountability. But you also need national framework for local energy plans. There are huge variations in local plans and we need to bring focus onto making sure that all of these plans are affordable, achievable and effective. They need to work together to add up to a coherent whole.”

“How do you create a national sense of vision while allowing localities to find their own way – which  will mean costs and benefits appear in different ways and certainly at different times in different places?”

We need to stop worrying so much about short term unfairness. We have unfairness across all sorts of aspects of charging right now…There are a lot of differences in the underlying costs of serving different customers at the moment and we don’t get too hung up about it.”

“One of the big challenges around net zero at a local level is one of capacity within local organisations to deliver this.”

“I would draw a distinction between local authority capacity and local capacity. There is a great deal of expertise in universities, community groups, local businesses.”

“For cities which are responsible for their own social care and health budgets, taking action on fuel poverty has significant implications in terms of savings to the city region. Taking somebody out of fuel poverty does amazing things for their health and wellbeing.

“The sophistication of our data and understanding around how local energy systems work and how they interact isn’t good enough yet.”

“If directly elected leaders in local government cannot engage constructively with directly elected leaders in national government then there’s something wrong with our institutions that won’t be solved establishing another one.”