Collective Leadership to Unlock Place-Based Net Zero Investment 

The Net Zero future to which we are committed cannot happen without mobilising the finance we need to achieve it. If we cannot make the investment case, the work will not take place. Here in the UK, we know the investment need runs to perhaps £2trillionⁱ just for local Net Zero (local energy and waste, domestic and commercial retrofit, local transport), way beyond the ability of the public purse. 

So, our collective task must be to create models capable of paying back capital whilst reducing emissions, also delivering a return in jobs, local growth and health. This has the added benefit of changing the debate on Net Zero, framing the challenge as one of investment and economic opportunity, rather than cost.  

This is the mission of 3Ci, its public and private sector stakeholders, and precisely the conversation that our recent joint event during London Climate Action Week facilitated, with the objective of informing the new Government’s policy. Bringing together practitioners across the finance sector and local government, we challenged them to get down into the detail of exactly what will make this work. The immense talent in the room rose to this challenge, and the results were fascinating. 

Top of the list was a more robust National Net Zero Framework, complementing the work of the Climate Change Committee by building bottom-up by local areas and sectors with targets and timelines, for example for emissions, energy use, and gas boiler phase-out. National approaches to Net Zero governance should back this by seeking to involve local political leadership and the private sector from the outset, to accelerate progress. 

Increasing local capacity is a major issue, and discussion acknowledged the extreme constraints and challenges faced by local authorities. Therefore, understanding the resources and powers local authorities will need is vital, linking this to the Government’s English Devolution Bill and working through what might be needed by localities in Devolved Administrations. Simplifying funding will help, encouraging collaboration not just competition, enabling aggregation of funds and schemes alongside enhanced borrowing powers. 

Participants backed the need for Net Zero Neighbourhood Demonstrators to be accelerated as a route to unlocking major private capital, acknowledging that there are many already on the starting blocks and progress could be quickly made. 

Understanding how to scale up delivery from these and other pilots is key, including: clear ministerial leadership; skills development including a comprehensive technical assistance programme for local authorities; and supply chain development, where we have a significant hill to climb, and which is reliant on strong national policy signals to the market. This could be aided by statutory instruments and duties for relevant agencies to uphold the legal commitment to 2050. 

Innovative approaches to procurement will fundamentally shift the dial, respecting transparency and diligence whilst being less risk averse. Bringing public and private sector together earlier in the process, enabling strategic partnerships and increased use of frameworks to fast-track delivery. 

Investment relies on recognising the importance of community engagement as part of the planning process; without buy in, finance cannot flow. Local authorities have a key role as planning authorities and community conveners, as do new methods of communication including digital. Understanding what matters to people in their own terms is key; the term ‘Net Zero’ might have technical connotations whereas lower bills, local jobs and improved community facilities could cut-through and drive action. 

Older properties are a major source of emissions, but to avoid continually correcting the mistakes of the past a joined-up strategy for newbuild and retrofit is needed. And retrofit itself should be joined up with other interventions, for example dealing with mould or fire safety in social housing, so any disruption only happens once, not people tramping in an out for weeks. 

‘Don’t reinvent the wheel’ and understand what innovation is already out there was a key message from participants, that we simply need to get better at sharing this actively, not only putting examples out passively. The private sector also has access to international examples of best practice and financial innovation which could provide insights for the UK. 3Ci offers a mechanism to help with this, as do existing Government initiatives like Net Zero Go. 

Government and its agencies have an opportunity to accelerate progress in this vital area, not just through the injection of more cash, but by realigning existing resources and policy, creating certainty and market confidence to leverage private capital. Additional to the above, this might include: underwriting early project risk, for example through guarantees; updating Green Book guidance; fiscal incentives for Net Zero progress and fossil fuel reduction; and linking Net Zero to national strategies for industry, health, skills and employment – for example ensuring a supply of skilled labour to undertake work, alongside industrial innovation to accelerate progress. 

This event ended with the conclusion that, although there is much the new Government can do to access potentially hundreds of £billions for Net Zero, it cannot do it alone. A multi-level, local-national, cross-sector approach is essential from the outset, and must be reflected in governance and the development of policy. These ideas complement the findings of 3Ci’s recent Investor Taskforce, led by Catherine McGuinness CBE, and its final report From Challenge to Opportunity: Unlocking a UK-wide Net Zero Investment Dividend.   

We have had many good debates on these issues which floated many ideas in the past. So what, one might ask, is different about now? It’s not just that there is a new Government, or the growing recognition that we are running out of time to meet climate challenges. It is the combination of in-depth, worked up investment models alongside the collective commitment of localities with plans and investors with capital to get to the next stage. This discussion was, overall, a call to solid action.  

We see this as a massive opportunity, but do not underestimate the task ahead. It requires an unparalleled collective act of leadership and radical collaboration. The partners from this event are ready to provide step up, and Government has a clear, ready-made opportunity to help us deliver this shared ambition.