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LGA sustainability briefing: the green economy

Introduction

The UK has committed to reaching net zero by 2050. This means that the total greenhouse gas emissions would be equal to the emissions removed from the atmosphere, with the aim of limiting climate change. Achieving these commitments will require a wholesale transformation of our economy across all emission sources.  Councils across the UK have developed climate action plans with their own targets for achieving net zero. This will require councils to engage and develop a strong low carbon and green supply chain, creating skilled jobs and a stronger local economy.

The United National Environment Programme defines a green economy as low carbon, resource efficient and socially inclusive. In a green economy, growth in employment and income are driven by public and private investment into economic activities, infrastructure and assets that allow reduced carbon emissions and pollution, enhanced energy and resource efficiency, and prevention of the loss of biodiversity and ecosystem services. The UK’s Office for National Statistics (ONS) estimated the UK’s Low Carbon Renewable Energy Economy to be £41.2 billion in 2020, employing over 207,000 full time equivalents in low carbon electricity and heat, energy efficient products, low carbon financial and advisory services and low emissions vehicles and infrastructure. 

This briefing explains the business case for taking action to support the local green economy and sets out suggested interventions that local authorities can take to best capitalise on the opportunities for local green jobs and skills. It is one of a series of LGA briefings relating to environmental sustainability. 

The business case for action

Job creation

  • 700,000 green jobs could be created in the UK within the next ten years, and a further 488,000 by 2050. Councils that can act now stand the best chance of making the most of the opportunity by creating local jobs for businesses and residents.

Boosting 16+ and adult education provision

  • By improving access and provision to green skills, councils can help to boost the profile of schools and colleges in a local area, creating pathways for more people into well paid and sustainable careers. 
  • According to a survey by Good Energy, almost half of 18–34-year-olds would like a career in the green economy. 

Transition to a greener economy

Net zero requires a transformational shift to decarbonise homes, buildings, transport networks and energy systems. 

  • Places with established supply chains and the required skills to drive change will be best placed to retain rapid environmental and economic benefits locally. Councils are key players in the local economy, spending around £200 billion annually, providing them with an opportunity to drive growth in the low carbon goods and services sector, as well as fostering jobs related to nature restoration and rewilding. 
  • Expanding sustainable public transport options is good for the economy. In 2021, congestion cost the UK a total of £8bn, with the average Briton losing 73 hours to traffic.

Secure green investment

  • The UK government’s Climate Change Committee estimates that by 2030, the UK needs to be investing in approximately £50 billion each year through to 2050 to meet our net zero targets. 
  • Council areas with the most established and capable supply chains stand to benefit the most from this investment and can harness the rippling multiplier effects on their wider economy.

Foster innovation

  • The UK’s ability to develop, scale and deploy low carbon technologies will be key to meeting the net zero ambition. Places that can accommodate these innovations by providing incubator and/or innovation support could expedite their own journey to net zero as well as attracting inward investment and export opportunities.

Suggested interventions with case study links

There are several levers that councils can use to support low carbon growth. A list is provided below split by what the council can do across different areas.  

Strategy and leadership

Councils seeking to take advantage of the green economy growth opportunities presented by the net zero transition should ensure that net zero and environmental sustainability are given a high priority across the council’s estate, combined with adopting a leadership role in the local transition to net zero.  A clear and actionable climate change strategy can be used to support the growth of low carbon business, showcasing to potential investors and local businesses a clear long-term pathway that can provide the reassurance needed to underpin collaboration, secure investment and bolster low carbon growth. 

Councils can use their statutory powers as well as funding opportunities such as the UK Shared Prosperity Fund, the Levelling Up Fund and Freeports, to reinforce wider council strategies and commitments from their climate change strategy. Key policy levers that councils can shape include:

  • Procurement strategies can leverage a council’s purchasing power to increase the demand for local suppliers of low carbon goods and services.
    • Lewes District Council is driving forward a new approach to local regeneration - community wealth building, which aims to redirect wealth back into the local economy, and places control and benefits into the hands of local people. This includes the council adopting new procurement strategies to maximize opportunities for buying locally and supporting SMEs. 
  • Economic development strategies can prioritise and acknowledge the need for low carbon products and services help to secure the funds and future activity to accelerate low carbon growth.
    • Winchester City Council’s Green Economic Development Strategy positions the Winchester district as a carbon neutral, sustainable place in which to live, work, study and visit. 
  • Planning policies can help to shape the sustainability of new developments, as well as help to unlock investable sites for the future development of net zero clusters.
    • East Ayrshire Council has worked with South Lanarkshire Councils, the renewable energy industry and other stakeholders to produce a development framework for the Hagshaw energy cluster.

Investment opportunities

Historically, many councils divested control of inward investment activities to their Local Enterprise Partnership (LEP). However, government funding for LEPs ceased from April 2024, with the government now supporting county, unitary or combined authorities to absorb LEP functions, offering new opportunities to these councils to support the green economy. All councils can use their power and influence to ensure relevant strategies consider low carbon investment opportunities and look to attract high-growth net zero companies. 

  • Strategy: Councils can work across geographic boundaries to ensure that regional investment strategies align with and represent local economic strategies. 
  • Local knowledge: Councils can leverage their knowledge and understanding of local businesses and the wider local economy to identify and promote their strengths, natural assets, and established supply chain opportunities. This supports the development of compelling investable propositions which can strengthen the wider regional offer. 
  • Planning: Leveraging powers around planning consent can help to unlock investable sites for net zero clusters
  • Mapping: Map existing natural assets, sector strengths and research capabilities that can contribute to a net zero proposition and ensure they are reflected in regional investment propositions.

Business support

Barriers to growth by low carbon businesses include high inflation rates, increased interest rates and supply chain shortages and skills gaps – as well as a constantly changing policy landscape. Businesses facing these challenges must therefore be reactive and resilient to overcome these challenges and must seek to build a sustainable business model that can meet the needs of the net zero transition.

Business support in England has almost exclusively been delivered through a national network of 38 Growth Hubs that are managed by the LEPs and has been funded through the European Regional Development Fund (ERDF). The advent of the UK Shared Prosperity Fund presents new opportunities for councils to influence, shape, deliver and commission future business support programmes through a green lens. This can be funded through UKSPF interventions, business rates and alternative funding routes, and should consider:

  • Carbon reduction programmes and support: By accessing advice and grants, businesses can reduce their carbon footprint and invest in low carbon technologies
    • The London Borough of Barking and Dagenham has bought access to a sustainability action planning tool for up to 500 local businesses. It is working with its local business support provider to encourage take up, identify potential influencers and early adopters, and embed sustainability support into existing business support. 
    • North East Lincolnshire Council is supporting small and medium-sized enterprises through the Smart Energy Greater Lincolnshire, providing ‘one stop shop’ free advice and grants to boost renewable energy use and lower carbon emissions.
  • Eco Innovation programmes: Some councils offer eco innovation support to help businesses embed and promote sustainability throughout the full lifecycle of a given product or service. For example:
    • Derbyshire County Council has launched a Green Entrepreneurs grant fund to help local businesses develop and invest in green technologies and carbon reduction.
    • Brighton & Hove City Council has been a lead player in identifying the potential of green hydrogen in the Greater Brighton City Region, setting up Hydrogen Sussex, a new body which supports and promotes the development of a hydrogen economy. 
    • Cornwall Council is piloting ground-breaking, highly innovative technology - developed by a Cornish company - to turn methane, derived from organic waste, into renewable fuel, working with six of the council’s farms.
    • Devon County Council is supporting a local business to scale up their EV battery recycling process.
  • Signposting: Councils can play a key role in signposting and should look to fully leverage existing website and communication channels to promote low carbon businesses to the various regional Growth Hubs, universities, and other business support organisations.

Skills

Green skills requirements will vary across the country, so councils should work in collaboration with employers and training providers to map the local requirement for green skills and ensure appropriate skills provision is put in place as the sector grows and evolves. The introduction of Local Skills Improvement Plans (LSIPs) presents an opportunity for councils to work in collaboration with businesses, employers, local and regional skills organisations to ensure sufficient provision of green skills.

  • Strategy: Councils can work with their LSIP and Employer Representation Bodies to ensure that regional skills strategies are aligned to a council’s net zero commitments, and that green skills requirements and provision are as inclusive as possible.   [GA1]
  • Developing local strengths and supporting specific needs: Councils can leverage relationships, networks, and access to local assets to promote and maintain sector specialisms. 
    • Devon County Council has supported the delivery of a training programme to help local businesses develop skills to enable a transition to regenerative farming and the creation of new jobs in this sector. 
    • Portsmouth City Council has ambitious plans to retrofit its housing stock, but lacks a skilled local supply chain to improve the fabric of homes and deliver heat pump installations. To overcome this, the council has supported the City of Portsmouth College in the creation of the NetZero Training Hub. 
  • Signposting: Once skills provision is in place, local authorities can play a role in signposting businesses to the appropriate service provider. 

Partnership

Supporting the attraction and growth of low carbon businesses cannot be tackled by councils alone and requires collaboration and partnership working with local businesses, universities, and national government. Opportunities include:

  • Ensuring local, sub-regional and regional agencies are working collaboratively to develop a compelling offer for investors, in line with local climate policy ambitions.
  • Engaging with training providers and other key stakeholders to ensure they have a sufficient green skills provision to offer incoming companies. 
    • Birmingham City Council has partnered with the Retrofit Academy to accelerate the development of the green workforce and infrastructure needed to upgrade social housing in the region, at scale.
  • Where relevant partnerships exist, consider how partnership activities can better support low carbon growth.
  • Establish a climate action group that brings together key actors from across the council and region to identify and respond to local climate challenges. E.g. Manchester Climate Change Partnership 

Innovate UK Business Connect’s Net Zero Places Innovation Network is supporting local/regional authorities and agencies to connect, collaborate, inform, share experiences and lessons learned, to support organisations across the UK.

Further information