Identifying and promoting green growth opportunities

The UK was the first major economy to create a legally binding target to reduce greenhouse gas emissions down to net zero by 2050. Achieving these commitments will require a wholesale transformation of our economy across all emission sources.

Councils are already showing high levels of commitment to support the UK’s targets, with over 300 councils having already declared a climate emergency. Delivering on these climate action plans will require councils to engage and develop a strong low carbon supply chain, creating skilled jobs and a stronger local economy.

This report explores the ways in which councils can use their powers and influence to attract and stimulate a low carbon business base. The research combines a desk-based review of council websites as well as qualitative insights drawn from stakeholder interviews.  

Key recommendations:

1. Align net zero ambitions with low carbon growth: Councils should ensure low carbon growth is prioritised within climate action plans and there is a commitment to ensure that a low carbon supply chain is in place to help the council deliver on its net zero commitments.
2. Embed net zero commitments across council-wide strategies: Councils should ensure their net zero commitments are embedded within wider council strategies so that all available levers to support low carbon growth have been joined up and acted upon.  
3. Understand local strengths and weaknesses: Measuring and monitoring the scope and scale of the local supply chain will establish the current capabilities, highlight any weaknesses, and give key insights that enable future sector support.
4. Demonstrating leadership to build market confidence: Councils should use their local leadership to demonstrate to the local supply chain that there is demand for their products and services.
5. Stimulate the demand for low carbon products and services: Councils have significant purchasing power that can be used to ensure local businesses can access and benefit from public sector investment.

In response to growing awareness of the impacts of climate change, over 300 councils have now declared a climate emergency and are developing climate change action plans as a route to meeting the government’s target of net zero by 2050, with some councils aiming for sooner. Attracting and developing a thriving low carbon business base will be key to delivering the transition to net zero as well as delivering several additional benefits:

Job creation: The local green jobs – accelerating a sustainable economic recovery report estimated that the UK could create 700,000 green jobs within the decade 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 post 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.

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.

Secure green investment: The UK government’s Climate Change Committee (CCC) 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.

While councils have a crucial role to play in securing the above opportunities for their areas, a shifting policy landscape, post COVID-19 recovery and continued austerity measures can limit their ability to draw in and keep low carbon businesses.

The publication of the Net Zero Review in January 2023, led by Rt Hon Chris Skidmore MP outlined 129 recommendations to deliver net zero by 2050 in ways that support growth. Amongst other pillars, the review focuses on net zero and the community, recognising that locally and regionally there is a will to act, and that government should empower places and people to deliver greater economic and social benefits. Relevant recommendations for local areas include:

• simplifying the net zero funding landscape
• fully backing at least one ‘Trailblazer’ Net Zero City, Local Authority & Community’
• reform local planning and national planning policy frameworks to introduce a net zero test.

The Local Government Association (LGA) commissioned Green Economy to undertake a review of the ways in which councils can use their powers and influence to attract and retain a low carbon business base. Conducted between October and December 2022, the research combines a desk-based review of council websites as well as qualitative insights drawn from stakeholder interviews. The report explores potential levers across the following themes:

1. Strategy
2. Finance and funding
3. Investment
4. Skills
5. Innovation
6. Business support
7. Partnerships

For each theme, the report aims to identify: the key levers that can enact change; the challenges that are currently prohibiting low carbon growth; and finally make recommendations for how councils can overcome those challenges in pursuit of growing a thriving low carbon sector.

The Office for National Statistics (ONS) defines the low carbon sector as economic activities that deliver goods and services that generate significantly lower emissions of greenhouse gases; predominantly carbon dioxide. Since 2015, the ONS has referred to the sector as Low Carbon and Renewable Energy Economy (LCREE) and the following table describes the core groups within LCREE.

The latest findings from the ONS estimate that turnover in the UK LCREE was estimated to be £41.2 billion in 2020 and the sector employed an estimated 207,800 full time equivalents (FTE).  A breakdown of the LCREE is provided below:

1. Low carbon electricity:  Offshore wind, onshore wind, solar photovoltaic (PV), hydropower, other renewable electricity, nuclear power, carbon capture and storage
2. Low carbon heat: Renewable heat, renewable combined heat and power
3. Energy from waste and biomass: Bioenergy, alternative fuels
4. Energy efficient products: Energy-efficient products, energy-efficient lighting, energy monitoring, saving or control systems.
5. Low carbon services: Low carbon financial and advisory services
6. Low emission vehicles and infrastructure: Low emission vehicles and infrastructure, fuel cells and energy storage systems

The aim of the research was to:

• identify the key levers councils can use to support low carbon growth
• understand the challenges and benefits of sector specific engagement
• identify best practice examples of council activity that have resulted in the attraction of low carbon businesses.

To achieve the above, our team gathered across the following two stages:

• Stage 1: Desk-based evaluation of documentation published on 30 council websites as defined by the LGA to identify the strategic policy framework councils have put in place that encourage the growth of low carbon businesses.
• Stage 2: one-hour interviews with five councils to explore and discuss the challenges and benefits of sector engagement.

Councils were selected in agreement with the LGA and included both upper and lower tiers of government from across England. LCREE data was used during this selection to ensure the research included areas with high and low concentrations of low carbon businesses.

The following sections set out the findings of this research along with referenced examples, followed by our conclusions and recommendations.

The UK has set a net zero target of 2050 and many councils are increasingly ambitious in their plans to tackle climate change. Today, over 300 councils have now declared a climate emergency. However, a lack of government support in the form of policy and funding, coupled with varying degrees of local control, assets, resources and leadership, has resulted in inconsistent levels of activity across the country.

Any council seeking to take advantage of the low carbon growth opportunities presented by the net zero transition should ensure that net zero is given a high priority across the council’s own estate (assets owned by the council), combined with adopting a leadership role in the local transition to net zero in their area.

A clear and actionable climate change strategy with clear alignment to strategies led at combined authority and district levels is pivotal to a council’s ability to meet its net zero goals. It should also be used to support the attraction and growth of low carbon businesses.

Clear and integrated climate ambitions across council strategies can also showcase to potential investors, local businesses, and government a clear long-term pathway that can help provide the reassurance needed to underpin collaboration, secure investment and bolster low carbon growth.

Strategy review

The review of climate change strategies across the targeted sample of councils identified the following approaches that can be used by councils to foster low carbon business growth:

Establishing meaningful commitments: Although most of the councils reviewed had published a Climate Action Plan (CAP), the research found that the plans contained varying degrees of detail. Declaring a climate emergency will only have impact if there is a robust plan and measurable targets in place. Councils that can develop target-based plans will help to provide stability in the market and build the foundations for low carbon business growth. Key elements of a robust CAP included:

• clear commitment to meet net zero by 2050, or sooner if applicable
• SMART targets and commitments, i.e. science-based targets or similar
• easily accessible to businesses wanting to understand council commitments
• a focus on the council’s own estate as well as the wider council area (if possible).

Place-shaping: Councils can use their statutory powers as well as funding opportunities such as the UK Shared Prosperity Fund (UKSPF), the Levelling Up Fund and Freeports, to reinforce wider council strategies and activities incorporate commitments from the CAP. A high-level review of procurement, economic development and planning strategies found that climate change commitments were not always referenced. This may lead to missed opportunities to drive climate commitments across all council activities. 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.
• Economic development strategies that prioritise and acknowledge the need for low carbon products and services help to secure the funds and future activity to accelerate low carbon growth.
• 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.

Developing intelligence: To inform strategy development, councils should gather, track and monitor their climate impact and that of their low carbon goods and services sector to benchmark performance, inform decisions and help measure the success of their climate strategy. The review found that, whilst some councils are already taking steps to measure the scope and scale of their low carbon sector (i.e., a quantitative and qualitative assessment of the sector and its future needs in respect of delivering net zero), most still lack a strong handle on low carbon businesses and need to better understand supply chain gaps by better ongoing measurement and benchmarking of the sector.

Demonstrating leadership: Councils also have an important role to play in exercising climate leadership, both internally within the council and to the wider businesses and communities they serve. Key areas in which councils can demonstrate leadership include:

• Leading by example: By investing in decarbonisation projects across their estate, councils can help to advance the uptake of low carbon products and services. Examples include LED lighting upgrades, transition to EV fleets and onsite renewable energy generation.
• Engagement: By mobilising change within businesses and communities, councils can galvanise and mobilise action across their local area.  
• Promoting: Championing climate change actions among local businesses and stakeholder groups can help translate national climate change policy within the context of place.

Key challenges

Interviews with councils identified the following challenges:

• In the face of significant real term funding cuts, rising challenges from COVID-19 and the cost-of-living crisis, councils can struggle to prioritise climate goals over their statutory duties, with limited team members available to manage and deliver the transition to net zero.
• There is a lack of standardisation in the measuring and monitoring of climate progress and intervention outcomes at a council level.
• Local authority planning frameworks may be overruled by national government priorities. Delivering against low carbon ambitions may compete with other local priorities, for example housing targets.

Recommendations

Recommendations councils can implement to strengthen action and strategy to support low carbon business growth include:

• Alongside a climate target, develop an integrated approach to climate reporting which brings together wider social, ecological and environmental outcomes, including growth of the low carbon sector.
• Clearly define, act on and join up the direct controls and policy levers the local authority can use to support climate action, and consider the role each council department can play in helping to grow the low carbon business base.
• Consider what role the council could play in helping build national resilience around net zero at a community level.
• Demonstrate leadership by identifying a councillor at cabinet level to act as a climate champion, ensure political accountability to the agenda and actively communicate the council’s commitment and progress on the climate agenda to local businesses.
• Identify a lead senior responsible officer for climate change, accountable for delivering the council's CAP and coordinating activity across the organisation and, where relevant, the wider local authority area.
• To support recognition and buy-in of the climate agenda across the organisation, councils may choose to incentivise staff by including climate action in job descriptions and setting climate-related goals in performance development reviews.

According to the Government’s Climate Change Committee (CCC), the estimated cost of meeting the UK’s net zero commitments is expected to be in the region of £1.4 trillion by 2050. Whilst the true cost of the transition at a council level is not yet fully understood, the relationship between securing green investments and growing a low carbon business base is clear, with those able to secure finance and funding benefiting from enhanced job creation and local economic growth.

However, for councils, financing remains a significant barrier. According to the LGA’s Financing Green Ambitions report, the amount, accessibility, terms, and reliability of funding are some of the most often mentioned obstacles that local authorities encounter while attempting to transition to net zero.

Review findings

Capital grant schemes such as the Public Sector Decarbonisation Scheme (PSDS), Local Authority Decarbonisation Scheme (LADS) and the Low Carbon Skills Fund (LCSF) have proved to be a good source of funding for councils and have the potential to stimulate the demand for low carbon goods and services locally. Since its introduction in 2020, the PSDS scheme has seen over £3 billion allocated to local energy efficiency projects and is projected to create over 30,000 jobs.

Whilst a review of PSDS allocations found that most councils had successfully secured these grants either directly or as part of a consortium bid, it is less clear to what extent local businesses have benefitted from the investment. Discussions with councils found that short and overlapping timeframes, combined with the competitive nature of funding rounds, make it difficult for councils to execute an investment strategy that works for local businesses.

To quickly mobilise projects, councils have drawn from existing supplier frameworks, which typically leads to the appointment of large, national contractors. Unless specific procurement requirements are already in place, these contractors are not required to engage with local businesses and instead use internal suppliers which may or may not include local suppliers.

None of the councils interviewed had systems in place to monitor and evaluate how investments were benefiting the local economy. Reasons for this included no requirement from commissioners to do so, and a lack of time and internal resources. A breakdown of the key levers that can be used to ensure that green finance and funding initiatives advocate for, and support, low carbon business growth include:

• Engage with existing suppliers: Councils can use existing relationships and networks to engage with the local supply chain. Where supplier frameworks are already in place, councils can encourage closer engagement through supplier engagement days and more rigid procurement processes.
• Promote opportunities locally: Councils can use existing networks, partnerships and communication channels to promote local low carbon procurement opportunities. Hosting market engagement or meet the buyer sessions can help to engage the market, increase the quality of bids and encourage greater levels of collaboration.
• Monitor and evaluate: Councils have access to information and data relating to the procurement of low carbon goods and services. By monitoring and evaluating this data, councils can better understand how procurement is benefiting local businesses and can use the data to test and trial new ways of working.
• Leveraging additional funding: Councils can work with local and regional partners, including anchor institutions, to develop alternative funding models that can leverage additional low carbon investment into the local area. This could include crowd funding platforms, group buying schemes and repurposing council funds to net zero initiatives.

Key challenges

The key challenges that impact a council’s ability to support low carbon growth through finance and funding include:

• Climate change funds and wider relevant government bidding processes are often competitive, fragmented, announced with short notice, overlapping and need to be spent in a short length of time.
• The competitive element of these funds limits the scope for co-operation and learning between councils and may inhibit novel and creative solutions, or reward eye-grabbing but low impact solutions.
• The evidence for how local supply chains can benefit from the investments is limited.

There is currently no pre-requisite on councils to complete return on investment evaluation analysis on allocated funding.

Recommendations

Recommendations for how councils can overcome these challenges include:

• Develop stronger relationships with existing suppliers, working with Tier 1 contractors to build greater levels of engagement with local suppliers.
• Establish priorities to ensure access to accurate information so that decisions about where to invest can have the biggest impact locally.
• Work with local growth hubs and low carbon clusters to promote opportunities to local suppliers. 

Another route to growing the low carbon business base is by attracting inward investment, where a viable investment proposition can support regional job growth, improve local supply chains and spur industry expansion.

Investment Strategy Review

A review of council strategies and websites revealed that many councils have now divested control of inward investment activities to either a dedicated Investment Promotion Organisation (IPO), the regional Local Enterprise Partnership (LEP) or the combined authority. These organisations should create awareness of existing investment opportunities, attract investors that can foster job creation and productivity growth, and facilitate their establishment and expansion into the regional economy. It is important to note that the future of LEPs is very uncertain as they have recently lost their core funding from government. During this period of uncertainty councils need to make sure their green economy investment propositions are properly reflected.

Even though this may no longer be under their direct control, councils can and should still make use of their power and influence to ensure that their IPO, regional LEP or combined authority strategy considers low carbon investment opportunities and can successfully attract high-growth net zero companies. The research highlighted the following levers councils can use to encourage low carbon businesses to locate in the local area:

• Strategy: Councils can work across geographic boundaries to ensure that regional investment strategies align with and represent local economic strategies. In some instances, the research identified a disconnect between strategies, meaning that net zero priorities are not necessarily translated into investment propositions and local investment opportunities can therefore be overlooked.
• Local Knowledge: Councils can also 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 also help to unlock investable sites for net zero clusters.

Key challenges

Key challenges that were identified include:

• Divesting control of inward investment strategies to IPOs can lead to a disconnect between climate commitments and investment propositions.
• Developing credible investment propositions can be challenging if councils and regions do not have access to the right data or understand the scope and scale of the low carbon business base.
• Identifying new sites and making them investment ready can be expensive and time-consuming due to challenges around infrastructure, finance, and planning.

Recommendations

• Ensure local, sub-regional and regional agencies are working collaboratively to develop a compelling offer for investors, in line with local climate policy ambitions.
• 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.
• Identify how future net zero investment zones (or similar) can accelerate opportunities to invest in large-scale net zero infrastructure such as hydrogen, wind, and gigabit factories, to help catalyse the development of net zero clusters and ecosystems.
• Explore the feasibility of setting investment attraction and promotion KPIs in line with net zero priorities.
• Leverage local relationships with government departments including Department for Energy Security and Net Zero and the Department for International Trade to elevate local low carbon sector propositions to ensure they are considered as part of a national and international low carbon offer.
• Engage with training providers and other key stakeholders to ensure they have a sufficient green skills provision to offer incoming companies.  

Low carbon businesses operating in today’s turbulent market must overcome several barriers to growth including high inflation rates, increased interest rates, supply chain shortages and skills gaps, as well as the fallout from the pandemic.

Driven largely by government action rather than market forces, low carbon businesses must also keep abreast of, and adapt to, a constantly changing policy landscape. The failure of the Green Deal, changes to the Energy Company Obligation, the withdrawal of the Code for Sustainable Homes, 2016 zero carbon homes policy and onshore wind planning effectively banned, can all impact the success or failure of thousands of small businesses.

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 Review

A review of the business support landscape in England identified that business support 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 recent announcement by government of their intention to end LEP core funding after 2023/23 combined with the advent of UKSPF is however presenting new opportunities for councils to deliver and commission future business support programmes in new and innovative ways, i.e., with Chambers of Commerce and universities.

A review of existing programmes that support low carbon growth identified three core offers:

• Energy efficiency programmes:  Almost all the councils reviewed were supporting energy efficiency programmes. By accessing advice and grants, businesses can reduce their carbon footprint and invest in low carbon technologies (i.e. solar panels, LED lighting, etc).
• Sector development programmes: A smaller number of councils were funding programmes that provide one-to-one and one-to-all support from sector experts to support local businesses operating in, or diversifying into, the low carbon sector.
• Eco Innovation programmes: A small proportion of councils offered eco innovation support to help businesses embed and promote sustainability throughout the full lifecycle of a given product or service.

The review found that business support delivery varied in both scope and scale across England, most likely due to a variance in priorities and/or access to funding. It is anticipated that changes to core funding sources, such as the switch from ERDF to UKSPF, which is short-term (2.5 years), will have an impact on business support which may result in momentum and progress around low carbon and climate action being lost. The impact of funding changes and prioritisation of green business support will however vary across councils depending on their funding allocations, structures, and local priorities.

As place leaders, councils have access to key levers that can help to ensure support to grow low carbon businesses is maintained:

• Strategy: Developing a low carbon business base should feature as a key pillar for economic growth within economic and local industrial strategies. Commitment at a strategic level ensures sufficient allocation and prioritisation of the resources needed to grow and support a low carbon business base that can meet the requirements of the net zero transition.
• Funding for business support programmes: Councils have an opportunity to influence, shape, deliver and commission future business support programmes through a green lens and can ensure that future business support is aligned to net zero commitments. This can be funded through UKSPF interventions, business rates and alternative funding routes, and should consider:
  • Targeted support to the low carbon sector to help overcome market failures (i.e., addressing the retrofit skills gap by providing focused support to installers of solar PV, heat pumps, hydrogen boilers, electric vehicles etc).
  • Wider support to businesses owners to help them transition to net zero by setting meaningful commitments, reducing emissions, and adopting sustainable business models.
• 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.

Key challenges

• Changes in the funding landscape and conflicting priorities may impact a council’s ability to fund low carbon and decarbonisation support programmes.
• Limited access to sector intelligence on the local low carbon business base can make it difficult for councils to engage at a meaningful level.
• UKSPF provides councils with greater flexibility to pivot funding to priorities, including net zero. However, the current funding commitments do not match the quantum or duration of previous EU funding, which may restrict council priorities.
• Varied prioritisation of decarbonisation activities and low carbon business support across England may risk the creation of a fragmented and inefficient business support landscape, which could have detrimental effects on the development of a viable low carbon sector that can deliver the UK’s net zero activities.

Recommendations

• Prioritise activities that provide support to low carbon businesses and accelerate the decarbonisation of local business bases within future funding allocations to secure long-term growth of the sector.
• Ensure that council websites provide easy-to-access and up-to-date information on local and regional business support programmes.
• Work with local groups to help local businesses overcome challenges, such as peer groups.
• Take steps to measure the size and scale of the low carbon sector at a regional/local level to inform future growth strategies and funding rounds.

Sector development programmes

Green skills encompass the expertise that we need to develop and support the UK’s transition to net zero. The UK’s Green Jobs Taskforce defines a green job as “employment in an activity that directly contributes to - or indirectly supports - the achievement of the UK's net zero emissions target and other environmental goals, such as nature restoration and mitigation against climate risks.” Although useful, such a definition is necessarily broad and will become more defined and specific as the green economy grows and the labour market adjusts.

*Green Jobs Taskforce Report, HM Government, July 2021, pg 15

The movement to a net zero economy will affect all jobs in some way, as a net zero and a more sustainable economy will require extensive changes to how goods and services are produced, transported, and consumed. However, this process will be dynamic, and it means we cannot easily and specifically predict what the full extent and requirement will be for green jobs and skills.

Various estimates exist, for example, the PCAN Network at the Grantham Institute for Climate Change has estimated that around 1 in 5 workers (6.3 million jobs in total) will be impacted by the transition to a net zero carbon economy, with around three million workers requiring upskilling and around three million jobs in high demand. Other estimates have looked at specific sectors, for example IPPR has highlighted estimates that around 750,000 people are expected to retire or are close to retirement over the next 15 years, and the impact this will have on the retrofitting of housing stock as well as the construction of green economy capital projects. A report from the LGA estimates that there could be almost 700,000 direct jobs employed in the low carbon and renewable energy economy by 2030 in England, rising towards 1.2m by 2050.

The broad nature of definitions behind green jobs mean that we still do not have a clear and specific understanding of ‘green skills’. Further challenges exist as the current skills landscape is complex, in a process of change and involves many players at a national and local level. Due to the complexities of the UK’s skills system, discussions around ‘green skills’ are currently focused on the formal education and qualifications system of schools, colleges, and universities. Whilst this system is central, the need to upskill, reskill and support the various pathways people take into and through local labour markets will require a proactive approach to meet the supply of workers needed in critical sectors.

Green Skills Review

A review of available skills strategies demonstrated that skills plans have, in many cases, been developed at a regional level by LEPs. A review of these plans highlighted that despite the recognised opportunity and pace of change required, for some places the development of green skills is not yet referenced as a priority. This lack of prioritisation may impact the growth of the low carbon sector in some council areas where the demand for green skills will outstrip supply.

As skills requirements are likely to vary across the country, councils should work in collaboration with employers, training providers and the LEPs 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.

To unravel this, more work is needed to help councils and their skills partners understand the emerging ‘green sector’, key clusters and the skills and jobs that will be needed so that local and national priorities for action are based on intelligence and evidence. As the new skills landscape continues to take shape and the definition of green skills evolves, councils have a role to play in identifying and developing the key sectors and clusters needed to meet the future needs of the local and regional area. The research identified the following levers:

• Provision of data:  Councils can collect a considerable amount of data about local jobs and skills by introducing a green focus to mapping how requirements are changing in response to sector transitions.
• Strategy: Councils, where possible, should influence their LSIP and Employer Representation Bodies to ensure that any skills strategies developed at a regional level are aligned to a council’s net zero commitments, and that green skills requirements and provision are appropriately mapped and as inclusive as possible.
• Developing local strengths: In areas where there are specific strengths, councils can leverage relationships, networks, and access to local assets to promote and maintain sector specialisms.
• Signposting: Once skills provision is in place, local authorities can play a role in signposting businesses to the appropriate service provider.

Key challenges

• Skills strategies developed at the regional/sub-regional level do not always reflect the climate ambitions of the councils they represent.
• Without access to accurate and up-to-date intelligence on the local green skills market, councils and combined authorities will not be able to develop effective skills strategies.

Recommendations

• Promote and signpost businesses and residents to green skills and training opportunities.
• Take steps to map the green skills market, including scope, scale, existing provisions, and future requirements.
• Ensure that sub-regional/regional skills strategies reflect a council’s net zero commitments.

The UK’s ability to develop, scale and deploy low carbon technologies is key to meeting the national net zero ambition. The CCC estimate that a third of all emissions nationally can be influenced through local council activity, including housing, transport, and waste. By targeting innovation activity around these local challenges, local authorities can not only help to address the climate crisis but can also help to create jobs and drive economic growth.

Councils, their links with anchor institutions and wider business support activity can play a vital role in catalysing how to deliver net zero at a local level, by putting measures and programmes in place to encourage or support local innovation projects or initiatives. By aggregating and coordinating challenges locally they can also help to accelerate the pace of innovation, improve competitiveness, and reduce costs.

Innovation Review

Discussion with a sample of councils identified a range of innovation activity that is taking place across the country:

• Demonstration: Many councils have participated in innovation projects, often on their own public estate, to improve energy performance. These projects demonstrate climate best practice and should generate important lessons on how to de-risk investments, develop new business models, test new technologies and demonstrate overall proof of concept to encourage wider adoption. These lessons should be catalogued and shared.
• Centres of Excellence: Councils are benefiting from their local centres of excellence, university strengths and innovation zones. Anchor institutions such as Marine-I Cornwall, Greater Manchester’s Salford Energy House and the North East’s Hydrogen Cluster can support local businesses to test new ideas and commercialise new products and can act as a focal point for curious businesses.
• Collaboration: Some councils are working with Innovate UK and collaborative national and international networks to identify shared place-based innovation challenges. These organisations bring together places with similar ambitions and shared challenges to share information and identify optimal solutions for using innovative solutions to reduce carbon emissions.

Challenges

• Recent research from UK100 suggests that council pilot programmes and competitions are not effective at delivering at scale and can therefore struggle to validate the business case. These programmes are also heavily reliant on grant funding, with longer-term strategic planning and financial commitment required to deliver change.
• Council innovation projects and resources have previously been funded via EU funding. Councils will now need to adopt new funding systems, including considering how UKSPF funds and collaboration with Innovate UK can continue to support net zero innovation work.
• Bidding for multiple funding streams to support local innovation projects is time-sensitive and often challenging for smaller councils who are managing other pressures.  
• Enabling and coordinating innovation is a challenge that requires resources and funding, an existing challenge for councils under budgetary pressures.
• Procuring and adopting net zero innovations at scale can be complex, expensive, and risky. 

Recommendations

• Identify existing net zero innovation assets, sector strengths and sectors of excellence where councils can have a real impact and explore how this can link to a wider regional innovation proposition.
• Signpost businesses to any innovation support that may be available locally and through national innovation programmes.
• Identify local innovation challenges in relation to net zero and work with local universities, partners, as well as Innovate UK to identify how they can address challenges, test solutions, and commercialise products collectively.
• Consider how UKSPF can be used as a potential funding stream to support net zero technology innovation locally, including through piloting projects across the public estate or establishing innovation zones and clusters.

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. As climate change is a global challenge, local authorities can also look internationally for innovative best practice solutions to address challenges locally.

Partnership findings

Research findings show that many councils across the country are already successfully engaging in different forms of partnership approaches to address climate change. Partnership examples include:

• Strategic delivery partnerships with local businesses that go beyond transactional relationships to support the delivery of local green outcomes.
• Partnerships with local actors across a local authority, for example climate change challenge groups and coalitions with pan-regional representatives, businesses, universities and community groups.
• Regional and pan-regional partnerships that pool sector strengths and assets to develop compelling net zero investment plans and propositions.
• Working in partnership with national government to translate national policy at a local level.
• International collaboration through city-networks to share and exchange net zero challenges and solutions.

Effective partnerships enable organisations that are working towards shared goals to pool resources, share knowledge, mobilise different perspectives and capitalise on complimentary activity to deliver a council’s net zero ambitions. Key elements of an effective partnership include:

• Secure buy-in: For place-based climate partnerships to be successful, leadership buy-in is critical and partnership objectives should be defined early on and reviewed in line with the evolving climate context and operating environment.
• Clear structures: Partnerships should be built on clear structures and processes, with defined resources, roles and responsibilities, ensuring they are integrated and working collaboratively with other relevant partnership groups.
• Evaluation: Partnership successes should be evaluated and celebrated to build momentum and, if arrangements are working, ensure their successes are leveraged elsewhere.

Challenges

• Initiating and sustaining relationships to ensure they deliver their intended value takes significant time and coordination.
• Measuring the outputs of partnerships can be challenging, particularly between different tiers of government and across regional boundaries where KPIs and measures of success may differ.
• Stakeholders normally enter partnerships on a voluntary basis. Whilst intentions are meaningful, holding people to account and driving action can be challenging.

Recommendations

• 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 local authority and region to identify and respond to local climate challenges.
• Build challenge groups on clear objectives and outcomes which are monitored and reported on to build momentum.
• Work with partners to create a common and agreed process locally for monitoring, with consistent indicators and targets to ensure a shared understanding of success and collaborative advantage.
• Integrated Care Systems (ICS) partnerships which bring together NHS organisations, local authorities and others to take collective responsibility for planning services, improving health and reducing inequalities across geographical areas, should consider the impacts and opportunities for low carbon growth.
• Establish strong relationships with national government departments to elevate partnership successes and priorities to catalyse further investment and action.
• Explore opportunities to join national and/or international city-networks and membership organisations such as Local Governments for Sustainability (ICLEI) to influence sustainability policy, drive local action and share place-based climate action best practice.

Partnerships

Councils require the support and direction of central government to overcome some of the challenges identified in this report. Recommendations for key stakeholder groups to consider are detailed below:

Recommendations for the LGA:

1. Promoting best practice: Publish case studies that enhance and support low carbon sector growth to facilitate increased levels of collaboration and knowledge sharing among members.
2. Develop guidance around funding: Consolidate information relating to the government’s decarbonisation grants so that local authorities can better prepare for, and respond to, future funding cycles.
3. Continue to lobby government: Continue to lobby central government to ensure that net zero strategies acknowledge the role of low carbon businesses and work to create confidence in the market. Help to ensure that future funding rounds are fairly distributed across the country and support the development of long-term schemes for whole house retrofit.

Recommendations for national government:

1. Develop an integrated delivery framework: Develop and implement a local authority Net Zero Delivery Framework that acknowledges and addresses the role of low carbon businesses.
2. Clear budget allocation for net zero activities: Councils want to develop strategic plans to integrate policies across a place, catalyse investment and add value. This ambition is challenged by a need for additional skills, resources, and funding, with many councils working with a skeleton staff. Providing a clear budget allocation for addressing climate action that enables councils to deliver against a Local Authority Net Zero Delivery Framework will remove the significant burden councils currently face in competitively bidding for multiple funding streams. Continuing with current approaches will result in greater inequalities in the level of action taking place across England.
3. Develop consistency around monitoring: Work with councils and regions to develop a shared monitoring system to measure carbon reduction, as well as wider impacts of climate action such as its links to economic development, inequality, health, and innovation. A performance framework could also look to define consistent shared metrics on the impact of green business support and business decarbonisation.
4. Recognising the importance of place-based economy development interventions: Councils and their wider business support infrastructure play an important role in directing businesses to both local and national business support programmes, ensuring programmes and advice cater for the needs of the local business base and economy. Whilst UKSPF provides flexibility in business support interventions, its short-term nature and reduction in funding risks businesses’ ability to access much-needed sector support and limits a place's ability to attract low carbon goods and service businesses.

Green Economy is a membership organisation focused on supporting the development and growth of the UK’s low carbon goods and services sector.

Since 2013, Green Economy has successfully supported low carbon business growth in readiness for the UK’s net zero transition. This has led Green Economy to work closely with public sector organisations to help them understand the capabilities of their local supply chain and implement work programmes to overcome the barriers to the net zero challenge.

This report was commissioned by the Local Government Association to identify the key enablers and local policy leavers that councils can use to help to attract low carbon businesses.

We would like to thank all those who contributed to this research:

Nathan Cudmore, Cornwall Council

Helen Burridge, Hertfordshire Climate Change and Sustainability Partnership

Julie Greaves, Hertfordshire County Council

Sarah Henshall, Manchester City Council

Mike Cunliffe, Manchester City Council,

Robert Dixon, Nottinghamshire City Council

Phillip Avery, Swindon Borough Council

Climate Change Committee – CCC

Climate Action Plan – CAP

Department for Business, Energy and Industrial Strategy – BEIS

Investment Promotion Organisation – IPO

Key Performance Indicators – KPI

Local Authority Decarbonisation Scheme – LADS

Local Government Association – LGA

Low Carbon and Renewable Energy Economy – LCREE

Low Carbon Skills Fund – LCSF

Local Skills Improvement Plan – LSIP

Office for National Statistics – ONS

Public Sector Decarbonisation Scheme – PSDS

Small to Medium Sized Business - SME

UK Shared Prosperity Fund – UK SPF