The public sector faces a significant challenge in transitioning to net zero. The UK Real Estate Investment & Infrastructure Forum recently held a panel discussion looking at some of the key issues including funding and the impact of the skills shortage
On 19 May, the UK Real Estate Investment & Infrastructure Forum (UKREiiF) hosted a panel discussion on the public sector’s role in decarbonisation with experts from both private and public sector, including:
- Andrew Hirst, projects and procurement lawyer at Womble Bond Dickinson, specialising in decarbonisation.
- Melanie Leech, CEO at the British Property Federation.
- George Munson, senior project manager at Leeds City Council.
- Dr Aileen Jones, executive director – investment and delivery at Liverpool City Region Combined Authority.
- Rachel Mason-Salkeld, principal consultant – sustainability, energy & carbon management at Ricardo Energy & Environment.
The scale of the transition
There is a significant challenge in how to approach the task of decarbonisation. Dr Aileen Jones from Liverpool City Region Combined Authority explained: “We have a lot to do to get to net zero – housing, transport, industry and workplace decarbonisation and then the behaviour change that goes with all of this.
“We have 720,000 houses in the city region that have an EPC band of D or below – that’s a lot of old housing stock that isn’t energy efficient. We are currently using government funding to retrofit 5,000 homes a year, but to reach our target of net zero by 2040 or sooner, we need to be retrofitting 35,000 a year. This gives you an idea of the scale of what we’re trying to achieve. Government funding isn’t enough, it comes with tight delivery deadlines and very specific criteria – so we need private sector partners given the size of the challenge.”
George Munson from Leeds City Council added: “The breadth of what the public sector covers is massive; it ranges from prisons to the treasury and everything in between. In Leeds we have 770,000 residents who live, work and play in the city and we’re always thinking about how we make their lives better.
“We successfully coordinate work between the public and private sector but what we’re finding difficult is coordinating the finance we need to invest in projects. Part of the problem is central government’s approach is to target funding at specific sectors with short timescales in terms of delivery. When it comes to houses, social and healthcare we need to tie funding streams together to invest in low carbon solutions rather than having to manage them individually.”
Roles & responsibilities of the public sector
Rachel Mason-Salkeld from environmental consultancy firm Ricardo Energy & Environment advises both public and private sector organisations. When asked if the advice she offers public and private sector differs hugely she said: “When it comes to advice on the technology available, it’s always similar. It’s interesting to hear coordination mentioned as part of this though. For me, the role of the public sector is to provide direction and act as a facilitator. In terms of direction, central government should really answer key questions like what’s happening with the gas grid and what each sector should contribute to decarbonisation.
“There are programmes which need public sector support from a facilitation perspective – projects that can’t rely on support from private sector alone like large district heating networks and waste disposal services, for example. There are also policy incentives central government could use to assist with the drive to net zero that aren’t currently in place – examples include easier planning permission for onshore wind and policies that stipulate that packaging or products have to include a certain percentage of recycled content. Policies like this would provide an incentive for the market to further invest in the infrastructure that supports collecting and processing recycling.”
Andrew Hirst from Womble Bond Dickinson agreed: “The public and private sector have distinct roles. The public sector can provide big solutions at scale – like a heat network, for example, where you need a number of buildings in a specific area, and this can provide a hub for growth. The public sector can also support the development of skills necessary for decarbonisation to happen.”
Dr Jones added: “Partnership working is definitely key too, not only with the private sector but the third sector too – these organisations working on a grassroots, voluntary level understand what drives the communities we’re trying to change.”
Finance: The biggest hurdle in decarbonisation?
When asked what the biggest challenges are for decarbonisation, Andrew Hirst explained: “Not mentioning funding would be a big miss. Most issues we have when it comes to decarbonising come from funding problems – grants are only available for a discreet period of time and come with conditions, alternatives are to take on debt or public or private sector investment. Bigger projects are easier to finance. Smaller projects can struggle to be commercially viable and require a similar level of due diligence as for investment in larger projects.”
Rachel Mason-Salkeld offered a different perspective: “Another key barrier is the people. Net zero strategies should follow the emissions reduction hierarchy and often people want to skip the first step (reducing emissions) and instead want a whizz-bang solution. We have the technology to achieve emission reductions – building energy management systems, efficient lighting and heating distribution systems, but for many solutions to reach their full potential, they need to be accompanied by behavioural change.
“One of the Climate Change Committee reports shows that of the decarbonisation measures required to achieve net zero, 50% require either support from behavioural change or are behavioural change measures. Changing the culture and people’s behaviour should be embedded in a net zero strategy and organisations will need to instil ownership and accountability around emissions generation – you will need a good governance system that staff can engage with. A lot of progress can be made through a good procurement policy too. You don’t have to reinvent the wheel though – there are a lot of good net zero strategies in the public domain you can borrow ideas from so you can get going with implementation.”
When asked about the challenge of financing decarbonisation, George Munson added: “We have also struggled with the conflicting timeframes of government funding streams, but we have made projects work. We have recently built one of the UK’s largest district heat networks, connected to a Veolia EFW facility. We prepared the business case, contracts and also secured European and regional growth funding to have 2,000 council flats as the initial anchor point. We have oversized the network so it can grow and during the pandemic constructed a branch into the city centre, which was the Carlsberg of infrastructure projects: we laid our district heating network in coordination with a separately funded highways and regeneration project to achieve efficiencies and minimise disruption. There is finance out there, but a lot of work has to go into making investments attractive and coordinating the various partners’ timings.”
The skill shortage
Dr Jones went on to explain that funding isn’t the only issue: “When it comes to retrofitting housing, four different funding streams became available in the last year, all with different criteria and timescales. Even if you do get allocated funding, you then have the challenge of finding the skills you need to deliver projects. You also often need Warmth Fund, for example, requires you to compete against other authorities, which diverts resource away from elsewhere. More flexible criteria and conditions would allow us to plan projects at scale holistically.
“I do agree with Rachel [Mason-Salkeld] about people being another big challenge – how do we educate and communicate the necessary behaviour change?”
George Munson agreed with Dr Jones that another pressing challenge is skill shortages. He concluded: “It’s not just about funding, because there isn’t the capacity in the market to deliver projects at the pace we need currently. The appetite to deliver more decarbonisation projects was there, but the home energy market had their fingers burnt several times in the past when funding became available but then was dropped quickly. When it comes to funding pots, ideally, we would have 12–18 months foresight and three years to deliver – the longevity of the funding is more important than the total sum.”
Andrew Hirst
Projects and procurement lawyer
Womble Bond Dickinson
Tel: +44 (0)345 415 0000
