UK: Dealing With Climate Change In Local Government

Last Updated: 2 February 2010
Article by Stephen Cirell

Climate change has had unprecedented levels of publicity recently with the intergovernmental summit in Copenhagen. It is rather a pity that the result that emanated from the conference did not live up to the hype! However, the Conference, and the recent cold spell, have brought into focus the whole area of climate change and, more importantly, highlighted what needs to be done in order to combat it.

In local government, whilst it may not seem like it yet, this is going to be a big growth area and the legal implications of this diverse new work will range from complex on the one hand to routine on the other. Indeed, I would go as far as to say that there will be a paradigm shift over the next ten years with climate change work becoming central to what local government does.

You might ask why I feel this to be the case? One reason is that there is a whole range of new regulatory burdens for local authority activities; but we are not just talking about regulatory matters here, these are factors that will change the very way local authorities operate and take decisions relevant to their localities.

Take the Carbon Reduction Commitment as an example. The Climate Change Act 2008 set legally binding targets for the reduction in greenhouse gases by 2050. This then filters down through other mechanisms, such as local carbon budgets and mechanisms to encourage or force compliance with the goals. The CRC Energy Efficiency Scheme, to give it its full title, is one such mechanism.

Coming in on 1 April 2010, the CRC requires energy efficiency improvements from a part of the economy (including local government) that has not been covered by emissions control before. The requirements are under penalty of financial deductions and reputational damage, backed up by a civil and criminal penalties scheme for those that get it wrong inadvertently or deliberately.

Whilst everyone else is focussing on the letter of the law (though the regulations are still awaited), it is the effect on local government itself that is the more interesting point. Decision makers, for example the Cabinet, will need to take account of the "carbon consequences" of decisions in real time. This is because if you have a tight CRC strategy, a decision could be taken with a disastrous carbon consequence (eg the Council is going to make all its buildings open to community use 24/7) which would completely throw it off course and incur financial penalty.

That means that it must be clear at the time of the decision that this will not be the case, meaning that reports will need to include 'carbon' sections in them and there will need to be an examination of the climate change implications. It is not much of an extension to the thought process to then predict that those decisions which might have an adverse carbon consequence will start to recede (or be properly addressed but taking into account additional costs), and those with beneficial consequences be promoted more widely.

The influence of this area will also reach resource allocation in local government. Currently there is a feeling amongst local authorities that the resources for this work are insufficient and this is holding local government back eg how many Councils accurately know what their carbon emissions are, let alone have a strategy to address them?

Whilst it might be seen as a controversial view, the real issue is what cognisance local government pays to the real value of this work: experience shows that if the value of something is recognised, then the money is normally found for it. The problem is that the value of this work is not yet widely recognised.

Often the way to persuade organisations to act is to take the financial route. Whilst the tree huggers might want to do something because it's the 'right thing to do', everyone else does it because it saves them money! The government has recognised this fact and has therefore put a price on carbon. Under the CRC the price is £12 per tonne of carbon and that is the price of a carbon allowance. However, after a preliminary period of three years, this will become a free market value. Many think the price will then soar to between £50 and £100 per tonne.

What pricing carbon has done is to allow corporate managers and finance directors to see in pounds, shillings and pence, as it were, what the value and also the cost of this work actually is. If you will need to buy an allowance in CRC costing £50 in order to undertake an activity or could stop doing it, or instead undertake some prevention work which removes the need for that allowance (eg changing bulbs in street lights) costing less than £50, which will an authority go for? This underlines neatly how carbon will radically start influencing decision taking.

The emphasis recently has also been on cost savings. As the General Election approaches, this issue will be rehearsed ad nauseam. But local authorities realise that they have to continually come up with ways of doing more with less resource. Here the green agenda is also likely to be felt.

Take transport as an example. Council officers and members drive millions of miles each year to attend meetings on Council business in any large rural or county area. This is predominantly in privately owned cars, for which a mileage allowance is payable. Whilst the going rate might be around 40p per mile, electric cars cost about 3p per mile on average.

Again, it is a 'spend to save' decision, as the infrastructure needs to be put in place. But having a fleet of electric vehicles in which to perform Council business would save money on allowances, as well as CO2 emissions from the vehicles themselves.

But even looking at it like that is really missing the point of what climate change work is capable of achieving. By having a cross sector partnership, comprising the private sector, the third sector and the public sector (local government/ NHS etc) in relation to this, the Council can do what it does best – community leadership – and can achieve community cohesion, Total Place benefits, cost savings as well as health and wellbeing benefits from environmental improvements ie in air quality.

Then there is the old chestnut of income generation which is about to come back big time under climate change. The reason is that there are numerous schemes which will involve income generation and charging others for green services.

Renewable energy schemes offer much promise here and are actively being considered by a number of authorities. A 70 metre wind turbine will cost approximately £500,000 to install and commission but has a payback period of just five years. This means that substantial lifetime profits are possible, after costs and expenses. The reason more schemes are not being put forward is the risk of obtaining planning permission, which can take years and cost up to £100,000. This should not be a problem for the local authority as applicant in the knowledge of the Council's own planning policies, nimbyism aside! Naturally, these schemes will throw up some interesting wider legal issues, from powers and vires, to regulatory issues under the Electricity Act, to state aid and competition law, contract and commercial issues.

The problem in local government at present is that it does not recognise this work as mainstream or in other words does not see it as part of 'the day job'. However, energy is central to the delivery of local government's functions and therefore to its health and wellbeing. Generating your own energy creates energy security, community leadership, local jobs, partnership working and cost savings. It is exactly what local government should be doing.

And the resource issue is linked in here too. Local authorities may struggle to find the money for large projects such as whole house retrofit programmes for social housing or the delivery of infrastructure for the new green economy. Renewable energy schemes can offer the funding necessary, together with other avenues such as prudential borrowing, by re investing the funds generated from such projects.

There are two messages for local government lawyers here: the first is that if your authority is saying "we'd like to get into all this but ....." then it is missing the boat; the second is that local government lawyers have to step up to the plate and develop the expertise that their authorities now need to cope with the green agenda.

There are examples all over the country of innovative work of this nature and this will provide the new frontier of cutting edge civic legal practice. My own experience is that this area takes a bit of getting into. You need to learn a new language virtually, but when the mist clears, it's a fascinating and interesting area of work. More to the point, it is one where local government definitely needs to develop more in house expertise.

Stephen Cirell is a Partner with Eversheds LLP, but is currently seconded to Cornwall Council as Programme Director for Green Cornwall, and leads on climate change issues for the Council.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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