A Follow-up Survey on the use of the Low Carbon Economic Development Toolkit
June 2013
Low Carbon Economic Development Toolkit Follow-up Survey
Climate Change and the Low Carbon Economy in London
A Follow-up Survey on the use of the Low Carbon Economic Development Toolkit by London Local Authorities
Prepared for Centre for Innovation & Partnerships Skills for Climate Change Project led by Newham College
6th June 2013
MTW Consultants Ltd. 70 Second Avenue London SW14 8QE info@mtwconsultants.co.uk www.mtwconsultants.co.uk Tel: (+44) 020 3002 4017
Low Carbon Economic Development Toolkit Follow-up Survey
CONTENTS Page No.
1.
INTRODUCTION
4
2.
THE FOLLOW-UP SURVEY
6
2.1
Sample achieved
6
2.2
Key findings
6
2.2.1 2.2.2 2.2.3 2.2.4 2.2.5 2.2.6 2.2.7
STEP 1: Embedding the Low carbon Agenda across the Council STEP 2: Identifying Low Carbon Procurement Opportunities STEP 3: Understanding low carbon business in your area STEP 4: Using existing procurement tools more effectively STEP 5: Using s106 planning agreements STEP 6: Supporting low carbon businesses STEP 7: Monitoring & evaluation
6 9 9 10 11 13 14
2.3
Main conclusions
16
3.
POLICY UPDATE
17
3.1 3.2 3.3
Introduction Green Deal/ECO Social Value
17 18 20
4.
CASE STUDIES
21
4.1 4.2
North London Retrofit Network Growing the Green Economy: London Borough of Sutton
21 23
APPENDIX Detailed changes to the July 2012 Toolkit
26
Low Carbon Economic Development Toolkit Follow-up Survey 1.
INTRODUCTION In July 2012 MTW completed a Toolkit for Public Authorities in London to assist them with creating employment and business growth in their local low carbon sector. The toolkit set out seven steps that Councils could follow designed to give local SMEs greater access to the opportunities being created from the low carbon investment going on their boroughs. Tried and tested methods were provided to enable local authorities to build in the use of the local supply chain into their main contracts and into their planning agreements. The toolkit and an accompanying video about the study was launched at a Conference on 24th July and the report was subsequently disseminated to all London Local Authorities as a downloadable pdf file. After a 6 month interval, MTW was commissioned by Newham College, the lead for the Centre of Innovation & Partnership’s Skills for Climate Change programme, to follow up with the local authorities to assess what impact the toolkit had had on them directly or indirectly. This report sets out our findings from the follow up survey based on the seven key steps of the original toolkit, new case studies of best practice as well as providing updates to the original report. Indirect impact One of the indirect impacts the report has had is reflected in the 2 year ERDF funded RE:Start Local business support programme covering the South East outside London which began in February 2013. This programme is being managed by the Institute for Sustainability which is a stakeholder in the Skills for Climate Change project and which contributed speakers to the Conference and video. Partly as a result of the Toolkit, the Institute has commissioned MTW Consultants to produce a Low carbon Local Procurement Toolkit for RE:Start Local to assist public and private sector buyers as well as SMEs in the region. The toolkit is aimed at maximising local supply chain access to the opportunities from investment in energy efficiency building retrofit and renewable energy in the region over the next few years.
Low Carbon Economic Development Toolkit Follow-up Survey
Low Carbon Economic Development Toolkit Follow-up Survey 2.
THE FOLLOW-UP SURVEY
2.1
SAMPLE ACHIEVED
2.1.1 Of the 29 London Councils who participated in the original survey, three declined to participate as they were not aware of the toolkit due to changes of personnel. The remaining 26 Councils were individually contacted and the previous respondent, or a colleague they identified, agreed to act as the questionnaire coordinator and obtain the information from the relevant departments across each council. 2.1.2
In depth interviews were carried out with the London Boroughs of Islington and Sutton to test out the questionnaire prior to its release and modifications made accordingly. In addition two seminars held by Haringey Council were attended one about the Green Light North London project and the other on Retrofit Works the not for profit company set up in participation with the council to bring low carbon building retrofit opportunities to local SMEs.
2.1.3
On 12th February 2013 all the participating councils were provided with a link to the online follow-up survey. A copy of the questionnaire in pdf format is attached to this report. The questionnaire was structured along the lines of the seven steps of the toolkit and aimed to assess progress against each step. Reminders were sent out on 26th February and 8th March 2013 to all participants. Of the 26 councils approached, 21 responded to the survey, a response rate of 81%, of which 18 completed it in full. Although this is a lower response rate when compared with the 29 responses to the original survey (88%); it reflects changes in personnel, job cuts and cases where the toolkit was never received or not circulated internally. Even among the responses received, there are Councils who have not used the toolkit at all. However on the positive side, it would appear that the process, namely the original survey questions, the conference and the toolkit, have together influenced the thinking and strategy of a significant number of boroughs.
2.2
KEY FINDINGS
2.2.1
STEP 1 Embedding the Low carbon Agenda across the Council Local Development Frameworks Step 1 was about ensuring that key low carbon measures were built into Council policies and strategic plans. Councils were first asked whether key objectives were included in their Local Development Frameworks that: -
Required new buildings to generate at least 20% of energy needs on site
-
Ensured local companies have access to tendering opportunities
-
Considered opportunities to deliver low carbon district heating for housing projects
Low Carbon Economic Development Toolkit Follow-up Survey The results were encouraging with 60% requiring the on-site energy generation, just under 40% aiming to ensure local companies have access to tendering opportunities and over 90% focussing on district heating networks.
A third of the Councils intended to include low carbon energy infrastructure projects in their Community Infrastructure Levy, while 40% did not know at this stage. One of the Councils had introduced business waste and food waste recycling in the past six months. Green Deal policy changes 44% of the Councils had changed their Green Deal policy since the last survey: • •
•
•
•
One was looking to become a Green Deal provider, another two to become Green Deal promoters; one had joined a Community Investment Company - Green Deal Together, which has applied for Green Deal provider status and will deliver part of the Green Deal in their community using local SMEs, strengthening local supplier networks and providing a central hub for referrals; another had secured funding through DECC, to undertake some community based engagement on energy efficiency and ran a workshop for SMEs in March. They have also held some higher level discussions with energy companies, on maximising ECO investment in the borough; one will partner with a green deal provider to deliver ECO within the borough, to ensure those within the affordable warmth criteria are aware of ECO funding. It is likely this will include working with a variety of community groups; two are developing tenders to appoint ECO companies, one of which is running a workshop for SMEs;
Low Carbon Economic Development Toolkit Follow-up Survey •
One council has stepped back from becoming a provider and is solely concentrating on leveraging in ECO funds for solid wall insulation and hard to treat cavity wall insulation projects
Green Deal partners Green Deal partners that the Councils are working with range across the spectrum with particular focus on energy companies (56%) as well as fellow local authorities (44%):
Which other Government/EU funding initiatives do you see as playing a key role in reducing energy consumption in their area?
A variety of initiatives were mentioned as follows: • DECC grant funding for fuel poverty, collective energy switching and promotion of Green Deal; • Department for Health Warmer Homes Healthy People funding; • Home Energy Conservation Act (HECA); • The Carbon Reduction Commitment (CRC); • Energy Company Obligation; • Mayor of London’s RE:FIT programme’s impact on energy consumption in the councils’ own properties. • ERDF (Priority 1 Theme 1) funded project to help local SMEs reduce energy use and European funding to further develop the Council’s decentralised energy network;
Low Carbon Economic Development Toolkit Follow-up Survey • ELENA - European Local Energy Assistance1; • London Energy Efficiency fund; • Keep Warm Keep Well
2.2.2
One of the councils was in discussion with a major energy company to see if works could be funded by them from ECO. STEP 2 Identifying Low Carbon Procurement Opportunities across the Council Identifying low carbon investment plans across different departments 78% of respondents are doing this. Redbridge has carried out a Borough-wide Carbon Reduction Study and has prepared decentralised Energy Master planning for two areas of the borough. Sutton’s Carbon Management Plan 2012-17 (adopted in April 2012) sets out a comprehensive list of planned/funded carbon reduction projects across the Council’s own buildings. Low carbon champion 56% of boroughs have a low carbon ‘champion’ working across Council departments who influences investment plans and procurement. Sutton has a Corporate Zero Carbon Emissions Steering Group. Membership of this group is drawn from all relevant teams and sections in the Council. 100% monitor government measures and initiatives on Climate change.
2.2.3
STEP 3: Understanding low carbon businesses in your area 39% of respondents have begun to map out low carbon SMEs in their areas and 22% are planning to do so, which is encouraging.
ELENA funds can be used for structuring programmes, business plans and additionally needed energy audits,
preparing tendering procedures and contracts, and paying for project implementation units. The EU contribution can cover up to 90% of eligible costs. Funding for ELENA comes from the European Commission’s Intelligent Energy Europe II (IEE) programme
Low Carbon Economic Development Toolkit Follow-up Survey
2.2.4
STEP 4: Using existing procurement tools more effectively Implementing the Public Services (Social Value) Act Seven Councils have incorporated this into their procurement practices, while eight are at an early stage of grappling with the Public sector (Social value) Act which only came into force in January. In some councils like Camden all major tenders include appropriate, economic, environmental or social requirements. Lewisham has re-drafted its Code of Practice for Contractors and accompanying documentation and processes so it is now a Sustainable Code of Practice which integrates previous guidance around social, economic and environmental actions into one piece of guidance. Islington’s Strategic Procurement Team is currently preparing a good practice guidance document on managing Social Value in Islington's Supply Chain. The purpose is to ensure Council officers and providers are aware of the implications of the Act. They state that ‘all procurement activities should contribute to the economic, social and environmental wellbeing of Islington.’ Use of any of the Toolkit tactics for securing local procurement benefits from major Council contracts. 50% of Councils have incorporated tactics from the toolkit regarding the procurement of larger Council contracts and a third were working on this. The chart below shows which elements have been adopted.
Low Carbon Economic Development Toolkit Follow-up Survey
2.2.5 STEP 5: using s106 planning agreements and supplementary planning guidance Local procurement and S106 Planning agreements 28% of Councils have adopted Local Procurement clauses as part of their s106 agreements; 11% are planning to do so and 28% of Councils are looking into it.
Low Carbon Economic Development Toolkit Follow-up Survey
Local Procurement and Supplementary Planning Documents (SPDs) 16.7% of respondents had already incorporated local procurement into their SPDs and a further 11% were planning to do so.
Low Carbon Economic Development Toolkit Follow-up Survey 2.2.6
STEP 6: Supporting low carbon businesses Local Procurement business support initiatives – funded by ERDF or other public sources Three Councils had current business support initiatives in their boroughs: Sutton has allocated significant Council funds to a project called ‘Growing the Green Economy’. As part of this, it is actively engaging with low carbon businesses within the Borough identifying opportunities for them. Camden is part of the Supply Cross River ERDF funded programme focusing on procurement business support for Camden SMEs Islington is part of a DECC Green Deal Pioneer Places project to encourage local businesses to prepare for Green Deal/ECO Other planned business support to local LCEGS companies An encouraging 56% (10 Councils) intended to provide a variety of support to low carbon goods and services suppliers in their area. •
•
• • • • • •
Sutton is actively engaging with LCEGS businesses through the Sutton Green Business Network; which will provide continuous support through formal events, training and through informal routes. The Council is also in the process of creating a low carbon hub to stimulate high growth through collaboration; Camden offers support through the Camden Climate Change Alliance, aiming to reduce carbon emissions, provide a green suppliers list; and providing communications support to the North London Retrofit Cooperative; Richmond is investigating linking the Green Deal to local suppliers; Islington is investigating a local Green Deal conduit and having a publically available directory of suppliers. The City of London is working with Climate-KIC at Imperial College; Merton has a green sector forum that is aimed at building networks for green sector businesses in the area; Green Business Redbridge indirectly provides support to local businesses, by making them aware of opportunities within the low carbon economy; Bexley is reviewing specific project opportunities to work with local LCEGS suppliers; for example, opportunities for a local LED manufacturer to operate trial installs at civic accommodation and schools.
Awareness of the Green Deal Conduit (a cooperative hub of low carbon retrofit SMEs) 71% (12 Councils) are aware of the Green Deal Conduit. Three were exploring it or involved. Sutton is investigating using this approach and also the Climate Energy Hub Camden is supporting this through the North London Retrofit Cooperative Islington is exploring it as part of a GreenDeal Pioneer Places project.
Low Carbon Economic Development Toolkit Follow-up Survey 2.2.7
STEP 7: Monitoring & evaluation Have you taken any steps to monitor and evaluate the implementation of parts or all of the toolkit Only two councils answered yes to this question. Clearly many were still at the planning and implementation stage. They were Sutton and Bexley. Comments made by respondents included: Sutton: ‘The Draft Strategy for Sutton's Green Economy, prepared in September 2012, was largely informed by guidance set out in the Toolkit. The Project Initiation Document which has been written in order to gain approval for the ‘Growing the Green Economy’ project (and has subsequently been approved) closely follows the toolkit steps.’ Camden: ‘Important to note that many of the actions taken discussed throughout this survey have been implemented independently of the toolkit. For example many of the issues are evaluated and monitored through strategic progress, reports and other documents, for example the annual review of the Council's sustainability plan, 'Green Action for Change'. Islington: ‘The Toolkit has been forwarded to relevant departments e.g. Regen and Procurement but it's use has not been monitored.’
2.2.8
Feedback and overall position Is developing the low carbon economy in your area now seen as a higher priority within the Council than in June 2012 at the time of the first survey? Six Councils now see developing the low carbon economy as a higher priority than at the time of the survey and three were not sure. What difficulties/issues have arisen in trying to take the low carbon agenda forward – both external and internal? The responses to this question differed markedly depending usually on the resources available, council priorities and political buy-in. Sutton: Internally, there continues to be support for the low carbon agenda which is in line with the One Planet Living aspiration. Camden: ‘Externally, it appears difficult to accurately map the low carbon sector within the borough. Internally, the drive to establish low carbon investment plans across council departments has been complicated by our forthcoming move…’ Lambeth: It is not really considered a huge priority, above issues such as jobs, employment and growth. ‘Not a political priority. Resource constraints means that only work that can be incorporated into existing work streams is being undertaken’ ‘Lack of resource and funding to take this forward’
Low Carbon Economic Development Toolkit Follow-up Survey . ‘Lack of internal staff resourcing and lack of revenue project funding.’ ‘Budget cuts, Government uncertainty, Lack of leadership on this issue from external organisations.’ ‘ The mixed messages emanating from the Treasury, and the intemperate remarks made by the chancellor, which have made the low carbon agenda toxic to Conservative Party politicians.’ ‘We have prioritised economic growth. All other issues are not key.’ ‘Difficulty getting buy-in from senior management’ ‘Capacity constraints but Green Deal has increased awareness’ How useful have you found the toolkit and report 6% (1 Council) found the toolkit very useful, 29% (5 Councils) have found the toolkit quite useful, 41% (7 Councils) have not found it particularly useful, and the rest did not find it useful. Comments included: • •
•
• • •
“The process of doing the survey has itself been useful but I have no feedback as to whether the toolkit is being used by relevant teams”; “Due to staff resourcing constraints, we have been unable to date to use the toolkit in depth - as intended. However it is a very useful toolkit and report, should we have the resources to prioritise and implement this in future”; “The toolkit is a useful general guide, although it has been other policy and economic drivers that determine the work stream and relative priority of developing a local low carbon economy”; “Haven't fully utilised the toolkit to explore how useful it may be”; “We have not seen the toolkit”; “Not had opportunity to use it and judge”;
Which steps of the toolkit have you implemented? Respondents were asked which steps of the toolkit they had implemented which is illustrated below. Seven of the Councils had implemented one or more steps with steps 1 and 2 recording the highest number with 4 in each case.
Low Carbon Economic Development Toolkit Follow-up Survey
2.3
MAIN CONCLUSIONS It would appear that six London Councils have found the toolkit useful (just under 30%). It is likely that the surveys, many emails about it as well as the conference, have raised consciousness among Councils about the issue of benefitting SMEs from low carbon procurement; which had been largely overlooked by respondents to the first survey. 59% of Councils responding to the follow up survey intend to provide support to low carbon goods and services suppliers in their area and several have already started doing so, often on the back of the Green Deal. It is arguable that the Green Deal has been the prime motivator behind greater interest in this, but the toolkit has given Councils the tools to do it which undoubtedly has helped implementation. It was good to see proactive steps being taken by many Councils to help LCEGS SMEs across most of the seven steps of the toolkit. When asked what difficulties have arisen in taking the low carbon agenda forward, most Councils put this down due to a lack of staff/funding resources; and the level of political priority. When asked in what ways the toolkit could be improved, there was no really adverse comment from respondents: Nine said they didn’t know or were not able to comment, one said it could be shorter, one suggested the PR about it should be targeted at the decision makers and one suggested that it might be helpful “to consider areas where more detailed support could bolster the toolkit's usefulness.” One Council (Sutton) had several suggestions, stating that the toolkit could contain more guidance on: •
The Council's role in promoting/ facilitating the Green Deal and ECO
Low Carbon Economic Development Toolkit Follow-up Survey •
ways in which Councils can assume a pro-active role in promoting the implementation of planned District Energy networks e.g. by setting up a Special Purpose Vehicle in which a Council becomes a minority shareholder in a new Energy Company (in partnership with an established ESCo) which would then be responsible for delivering and operating the network, or by directly funding parts of the necessary DE infrastructure and entering into a contract with the ESCo to guarantee a share in the future profits etc., and
•
how Councils should move towards the Government's 2016 target for zero carbon in new housing by addressing the need to develop a programme of 'Allowable Solutions' to make up for the inevitable shortfall in emissions reductions achieved on site. An important precursor of this is to introduce and set up a carbon offset funding mechanism as part of the LDF prior to 2016 together with a programme of retrofit measures to be funded through s106 contributions
3.
POLICY UPDATE – CHANGES SINCE JULY 2012
3.1
INTRODUCTION Government Policies and initiatives governing the low carbon sector have seen further changes since July 2012. This period has seen the introduction of the Green Deal and Energy Company Obligation in January 2013 and the emergence of several initiatives to involve the local supply chain. It has also seen the introduction of the Public Services (Social Value) Act 2012 which became ‘live’ on 31st January 2013 and which, for larger contracts, requires public sector commissioners and procurers to consider how what is to be procured may improve the economic, environmental and social well-being of the relevant area, how they might secure such improvement and to consult with local stakeholders. Many Local Authorities are seeking partnerships with the big 6 Energy Companies and main contractors to deliver ECO funded low carbon retrofitting of their housing stock, building in much higher levels of local procurement into the contractual terms than have been achieved for other types of procurement. This section is therefore an addendum to the original toolkit published in July 2012, identifying changes to the Policy Context of the toolkit to update it and including fresh material on some of the key developments that have incurred in the interim. The more detailed changes to the policy context in the original toolkit are set out in the Appendix.
Low Carbon Economic Development Toolkit Follow-up Survey
3.2
GREEN DEAL/ECO (Ref page 14, para 6) The Green Deal & ECO programmes are expected to deliver improvements worth on average £10,000 per household. Green Deal The Green Deal was launched in January 2013 and applies to both the domestic and non-domestic sector. A Green Deal Registration and Oversight Body has been established to register the organisations that are approved to deliver the Green Deal – Advisors, Providers and Installers. Green Deal Advisors are carrying out energy assessments, Providers are providing finance for projects, Green Deal installers will be installing improvements and the electricity supplier will repay the cost of the improvements through savings on energy bills. There are 45 measures or areas of home improvement approved to receive funding under the Green Deal, covering insulation, heating and hot water, glazing and micro generation. For the non-domestic sector lighting, mechanical ventilation and heat recovery measures can also be covered. More areas may be added as technology develops. Some construction industry representatives and other bodies have questioned whether the support available under the scheme will be sufficient to incentivise householders and businesses, especially since interest is payable at approximately 7%. Energy Company Obligation The Energy Company Obligation (ECO) started on 1 January 2013 and replaced the Carbon Emissions Reduction Target (CERT). It places an obligation on the energy companies to meet a set of targets, based on their market share, to reduce householder CO² emissions within a set timescale. ECO is intended to work alongside the Green Deal to provide additional support in the domestic sector, with a particular focus on vulnerable consumer groups and hard-to-treat homes. Since the funding comes directly from the energy companies and not the Government, this scheme is well under way. ECO creates a legal obligation on energy suppliers to improve the energy efficiency of households through the establishment of three distinct targets which must be met by 31st March 2015: -
Carbon Emissions Reduction Obligation (CERO) (20.9 million lifetime tonnes of carbon dioxide). Focusing on hard to treat homes and, in particular, measures that cannot be fully funded through the Green Deal. Solid wall insulation and hard-to-treat cavity wall insulation are the primary measures that the Government intends to be promoted under this target.
-
Carbon Saving Community Obligation (CSCO) (6.8 million lifetime tonnes of carbon dioxide). Focusing on the provision of insulation measures and connections to district heating systems to domestic energy users that live within an area in the top 15% of most deprived LSOAs (Lower Super Output Areas). This target has a sub-target, which states
Low Carbon Economic Development Toolkit Follow-up Survey
that at least 15% of each supplier’s CSCO must be achieved by promoting measures to low income and vulnerable households living in rural areas. -
Home Heating Cost Reduction Obligation (£4.2bn of lifetime cost savings). Requiring energy suppliers to provide measures which improve the ability of low income and vulnerable households (the ‘Affordable Warmth Group’) to affordably heat their homes. A heating qualifying action is the installation of a measure that will result in a heating saving; including the replacement or repair of a qualifying boiler.
CERT which has now been phased out, required electricity and gas suppliers to achieve energy efficiency targets by assisting their customers with energy efficiency measures. The CERT programme operated from 2008-2011 and followed the earlier Energy Efficiency Commitment which commenced in 2002. ECO contracts and local supply chains A number of high profile examples of local authorities procuring a main contractor and/or energy company to deliver low carbon building retrofit to their housing stock using the ECO funding have already been launched and a number are in the pipeline. A feature of all these arrangements is the inclusion of a high level of local procurement built into the contracts which becomes a key performance indicator. The largest of these is the Birmingham Energy Services contract which is being managed by Carillion Energy. The Council has built in a requirement for 85%-95% local procurement. Similarly the Kent & Medway Green Deal Partnership, which comprises Kent County Council, all the Kent councils, 8 housing associations, the NHS, water utilities among others, with the ECO funding coming from Npower, has agreed a 60% local procurement target with its main contractor for an initial £80 million of low carbon building retrofit initially to cover 8,000 homes across Kent.. West Sussex County Council has formed a partnership of local authorities and will soon appoint a Green Deal Partner to deliver low carbon building retrofit works across the region upgrading 18,000 households in the first three year phase. The Council will contribute £75 million of the work but most of the funding will come from Green Deal and ECO funding streams. This contract is expected to include a strong element of local procurement.
Low Carbon Economic Development Toolkit Follow-up Survey
3.3
SOCIAL VALUE The Public Services (Social Value) Act 2012 was brought fully into force by commencement order on 31st January 2013. Procurers and commissioners in public authorities are now required to consider • How what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area. • How, in conducting the process of procurement, it might act with a view to securing that improvement.
In doing this, the Act aims to give commissioners and procurement officials the freedom to determine what kind of additional social or environmental value would best serve the needs of the local community as well as giving providers the opportunity to innovate. The Act applies to the procurement of larger services and framework contracts for services above the EU threshold i.e. those contracts that must be advertised in the Official Journal of the European Union which are included in Parts A & B of Schedule 3 of the Public Contracts Regulations 2006. It does not therefore include procurement of goods and capital works contracts; however property maintenance contracts are included under services with a certain amount of associated works which would include most building retrofit activity. Although procurement of goods and works are not covered by the Act, the government in its policy guidance note states that ‘commissioners, as a matter of good practice could consider economic, social and environmental well-being in order to obtain maximum value for money and for local authorities to comply with best value duty’.2 The policy note states that procurers must consider the need to consult potential service users and representative community organisations at the pre-procurement stage when deciding on the social, economic and environmental improvements to be sought from a contract and how to secure them. The voluntary and community sector should be engaged from the earliest stage to help shape policies, programmes and services.
Low Carbon Economic Development Toolkit Follow-up Survey
4.
CASE STUDIES
4.1
NORTH LONDON RETROFIT NETWORK The North London boroughs of Camden, Enfield, Haringey, Islington, Newham and Waltham Forest are working together to develop a network of SME (small and medium sized enterprises) located in the North London area delivering energy efficient retrofit services and installations. The Councils involved are working to promote uptake of energy retrofit in each borough. The overall UK market value of retrofit is estimated at over £500 billion. Participating Councils want to build upon and support existing local supply chains to deliver this work. This will grow the local green economy and develop a SME/labour market that can be exported beyond North London. Aims of North London Green Retrofit SME Network: •
• • • •
Create a directory of SME builders and installers who carry out carbon reduction retrofit projects in North London. The North London SME retrofit directory is open to any SME delivering retrofit services located in the boroughs of Camden, Enfield, Haringey, Islington, Newham and Waltham Forest. Start a forum to hear from local SME how Councils can support locally delivered retrofit in North London. Create networking opportunities among SMEs working in the area. Strengthen links with local training providers. Signpost local retrofit SME towards the different initiatives offering support and training in this growing market both locally and London wide. RetrofitWorks – The Delivery Mechanism The London Borough of Haringey set up the Haringey Carbon Commission in 2012 and they have been tasked with identifying a carbon reduction roadmap for Haringey that will not only help the authority fulfil its pledge to reduce its emissions by 40% by 2020, but show how to drive economic growth and achieve prosperity for all without an equivalent rise in emissions. As a result of the recommendations of the Commission, the council have become the recipient of DECC Pioneer Places funding which has enabled them to offer Green Deal assessments in the Borough and so far 400 households have taken up the offer. This will be expanded to include non-domestic assessments. The London Borough of Haringey has taken the approach of working with Parity Projects to set up a co-operative of SME builders and installers in their Borough.
Low Carbon Economic Development Toolkit Follow-up Survey
RetrofitWorks (www.retrofitworks.co.uk); as the co-operative will be known, is a partnership between Haringey Council and a selection of professional and membership bodes, including the Federation of Small Businesses, the Electrical Contractors Association, amongst others. RetrofitWorks will be a Green Deal conduit, through which potential customers will be directed onto Green Deal Providers. The co-operative members are classified as either Industry Groups, Lead Finders or Practitioners (assessors or installers), each with their own membership rates. It is a not-for-profit organization, though of course members are for-profit. RetrofitWorks will provide back-office support to the SME members through pre-pricing of works, automated tendering and contract, simple recording of project progress and completion and expediting payments. The SME members have been involved in the setting up of the cooperative through a series of focus group sessions focused on key elements of the co-operative such as governance, contracts, terms and conditions and pricing. RetrofitWorks has also carried out its own assessment of current Green Deal Providers to enable it to work with the right providers. Whilst the co-operative itself is already set up, it still needs final approval from the Haringey Council cabinet for their full participation and endorsement and the role of the council has not yet been confirmed, a final decision is planned for May 2013. It is intended that a Retrofit Co-ordinator may be employed by the co-operative, or possibly by the Council to facilitate projects and liaise with the relevant participants and this will also help to address some of the critical failure points that have been identified for RetrofitWorks.
Low Carbon Economic Development Toolkit Follow-up Survey
4.2
GROWING THE GREEN ECONOMY: LONDON BOROUGH OF SUTTON Introduction Growing the Green Economy is one of seven projects approved under Sutton Council’s overall ‘Opportunity Sutton’ economic growth programme and strengthens the Council’s bid to become a ‘One Planet Living’3 and zero carbon-enabled borough by 2025. The value of the LCEGS sector in Sutton is estimated at £472 million per year employing 3,900 people. In developing its Green economy strategy, Sutton has drawn heavily on MTW’s Skills for Climate Change ‘Toolkit for developing the low carbon sector for London Public Authorities’ launched in 2012. The toolkit sets out a series of steps and practical guidance for ensuring that local procurement is embedded into Councils’ planning and procurement processes. One of Sutton’s most deprived wards with a lot of social housing, is Hackbridge, which is the home of an award winning international social enterprise, BioRegional, which initiates and delivers practical sustainability solutions through partnerships around the world. BioRegional is the Council’s strategic partner and has developed a toolkit for retrofitting buildings at three levels. One of BioRegional’s projects is ‘Zero Carbon Hackbridge’ funded from DECC’s Local Energy Assessment Fund (LEAF) to trial a community referral fee approach to increase the uptake of energy efficiency measures. Sutton is also home to the award winning Beddington Zero Energy Development (BedZED) an environmentally friendly housing development in Hackbridge, built in 2000–20024. Growing the Green Economy Project Sutton has provided a significant amount of funding for this economic development project which is seeking to grow the green economy by creating a cluster of green businesses; a ‘low carbon hub’ in Sutton attracting both home grown businesses and inward investment, develop a Green Business Network, provide business up skilling, create employment and carry out retrofitting of domestic buildings. The key objectives of the project are to: •
• • • •
Grow the existing market which will provide a range of job opportunities – from assessors to installation designers and installers, for individuals, SMEs and larger companies Reduce carbon emissions and the borough’s environmental footprint in line with One Planet Living principles Provide opportunities for residents to gain training and skills Provide opportunities for apprentices, work experience and job placements Set up the framework to allow Sutton to leverage in EU funds
Low Carbon Economic Development Toolkit Follow-up Survey
The main project target outputs and outcomes are set out below: Target output/objective
Target performance
Mapping & understanding the Green Economy
Map of LCEGS businesses in Sutton mapped using London Low Carbon Market Snapshot 2011 methodology
Establishing a Green Business Network
100 businesses engaged and supported in 2013; Business network formed with workshops & events
Creating a Green Business Cluster
Study of low carbon clusters leading to creation of a preferential business environment within the area
Greening non LCEGS businesses
10 audits per month, 10 new travel plans per month
Create a Decentralised Energy Network
Meet Mayoral target of ensuring 25% of London’s energy is from Decentralised Energy Network by 2025. Set new targets
Exploit the employment opportunities afforded by Green Deal
10% increase in business turnover achieved Additional jobs and apprenticeships created Jobs safeguarded
Green the local supply chain by increasing demand through Council procurement
Enhanced procurement processes for Council and others to incorporate local supply chain opportunities; 20% local businesses used in Council contracts
Green Business Award scheme
100 businesses entering awards in year 1
Source: Sutton Borough Council ‘Growing the Green Economy Project’, February 2013
Low Carbon Economic Development Toolkit Follow-up Survey Inward Investment Sutton is investing in facilities to provide a low carbon ‘Hub’ for SMEs in Sutton where businesses can access workspace, receive business support, share services and be encouraged to form partnerships. This is expected to grow into a Green business cluster and progress onto industrial sites in the borough. The combination of measures that Sutton is putting into place is likely to attract inward investment from companies working in the low carbon economy looking for a base in London. Sutton is considering using the new measures to allow Councils to collect business rates direct, to reduce business rates on its industrial sites to attract businesses into the borough. Climate Change Supplementary Planning Document Sutton is preparing a comprehensive SPD on Climate Change Mitigation which explains: -
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the various carbon emissions targets with technical guidance on different measures to increase energy efficiency and provide renewable energy in local developments; guidelines on Decentralised Energy Networks and the different systems available, guidance on energy assessments, details of the Community Energy Fund to which developers can fund off site carbon reduction measures through a s106 agreement in instances when it is not feasible on site. This goes into a locally managed fund for Low carbon investment elsewhere in the borough. Local procurement s106 requirements for all major developments.
Low Carbon Economic Development Toolkit Follow-up Survey
APPENDIX - Detailed changes to the July 2012 Toolkit Skills for Climate Change Toolkit – Chapter 2 Policy Update – changes since July 2012 (Page numbers refer to the pages of the original toolkit dated July 2012).
2. Policy Drivers of the Low Carbon Economy 2.1 – para 2 The LCEGS market in London was worth just over £24 billion in 2010/11 (5% growth since 2009/2010), representing 20% of the UK market. London already has around 9,246 companies, employing just under 164,000 people, involved in the low carbon economy.
2.2 – para 2 The second ETS trading period expired in December 2012 and the current scheme is undergoing reform. The prices of carbon permits have dropped so low, they offer little incentive to cutting CO2 generation.
Renewable Energy – para 3 FOLLOWING ‘renewable sources in 2010.’ ADD The UK Government updated the UK Renewables Energy Roadmap (in December 2012), which sets out the plan for accelerating the deployment and use of renewable energy to help meet the 2020 target.i
2.3 UK Policy Framework Page 13, after bullet 2, add: The UK Renewable Energy Roadmap update in 2012 added Solar PV as a key technology in this as costs have fallen dramatically and deployment has increased markedly. The Update also highlighted a strong pipeline for offshore and onshore wind, bioenergy and large-scale solar PV projects. Significant growth in industrial and domestic wood use and heat pump installations are also expected once the positive impacts of the Renewable Heat Incentive (RHI) and Renewable Heat Premium Payment (RHPP) are fully embedded.
Page 13, para 3 (Renewables Obligation) The Renewables Obligation has been subject to a number of changes since its introduction in 2002; in particular it has moved from offering a uniform level of support for all renewable technologies to variable support for different technologies dependent on their costs, maturity and potential for future deployment. In September 2012, DECC published its obligation level for RO banding levels for the period from April 2013 to
Low Carbon Economic Development Toolkit Follow-up Survey March 2014 at 0.206 ROCs for each MWh supplied. The RO will close to new generation on 31 March 2017. Page 13, para 4 Energy Act The 2008 Energy Act introduced the concept of Feed-in-Tariffs (FIT) to incentivise the take-up of renewable energy systems by providing payments for producing electricity and exporting it to the national grid, focused on projects of up to 5MW. By September 2012, a total of 329,889 renewable installations were registered under the scheme, with a Total Installed Capacity of 1,487MW.ii Page 13, para 6 Renewable Heat Incentive Add at end of para: The UK Government published their consultation on domestic RHI in September 2012. The key proposals in the consultation are that tariffs will be available (summer 2013) for air source heat pumps, biomass boilers, ground source heat pumps and solar thermal technologies that meet relevant required standards. The UK government has also confirmed that people who have installed equipment under Renewable Heat Premium Payment (RHPP) scheme will be eligible for support through the RHI providing they meet the eligibility criteria of the full RHI scheme. Page 14, para 6 Green Deal / ECO Rewrite para: The Green Deal and ECO programmes are expected to deliver improvements worth on average £10,000 per household. The Green Deal was launched in January 2013 and applies to both the domestic and non-domestic sector. A Green Deal Registration and Oversight Body have been established to register the organisations that are approved to deliver the Green Deal – Advisors, Providers and Installers. Green Deal Advisors are carrying out energy assessments, Providers are providing finance for projects, Green Deal installers are installing improvements and the electricity supplier will repay the cost of the improvements through savings on energy bills. There are 45 measures or areas of home improvement approved to receive funding under the Green Deal, covering insulation, heating and hot water, glazing and micro generation. For the non-domestic sector lighting, mechanical ventilation and heat recovery measures can also be covered. More areas may be added as technology develops. Some construction industry representatives and other bodies have questioned whether the support available under the scheme will be sufficient to incentivize householders and businesses, especially since interest is payable at approximately 7%. The Energy Company Obligation (ECO) started on 1 January 2013; ECO is intended to work alongside the Green Deal to provide additional support in the domestic sector, with a particular focus on vulnerable consumer groups and hard-to-treat homes and it creates a legal obligation on energy suppliers to improve the energy efficiency of households through the establishment of three distinct targets: -
Carbon Emissions Reduction Obligation (20.9 million lifetime tonnes of carbon dioxide). Focusing on hard to treat homes and, in particular, measures that cannot be fully funded
Low Carbon Economic Development Toolkit Follow-up Survey through the Green Deal. Solid wall insulation and hard-to-treat cavity wall insulation are the primary measures that the Government intends to be promoted under this target. -
Carbon Saving Community Obligation (6.8 million lifetime tonnes of carbon dioxide). Focusing on the provision of insulation measures and connections to district heating systems to domestic energy users that live within an area of low income. This target has a sub-target, which states that at least 15% of each supplier’s Carbon Saving Community Obligation must be achieved by promoting measures to low income and vulnerable households living in rural areas.
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Home Heating Cost Reduction Obligation (£4.2bn of lifetime cost savings). Requiring energy suppliers to provide measures which improve the ability of low income and vulnerable households (the ‘Affordable Warmth Group’) to affordably heat their homes. A heating qualifying action is the installation of a measure that will result in a heating saving; including the replacement or repair of a qualifying boiler.
The Green Deal and Energy Company Obligation replace the Carbon Emissions Reduction Target (CERT) which required electricity and gas suppliers to achieve energy efficiency targets by assisting their customers with energy efficiency measures. The CERT programme operated from 2008-2011 and followed the earlier Energy Efficiency Commitment which commenced in 2002. Page 21 para 2 The programme was piloted as an area-based initiative, with surveys on a street-by-street basis to identify and deliver an initial package of free energy and water saving advice (including low energy light bulbs, radiator panels etc.). Assessors also establish whether homes are eligible for more extensive energy efficiency or renewable measures and the availability of funding through the Carbon Emissions Reduction Target (soon to be replaced by the Green Deal/ECO programme), Warm Front or other other schemes or local authority grants. To date, interventions under RE:NEW have largely focused on lower cost measures including loft and cavity wall insulation. Page 22, para 5 (Climate change adaptation strategy) – replace with: The Mayor’s draft Climate Change Adaptation Strategy5 was published in October 2011. The strategy focuses on increasing understanding of climate change challenges and risks and ensuring emergency plans are in place to cope with extreme weather events. It considers a range of climate change issues including flooding, drought, overheating and a number of cross-cutting issues such as effects on the economy, environment and infrastructure. Insert on Page 17 before 2.4 The Energy Bill was introduced to the House of Commons on November 29th 2012. This Bill aims to establish a legislative framework for delivering secure, affordable and low carbon energy and includes provisions on: 1. Electricity Market Reform (EMR) by putting in place measures to attract £110 billion investment which is needed to replace current generating capacity and upgrade the grid by 2020, and to cope with a rising demand for electricity. This includes: o various provisions to encourage investment in low-carbon generation o provisions to ensure the security of electricity supply, o to ensure transparency amongst providers.
Low Carbon Economic Development Toolkit Follow-up Survey o o o
Power Purchase Agreements (PPAs), to ensure the availability of long-term contracts for independent renewable generators transition arrangements for investments under the Renewables Obligation scheme; and limits on carbon dioxide emissions from new fossil fuel power stations.
2. Nuclear regulation - The Bill places the interim Office for Nuclear Regulation (ONR) on a statutory footing. 3. Government pipe-line and storage system - The Bill includes provisions to enable the sale of the Government Pipe-line and Storage System (GPSS). 4. Strategy and policy statement - The Bill improves regulatory certainty by ensuring that Government and Ofgem are aligned at a strategic level through a Strategy and Policy Statement (SPS), as recommended in the Ofgem Review of July 2011. 5. Cheaper tariffs - The Bill (as amended) includes a range of provisions that enable the Government to improve consumer information when buying energy from their supplier.
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UK Renewable Energy Roadmap update, DECC 27 December 2012 Ofgem Feed-In-Tariff Update Issue 10 December 2012