Low carbon cities can kick-start the economy

The economy is stagnant, the eurozone is in crisis, public spending cuts have slashed regional employment levels, energy bills are soaring and deficit reduction is pushed back beyond 2014. Is there any cloud with a silver lining?

Leeds City Council chief executive Tom Riordan and Bradford City Council’s chief executive Tony Reeves certainly believe there is. The two councils are spearheading the growth agenda through the Leeds City Region (LCR) and have identified the low carbon sector as a new source of thousands of jobs in the future.

Tom Riordan argues that it is one of the few sectors with growth potential, explaining: ‘Most sectors are looking at jobless growth, with more output but not necessarily more employment. There are two exceptions; one is healthcare and the other is the low carbon industry.

‘We’re well placed for the latter because of our geographical location and because we’re already well established in sectors like renewables. But this is not about being soft and fluffy; we believe we have a central role against our competitors in the low carbon sector and business is beginning to understand. On top of this, rising fuel bills have captured the public’s attention about the need to reduce energy costs.’

The LCR has a population of 3m, an economy worth £52 billion a year and an energy bill of £5.4bn a year, expected to grow to £7.24bn a year by 2022. Globally, the low carbon and environmental goods and services sector is worth some £3.2 trillion a year and is set to grow steadily through the recession.

As developing countries such as China, with a huge and growing urban population, begin to realise the importance of reducing energy costs and their carbon footprint, so the demand for such services will increase and regions like Leeds City believe they can meet that demand.

But even within the region, as the technology and investment develops to reduce energy costs, so new jobs and skills will be created at the same time that the carbon footprint is reduced – a virtuous circle if it can be achieved.

In short, instead of £7bn a year vanishing from the regional economy to fund oil Sheiks, new technology could both stem that exodus of wealth and capture it locally through new jobs in the low carbon sector.

Almost £4bn of cost effective, energy efficient and low carbon investment opportunities are estimated in the region, making annual savings of over £1bn a year while also creating new jobs.

A conference in September at Bradford University will look at the potential of the low carbon economy.

Tony Reeves of Bradford, adds: ‘Sustainability is the thing of the future and central to this is innovation round low carbon. In the region we already have a variety of innovators, both industrial and academic in our universities. At Bradford University we have 1,000 students living in the world’s most sustainable building. We have energy industries in Selby and Wakefield as well as the biggest power station in the country at Drax.’

The region has become the first to commission a study into the economics of low carbon cities, which looks specifically at the LCR. Known as a ‘mini Stern Review’ and conducted by the Centre for Low Carbon Futures, it adds hard facts to the case for a low carbon strategy. The report looks at the low carbon options available, the scope for their deployment, the financial returns and carbon savings, and the implications for the local economy.

For example, 10% of a city’s GDP leaves the local economy annually through energy bills. If 1% of GDP could be invested each year for a decade to develop commercial energy efficiency schemes and low carbon potential, there would be lower energy bills, news jobs and skills, and wider social-economic benefits in health and lower fuel poverty. Compared to 1990 levels, the LCR could reduce its carbon emissions by 2022 by between 12.9% and 18.8%.

Investment in cost effective energy reduction measures could reduce the anticipated £1.86bn rise in energy costs for the LCR between now and 2022 by 64%. The mini- Stern estimates that with the requisite investment some 9,670 jobs in the LCR could be created over the next decade, adding another £442m to GVA growth and reducing carbon emissions by 40%. The key is whether the investment can be made.

However, as Tom Riordan adds: ‘There’s not a shortage of money out there but business is looking for low-risk investments. The Stern report looked at 1,000 projects we could do within the city region of which a third would have a commercial payback in three years.’

The report looks at the scope for low carbon growth in the domestic, industrial, commercial and transport sectors in the LCR, estimating investment opportunities for firms in the low carbon industry of almost £4bn.

In the domestic sector, it concludes that there are £1.1bn low carbon investment opportunities, which could generate annual savings of £400m a year with payback within three years. Savings would come from reduced domestic energy consumption, biomass district heating, mini wind turbines, efficient lighting and new double glazing. These domestic measures could generate 38% of the total jobs to be created in the region through investment in low carbon industries.

In the commercial sector savings are estimated at £335m a year with investment opportunities worth £1.9bn a year covering such measures as more efficient lighting, cavity wall insulation, solar water heating and biomass boilers. Investment in air source heat pumps alone could generate 43% of new jobs expected from energy efficiency savings in the commercial and office sector. In industry, £1bn of investment opportunities are identified in the report, with annual savings of £323m a year.

In the transport sector £847m of investment opportunities saving £133m a year are identified.

BASE Leeds City Region event

LGN is supporting a one-day conference on low carbon futures to be held at Bradford University on 11 September 2012.

Event director Andrew Dowding explains: ‘Base Leeds City Region provides a powerful forum to forge vital connections between policy, investment and enterprise. Base stands for “business and a sustainable environment”. Base Leeds City Region builds on the success of Base London and Base Glasgow, well-established events bringing influential public and private partners together to explore low carbon built environment and infrastructure opportunities.

Base Leeds City Region won’t just be a talking shop. The programme is being carefully crafted to provide inspiration and sound practical advice to unlock business potential.

The event is free to attend if you are one of our core-target Base Leeds City Region delegates, which includes senior managers in local or central government and the upstream parts of the construction, property and utilities industries.’

The University of Bradford campus also comprises a BREEAM Outstanding 1,000-bed student residence and Sustainable Enterprise Centre due for completion in January 2013 – tours of which will be part of the conference programme.