July 2020 saw the Government announce a £1bn grant scheme for energy efficiency upgrades in public sector organisations including local government. This follows plans set out by the Government to cut emissions and increase efficiency across the public sector in hopes to create a sea change across the wider economy as other industries follow suit. Targets include the Clean Growth Strategy that sets out ambitious policies and proposals to reduce emissions across the economy and promote clean growth through to 2032 and beyond. There is also a legal obligation for central Government to reduce the UK’s net emissions of greenhouse gases by 100%, relative to 1990 levels, by 2050.
Ofgem recently claimed that, in order to meet the target of net zero, there needs to be a concerted effort, together with industry, national, devolved and local governments, and consumers themselves. While thirty years may seem a long time, developing new infrastructure and fundamentally changing the way consumers interact with energy, requires urgent action. This means it is critical for local government and the wider public sector to feel equipped to make efforts in energy efficiency.
Gazprom Energy recently carried out research among 200 energy decision makers, including those across local government, to identify the biggest challenges they face today. The research found half (52%) of public sector organisations claim that improving environmental and sustainability records to become a more efficient and clean energy user in the sector is the most challenging factor affecting their business and energy use today. While almost half (42%) feel they do not have a proactive approach when it comes to energy use. On top of this, 24% of respondents feel energy procurement can be improved through green/renewable products from suppliers.
The £1bn grant scheme for the decarbonisation of public sector buildings represents a move away from the already existing loan scheme as it does not require repayment. This is available to a wide range of public sector organisations including local government and is part of the wider £2.9bn public sector decarbonisations manifesto commitment, on which the current Government was elected.
There are many benefits to this significant investment in energy efficiency. Aside from the obvious moral obligation and the impact on our planet, it will bring long-term financial benefits for organisations in terms of energy bills, as energy efficient solutions have cheaper running costs. As we face the largest global recession in recorded history, this move towards a more energy conscious future will benefit our economy greatly at a time when we need it most, as energy efficiency supports supply chain and growth of clean energy jobs.
Organisations that embrace energy efficiency can benefit from reductions in their Climate Change Levy (CCL) charges. This is an environmental tax charged based on an organisation’s energy usage. Local authorities are charged at the main rate on electricity, gas and solid fuel (such as coal, coke, lignite or petroleum coke) use. This is listed on the organisation’s gas or electricity bill. To pay a reduced main rate on CCL charges, energy-intensive businesses must enter into a climate change agreement (CCA) with the Environment Agency. This is a voluntary agreement that aims to reduce energy use and CO2 emissions. This could result in a reduction of 92% in the CCL rate paid on electricity bills, and an 81% reduction on all other fuels.
While the benefits are clear, our research has highlighted a lack of confidence within the public sector which will cause some major challenges going forward. Just 58% of public sector organisations, including local government, rated themselves as being extremely proactive towards environmental considerations when it comes to energy use, compared to 79% of manufacturing companies and 63% of retail companies.
Local government often has limited capacity to act efficiently on sustainability. Factors impacting local government include; national and global energy and climate policies, material aspects of energy systems, the national and global political-economy and the local political-economy.
While there may be factors unique to each local government that could throw up challenges in the journey to energy efficiency, many councils are taking a proactive approach to this. For example, Bristol has ambitious green targets and objectives set out in its One City Plan, corporate strategy and its mayor’s manifesto commitments. The city aims to deliver energy and infrastructure projects that benefit the city environmentally, socially and economically. In order to reach these targets the city is bringing together renewable installations, energy efficiency in council buildings, low carbon heat networks for social housing, smart energy, marine energy, as well as managing the council’s energy usage as an organisation.
It is crucial that every local authority is measuring its council’s energy usage, which is something that can be achieved through smart meters and Automated Meter Readings (AMR). Smart meters are the next generation of gas and electricity meters, helping users to measure their usage and use a secure wireless network to send meter readings to the supplier each month. One of the many benefits of smart meters and AMRs, is that the data is sent automatically each month to the supplier, saving time and ensuring accurate billing.
Local authorities should consider energy efficiency when selecting their supplier. While price is one factor to base this decision on, it shouldn’t be the only factor. Local authorities are often underfunded and overstretched. While it would be preferable to have a specialist team within local government to deal with energy supply, a lot of this weight can be taken off by an efficient supplier.
Local authorities should consider selecting a supplier with a specialist carbon team that can help to manage its exposure and minimise risk by optimising its carbon position. Market knowledge can bring significant value and organisations should look to their supplier for this information and advice on accessing bespoke solutions to meet their individual needs.
Local government should also use a supplier that can track biomethane or ‘green gas’ through their supply chain. Local authorities should have assurance from their supplier on this to understand their contribution to the generation of renewable energy. Suppliers can often present organisations with certifications that show how much of their consumption is made up of renewable energy. This allows local authorities to measure and reduce their environmental impact, while selecting the sources they would like the biomethane to come from.
With ambitious central and local government targets as well as the implementation of the £1bn grant scheme, it is clear that energy efficiency remains a top priority for the public sector and something that local government should be contributing towards. While there may be a lack of confidence from the public sector as a whole, local government should ensure they have a supplier that is able to support them with these challenges. When it comes to energy efficiency, knowledge is key and while the public sector is often stretched for time and resources, organisations should go to their supplier to gain market knowledge and insight into the opportunities available to them.
Becoming more energy efficient is a responsibility for everyone to create a greener future for our planet but also brings strong economic benefits, such as job creation and can allow local authorities to save money in the long run.
Mark Doyle is a senior corporate account manager at Gazprom Energy.