LAEPs provide critical pathway to investment for cash-strapped councils

Local authorities are in the pincer grip of increasing pressure on both their finances and services, leaving limited capacity for decarbonisation plans. Andrew Clark and Christine St John Cox argue that net zero is not a nice to have but an incredible economic opportunity for communities across the country. They explore the benefits of local area energy plans (LAEPs) and why all councils should be supported to produce one.

Since 2021, six local authorities in England have declared bankruptcy (Northamptonshire, Slough, Croydon, Thurrock, Woking, Birmingham City, and Nottingham City). Polling from the Local Government Association in December 2023 revealed that one in five council leaders and chief executives think it is very or fairly likely that they will issue a Section 114 notice in 2024 due to funding shortfalls.

Against such an economically tumultuous backdrop, it can be hard for local authorities to reconcile spending on decarbonisation and achieving net zero by 2050. Local people are looking to councils to deliver on housing, social care, and transport – net zero to many people is a nice to have.

We disagree. Net zero is not a nice to have, it is an economic opportunity for local places, businesses, and people. But without a credible decarbonisation strategy, there is a risk that local regions and the public sector could be missing out on having a way to communicate the shape of local ambition, the opportunity that net zero affords, and in turn, missing out on crucial investment.

A Local Area Energy Plan (LAEP) provides the means to coalesce decision makers and accelerate action and investment in local areas. In the Local Area Energy Planning process, stakeholders are brought together around a common understanding of the local context, and possible futures to achieve the local and national net zero target, allowing a shared and detailed local pathway to a net zero energy system to be established. This vision and identification of what needs to happen – and where – allows subsequent investment to be de-risked to help implement it at pace and scale.

Being able to share a coherent, robust, low-regret plan and pipeline of projects and infrastructure is a crucial enabler to help local authorities attract private investment towards local energy projects, delivering new infrastructure and a potential return on investment which can help maintain long term programme delivery. It can also help local government and other stakeholders take decisions about which parts of the local net zero transition they may wish to deliver and invest in themselves and make best use of available funding to do so.

More than 30% of local authorities in the UK have already committed to a LAEP, meaning they are well placed to turn their plans into action with the support of private financiers. For those without a clear plan, there is a risk that investors do not see these local areas as an equally attractive and credible investment opportunity.

The story is much the same for complex sites and public sector estates. Without a credible strategy, site owners and operators could be haemorrhaging money on short term ‘plaster over the cracks’ solutions or inadvertently locking in higher emissions for many more years. For the public sector especially, this is not a long term, sustainable solution. This is why we created the Public Sector Decarbonisation Guidance (PSDG) to help public sector organisations put in place a plan that will accelerate carbon emissions reductions with simplicity, speed, and scale.

Crucially – and in a similar vein to LAEP – PSDG can help make it simpler for public sector bodies to prioritise the steps needed to decarbonise. While there are many metrics that could be important to individuals or individual organisations, without an agreed upon approach (including the metrics to be used), it is nigh on impossible to take an objective approach to prioritising investment.  We know in any organisation there are numerous competing priorities and making sure your governance is set up to help you make the right long-term decisions is critical.

With over 80% of local authorities having declared a climate emergency, the need to tackle the climate crisis locally is evident. Delivering net zero against a backdrop of bankruptcy can be hard for local authorities and public bodies to square with taxpayers. But, with a credible plan in place net zero could be economically fortuitous – delivering much needed private investment and reducing costs for cash-strapped councils.

We are already witnessing an increase in local authorities and public sector estates taking matters into their own hands. PSDG and LAEP can support public bodies on their decarbonisation journeys – after all, without a plan in place, they’ll either get left behind or find that their net zero journeys cost more to implement in the long run.

Utility Week’s Make it a LAEP Year campaign calls for government to mandate and fund the creation of LAEPs for all councils across England. Find out more here.

Andrew Clark is Business Leader – Place and Christine St John Cox is Platform Lead – Complex Sites at Energy Systems Catapult