Low-carbon cities will reap economic benefits

11th January 2012


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Local authorities encouraging investment in energy-efficiency will benefit from lower carbon emissions, job creation and increased competiveness, according to the Centre for Low Carbon Futures

In new research examining the potential costs and benefits of a local approach to cutting carbon in Leeds, academics conclude that over a decade investing 1% of the city’s annual GDP in energy management will result in a drop in its yearly energy bills worth 1.6% of GDP.

According to the report’s analysis of potential efficiency measures, organisations in both the public and private sector investing in energy-efficiency can expect to see payback on the majority of measures in around four years.

For industry, the authors identify £1.07 billion worth of low-carbon investment opportunities, including more efficient processes, building energy management systems and renewable heat, that would pay for themselves in just 3.31 years and cut emissions from the Leeds city region by 4.3% over the coming decade.

Meanwhile, commercial firms investing in more efficient office equipment, biomass boilers and more effective heating systems could achieve a reduction in emissions equivalent to 3.9% in the city’s overall emissions over the next 10 years, with payback in 5.58 years.

The report concludes that a community-wide adoption of cost-effective and cost-neutral measures such as better insulation, more efficient equipment, better public transport and renewable heat, will enable the city to meets it 2022 target of a 40% reduction in carbon emissions on 1990 levels, while creating local jobs in installing green equipment, for example, and helping businesses to gain a competitive edge by becoming early adopters of effective energy management.

However, the report warns that the transition to a low-carbon economy depends on political, social and financial capital.

“The levels of ambition, investment and activity needed to exploit the available potential are very significant indeed,” it states. “Enormous levels of investment are required, along with major new initiatives with widespread and sustained influence in the domestic, commercial and industrial sectors.”
The report argues that to stimulate the levels of investment needed to meet Leeds’ ambitious carbon cuts, the local authority must create innovative finance mechanisms, considering new forms of cost recovery and benefit sharing.

“If local government can underwrite early stage investments, as is happening in some places, then major flows of private sector investment can be secured,” said the report’s lead author Professor Andy Gouldson from the University of Leeds.

According to Gouldson the necessary investment can come from pension funds or, in the future, through initiatives such as the Green Deal, the Green Investment Bank and the Energy Company Obligations.

Ingrid Holmes, low carbon finance lead at environmental think-tank E3G, agrees: “With a smart and targeted approach to public-private risk sharing, major scale investments could be secured that would cut energy bills and carbon footprints while also generating a wider range of social, economic and environmental benefits.”

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