Agenda item

Purpose of report:

This report seeks Select Committee approval of the approach set out in the updated Greener Futures Finance Strategy which includes a framework, investment principles and governance to support the delivery of our net-zero 2030 and 2050 targets. The 2030 net zero finance approach has been well developed and is underpinned by a Finance Model. It is important to note that this model has been produced to provide intelligence on the quantum of the overall costs required, and operational savings achieved, in relation to this target. Decisions will be made on individual business cases and not on the model.

Witnesses:

Katie Sargent, Greener Futures Group Manager, Environment Transport & Infrastructure Directorate

Carolyn McKenzie, Director of Environment

Katie Stewart, Executive Director for Environment Transport and Infrastructure

Marissa heath, Cabinet Member for Environment (online)

Key points made during the discussion:

1. The Cabinet Member for Environment introduced the strategy.  The aim was to achieve cost neutrality in financing Net Zero carbon targets. Substantial capital and risk were involved. The Cabinet Member highlighted dependencies on national infrastructure and grid connections and on government policy and support. Renewable investment initiatives were being explored to generate income including through power purchase and solar farms.  The Cabinet Member expressed interest in doing more with businesses and on a joint-finance approach with Boroughs and Districts and highlighted the risks associated with off-setting. Continued input from the Select Committee was welcome.  The Cabinet Member proposed reviewing the financial strategy with the Committee and Greener Futures Reference Group on an annual basis.

2. The Chairman asked the Greener Futures Group Manager what the key changes were between this and the original 2021 finance strategy and accompanying model. The Manager explained that the latest model included more accurate costs and assumptions as opposed to estimates. There was now much more confidence in the figures shared and the planning that followed. On the 2030 net zero target the Manager insisted that it was achievable and that costs could be covered with energy savings. The Executive Director for Environment Transport and Infrastructure warned that the council’s plans were dependent on government policy and technology.  One of the benefits of the proposed financial model was that it allowed for a dynamic response to the changing landscape. 

Net Zero 2030 Programme

3. A Member asked which strand of the 2030 capital programme of retrofit, refurbishment & renewable presented the greatest risk and queried what was being done to address the 99.3% of carbon emissions created by non-Council facilities. The Greener Futures Group Manager explained that the biggest risk was delays with the National Grid that meant viable solar farm sites might not be launched until 2035. The department was exploring other avenues to acquire working solar sites with grid connections already in place. The Manager outlined the process for annual update of the Climate Change Delivery Plan and review of progress against the 2030 and 2050 targets. This would come to the Committee and Cabinet in the autumn.

4. A Member asked to what extent the risk to delivery from a capacity skills shortage had been assessed and factored into plans. The Greener Futures Group Manager said procuring skilled workers has been an issue in the past, but that successful procurement rounds had built confidence. Close working with colleagues in Procurement and Land and Property were important.

5. A Member asked if the decarbonisation delivery rate of 13 to 20 buildings per year was achievable. The Greener Futures Group Manager explained that this programme was slow to start but that a robust team was now in place and the pace was stepping up.  The new Facilities Management provider would play a critical role. The Member asked about carbon banking from private wire energy supply. The Manager noted that where electricity was sold to a private off taker say from a solar farm, this would count towards reducing their carbon not that of the Council. Carbon produced from virtual sleeving where electricity is sold to the grid and taken off the balance of electricity being provided could be banked.

6. A Member asked about decarbonisation of Flex buildings and whether there was a potential to generate more income from these. The Manager explained that Flexbuildings were those with an uncertain future. Land & Property were conducting an asset strategy review, due to complete by 2025. This would clarify the status of various assets including which should be retained or sold. In the meantime, decarbonisations costs for both Flex and Core & Flex buildings needed to be assessed. Carbon offsetting would be required for any Flex properties retained by the Council in 2030 without decarbonisation investment.

7. A Member expressed concern over national energy supply and the need for more generating capacity in the UK and wondered if consideration of high-level risks had been built into plans. Potential future developments for a hydrogen economy were flagged as was the need to maintain close links to central government as thinking on this developed.  The Director of Environment emphasised the importance of a mixed approach to mitigate risks including through projects such as rooftop solar which didn’t rely on changes in government policy. She explained that lobbying took place on a regular basis at all levels. The Council was starting to look at hydrogen for buses and waste vehicles but there is more to be done to plug into strategic conversations about long term hydrogen plans.

8. A Member asked for an explanation around rising Capex costs under the 2030 finance model. The Greener Futures Group Manager explained that the jump in capital costs reflected the robustness of the new finance model which was more thorough and included all the costs involved including for example associated connection costs which can be significant. One building can cost in the region of £100,000 to connect to the grid. The Director of Environment explained the process for annual and quarterly reviews and for inputting real, as opposed to anticipated costs into the model to create a more accurate picture.

9. A Member noted that fleet transition costs were being funded by the service rather than the central Greener Futures budget and queried how to embed decarbonisation costs into other services. The Greener Futures Group Manager explained that electric infrastructure costs remained in the Greener Futures budget but that costs for replacing individual vehicles should be considered on a local basis by the relevant service area. A fleet strategy was being developed. This would cover decarbonisation of the Council’s fleet and provide guidance and support. The Manager noted the other key areas of emissions addressed by the 2030 strategy were LED streetlight replacement and corporate estate emissions and that it made sense for these to be dealt with in their own budget areas.

10. A Member asked if there were any solar farms being launched in the next couple of years and whether Solar Power Purchase Agreements (PPA) or solar panels on Council buildings could make up for a lack of ground based solar. The Manager noted frustrations with solar farms: sites had been identified but couldn’t be connected to the grid. A range of other opportunities were being explored, including maximising solar on rooftops. The directorate hoped to have a much clearer idea of solar potential within the next 6 months.  The manager stated that schools would be the first target for PPAs. Although they fall outside of the Council estate, they form part of Surrey’s indirect emissions. There was a huge appetite from schools for PPA to reduce energy costs.  Pilots were being run and a business case developed for Select Committee and Cabinet. The Director of Environment noted that in addition to schools, there was potential to work with the NHS to install solar on its Surrey estate. Initial conversations had taken place.

11. The Chairman noted that the report set out a range of options for consideration and asked for an explanation of the difference between option three and four. The Director of Environment explained that option four set out a more proactive approach to generating income to offset costs. On option two, a Member expressed concern over the viability of buying carbon off-set credits as an alternative to carbon reduction projects. The Director noted that a small amount of offsetting was required in all scenarios.  This would be delivered where possible via the County’s nature recovery strategy through habitat creation, tree planting and re-wetting of heathlands to bring positive benefits to Surrey residents. Reassurance was given that offsetting remained a last resort and that only good quality offsets would be used. The Director explained that option two had been included for completeness but was not the recommended approach.

12. A Member queried if the service had the resources it needed to maximise income. The Executive Director for Environment Transport and Infrastructure stated that the service had received immense support from their Cabinet Member and had the resources needed for now but stressed that this must evolve as needs changed. It was important to continue to grow the agenda and to bring in the necessary resource and expertise to match.

Net Zero 2050 Programme

13. The Chairman asked about the state of engagement with stakeholders to deliver the programme. The Greener Futures Group Manager noted the overlap between two of the Council’s strategic priorities: greener futures and growing a sustainable economy and highlighted joint working on the green skills agenda and growing green jobs. Work was underway to ensure green skills are embedded in the Surrey Skills Plan and within local skills improvement plans to deliver growth of the green economy. A holistic green business support package was being developed for SMEs covering how to measure carbon footprint and what financial support is available (e.g. the Green Grant programme).

14. A Member asked what steps were being taken to develop a countywide communications and engagement strategy to raise awareness, support and buy in for low-carbon measures. The Executive Director for Environment Transport and Infrastructure noted that the Deputy Cabinet Member for Environment was leading on this work. A Greener Futures Engagement Strategy had been produced. Colleagues in the Communities team and volunteers from Surrey Climate Commission and Zero Carbon Guildford were being trained to deliver unified messages to residents and to encourage uptake. A parish council climate change training course had been developed and piloted and a network set up for all elected members (county level down to parish level). This would be used to disseminate green messages and raise awareness of developments and opportunities around grant funding.

15. The Executive Director agreed with the Member that different modes of communication were vital in getting buy in from residents. A Member noted that 40% of Surrey residents over 60 did not use the internet and communication must be tailored to tackle this. The benefits of simple printed literature for dissemination by councillors and local associations was emphasised. The Director of Environment agreed and noted that different methods would be considered to reach all residents including use of ‘trusted’ community groups as intermediaries to disseminate messages.

16. A Member asked if the indirect emissions which make up 85% of the Council’s emissions were addressed in the 2050 programme. The Director of Environment explained that a detailed 2050 finance model was still being developed and would be bought to the committee in due course. An update on the Council’s indirect emissions would be provided as part of the Climate Change update coming to the Committee later in the year. The Greener Futures Group Manager noted the difficulties in quantifying indirect emissions from schools and supply chains.

17. A Member expressed concern over communications to Council, Borough and District members and suggested a membership development session was needed on how the various Greener Futures boards and groups relate to one another.  It was unclear how it all fit together in terms of governance and communications. The Executive Director for Environment Transport and Infrastructure acknowledged the problem and agreed to investigate.

18. The Committee discussed the draft recommendations and agreed and approved of option four.

Break at 11:55 for 14 minutes. Meeting resumed at 12:09 pm.

Rebecca Jennings-Evans left at 12:00 pm.

The Communities, Environment and Highways Select Committee

1. Endorses the approach set out in the updated Greener Futures Finance Strategy including continued focus and commitment to the County Council’s organisational target to become net zero by 2030 and preparations to deliver the 2050 target.
2. Fully supports the commitment to ensuring financial risk to the Council is effectively identified and managed and the processes outlined for achieving this, in particular the annual 2 step review process which focuses on effective management of financial risk; and approves the recommendation for the Council to adopt option 4 to proactively generate income to offset costs.
3. Recommends that the Council achievements to date towards the net zero 2030 target be publicised to Surrey Members at all tiers by the end of August 2023.
4. Welcomes the review of effective communications and steps to improve engagement with residents on Net Zero; and urges consideration of online and offline communications, as well as opportunities to use Councilors to disseminate messages locally.
5. Requests an update to the Committee on progress in early 2024 including on the Communications & Engagement Strategy.

Actions and requests for information:

1. The Vice-Chairman asked ETI Directorate to organise a Membership Development Session on the democratic landscape around Net Zero and Greener Futures including how all the Boards relate to each other and decision-making comes together.