The Cabinet Member for Environment explained
that the report set out the updated approach and
investment principles that support the delivery of the
Council’s 2030 and 2050 net zero targets, as set out in the
Green Finance Strategy. Officers in Greener Futures and
Finance with support from Land and Property had been further
developing the 2030 finance model, which was originally produced by
consultants, in order to gain a more robust understanding of the
capital costs required to achieve the 2030 target. Given the
increase in costs, four future approach options had been developed.
Work around achieving net zero carbon targets would constantly be
reviewed as new policies and targets are introduced. With regards
to the expansion of the ULEZ, the Leader stated that the council
supported improving air quality but did not support the negative
impacts the charge would have upon Surrey residents and
businesses.
RESOLVED:
1.
That Cabinet agrees the updated approach and
investment principles, that support the delivery of the
Council’s 2030 and 2050 net zero targets, as set out in the
Green Finance Strategy.
2.
That Cabinet agrees the recommended approach option
for the delivery of the Council’s 2030 net zero target,
including exploring and developing additional finance mechanisms to
offset potential future costs.
Reasons
for Decisions:
-
In the eighteen months
since the Climate Change Delivery Plan and the Initial Finance
Strategy were published in November 2021, rapidly changing and
increasing costs along with learnings from the delivery of capital
decarbonisation schemes on the Council’s estate, has meant
that the Finance Strategy requires updating. This paper, and the
accompanying Green Finance Strategy, sets out the updated approach
for approval.
- Officers in Greener Futures and
Finance with support from Land and Property have been further
developing the 2030 finance model, which was originally produced by
consultants, in order to gain a more robust understanding of the
capital costs required to achieve the 2030 target, as well as the
potential to offset these costs through energy savings and income
generation. Given the increase in costs, four future approach
options have been developed. The recommendation to Cabinet is to
adopt the 4th option.
- It
should be noted that all options will require the Council to invest
money up front in advance of income being generated. Net zero is a
significant cost to the council with all options, but the approach
is to off set this and aim for cost neutrality over the longer term
by generating income through renewables and reducing costs of
energy.
- The
Council abandons the 2030 net zero target.
- The Council only installs decarbonisation
measures which have a strong return on investment (such as solar)
to reduce capex, accepting that this will increase the cost to the
Council for carbon offsets from 2030 onwards. The minimum projected offset costs for this option (to 2050)
amount to at least £14m, calculated at a rate of
£95t/CO2, however by 2030 this rate may be much higher. This
option is therefore not recommended as the financial risk is
considered too great and the efficiencies resulting from investment
in the more costly decarbonisation measures would not be
achieved.
- The Council builds all the projected
increased costs of achieving the 2030 target into the Medium Term
Financial Plan, and income is seen as a bonus. This is the approach
taken by other Local Authorities however by not pursuing and
prioritising investment in renewables, which would generate income,
this would lead to a budget pressure.
- The Council continues with the current
approach to achieving the 2030 target, which includes being open
and transparent with costings and balancing the delivery of high
cost and quick pay back measures. This approach includes the
development of finance income generation mechanisms, mainly
renewables, with the purpose of generating a return on investment
to offset any future potential cost increases to the Council, or to
be used for other Greener Futures priorities.
(The decisions on this item can be called -in by the
Communities, Environment and Highways Select Committee)