Net zero neighbourhoods: Innovative investment at the local level to transform urban living

The resource titled "Net zero neighbourhoods: Innovative investment at the local level to transform urban living" is published by LGIU and authored by Daniel Glassman. It explores the concept of net-zero neighborhoods, highlighting the innovative investment strategies required to achieve sustainable urban living across Europe.

Rufus Grantham, Global Head of Retrofit and Built Environment at Bankers without Boundaries, aims to revolutionize 100 European cities by 2030 through a model that blends private finance with urban retrofitting. He emphasizes the need for community-driven approaches led by local governments to achieve net-zero goals.

Grantham transitioned from a finance career to sustainability after being made redundant in 2019. He joined Bankers without Boundaries and became involved in the EU-funded project "Healthy, Clean Cities," now known as Net Zero Cities. This initiative aims to address the significant emissions from the built environment, where 30-40% of emissions originate. Grantham noted that local government finances are primarily fixed-budget-focused, highlighting the necessity of private finance to meet net-zero targets.

Grantham's exploration of retrofit economics revealed that while individual lending is common, it often lacks financial sense for homeowners. He found that the costs of retrofitting are similar across different regions, but household income varies significantly, making individual retrofitting a regressive financial burden. This led to the conclusion that collective approaches, such as aggregating properties within neighborhoods, could attract long-term investment from pension funds.

By aggregating properties, it is possible to create a single income stream from energy savings, making it attractive for pension funds. Grantham's model suggests that retrofitting neighborhoods can yield economies of scale, reducing costs and enabling simultaneous infrastructure developments such as green spaces and EV charging stations.

For successful retrofitting, community engagement is vital. Local residents must perceive tangible benefits from the projects to allow access for retrofitting work. Grantham acknowledges the skepticism surrounding public-private partnerships but stresses that public funding alone is insufficient to tackle the climate crisis.

Grantham highlights the need for practical implementation of these concepts rather than just theoretical reports. He notes that local governments face austerity, requiring innovative funding structures to support climate action plans. Various UK local authorities are already exploring business cases for demonstrators in cities like Manchester and Bristol.

There is currently more capital available than viable projects to fund, presenting a unique challenge for local governments that lack the resources to develop such projects. Grantham believes that addressing these funding and staffing shortages is essential for the success of net-zero initiatives.

The narrative surrounding net-zero neighborhoods can be framed in various ways, focusing on carbon reduction, social benefits from improved housing, or economic productivity. Grantham argues that the UK's legal commitment to achieving net-zero emissions necessitates a comprehensive overhaul of the energy system and housing efficiency.

While the focus is primarily on retrofitting existing homes, Grantham acknowledges the potential for infill developments and conversions. However, he stresses that new construction must be approached cautiously due to carbon budget limitations.

Grantham draws parallels to past large-scale transformations in the UK, such as the shift from town gas to natural gas in millions of homes, suggesting that significant changes are indeed possible with the right funding and project design.

Moving forward, Grantham envisions a more systematic approach to funding local projects rather than a competitive bidding process. He believes that collaboration between local and central governments is crucial for testing these innovative models at scale and ensuring community involvement in decision-making processes.