So, COP28 finally delivered. Nobody got everything they wanted, they never do, but there was just enough to give us hope. At one point things appeared more than a little desperate. The final deal on the phasing out of fossil fuels IS a major step forward. The final texts are far from perfect, and the lobbyists came in their droves, but lobbyists only turn up when they are scared. 

There is still a lot of work to do. We need renewed effort to crack the financial challenges. Our current financial systems mean that for capital to flow we need projects of investable credibility with risk adjusted returns that provide opportunities for profit, but at borrowing rates which cites can actually afford. 

An inability to break through this barrier will result in all those Hollywood dystopian scenarios becoming true; collapse of global agriculture and food systems; mass migration from drought ridden regions; subsequent rise of populist far right governments; increased conflicts around the world and the subsequent collapse of organised civic society. However, there’s a Wall of Sound coming out of COP28, the collective voice of city mayors, who will of course be on the frontline in dealing with these climate impacts. 

Cities cannot do this on their own however, governments must play their role, pledging commitment to the right policies and programmes that enable cities to get on with the complex aspects of delivery. There is a sense however, that the trust between central and local government across the world has been eroded and needs rebuilding. Cities are the powerhouses of green growth and if governments can give them the right policy instruments, they can unleash the huge social and economic dividends on offer.  

This is why it’s been pleasing to hear the growing momentum around the role of cities and mobilising private finance at COP, some of the themes emerging included; 

• The first Local Climate Action Summit hosted by Bloomberg and the COP28 UAE Presidency, the Urbanisation Ministerial for a second year running and the launch of CHAMP – Coalition for High Ambition Multilevel Partnerships. These welcome initiatives included a focus on mobilising public and private sector investment into cities. 
• A significant ramping up of the number of activities convening investors and cities with a growing appetite amongst the former to forge early stage engagement and meaningful partnerships with cities, including agreement to develop an investment blueprint based on Govanhill in Glasgow. 
• Recognition that investment also needs to be made on the social side of the just transition not just physical infrastructure in order that citizens benefit through increased jobs and skills. 
• Increased demand for proven examples of local climate action from cities that demonstrate successful collaborative partnerships with investors, including Bristol’s City Leap 
• Growing interest from the UK and internationally in the 3Ci model for convening cities and investors around development finance, including its deployment through the Urban SDG on Finance. 

All of this provides a platform for 3Ci to continue developing its pioneering approach, one that convenes city leaders and investors to unlock the barriers that hold back the flow of capital; 

• Firstly, developing new innovative financial models grounded in place that allows for the deployment of blended financial models. The launch of our Net Zero Investment Prospectus and the work of our Net Zero Investment Task Force will help create a network of credible investable neighbourhoods. 
• Secondly, aggregating projects to provide scale provides investors with a greater rate of return, which is why we have developed the National Net Zero Project Pipeline and our work on developing sub-regional approaches, including that in South Yorkshire 
• Thirdly, our work to design and establish a technical assistance facility that allows local authorities to access the right mix of support to enable them to develop more robust investable propositions. 

There is much to look forward to in 2024 and 3Ci already has an exciting array of events and initiatives planned. We will further strengthen our city relationships and grow our networks with investors, because the battle against climate change will ultimately be won or lost on the streets of cities. 

Two major new initiatives to help accelerate the net zero transition were announced on 29 June as 3Ci – the Cities Commission for Climate Investment – hosted a London Regional Investor Event at the headquarters of Connected Places Catapult. 

First was the launch of a 3Ci publication advocating the case for a National Net Zero Neighbourhoods Programme and a Call for Proposals from local authorities to submit projects looking for investment into the programme. 

A second initiative unveiled to delegates was the launch of a Green Finance Fund from the Mayor of London, where up to £500 million will be lent to projects that focus on energy efficiency, renewable energy and clean transport. 

Eligible organisations offered favourable borrowing will include local authorities and social housing providers, and grants are available for small size projects up to £75 million. The Fund was announced by Greater London Authority’s Assistant Director for Environment and Energy, Catherine Barber. 

Professor Greg Clark CBE, Chair of 3Ci and Connected Places Catapult welcomed London’s Deputy Mayor for Environment & Energy, Shirley Rodrigues to the stage to speak about The Mayor’s vision for achieving net zero in London. 

“Cities have to move fast with this agenda, but they are delivering,” she said. 

The event took place in London Climate Action Week, during which a large countdown clock was placed in Piccadilly Circus to remind people there are just over six years left in order to balance greenhouse gas emissions, and prevent global heating exceeding 1.5C above pre-industrial levels. 

Shirley Rodrigues added there is a “huge challenge” ahead for professionals involved in promoting net zero initiatives, adding that it was “great to be here” at the London Regional Investor Event to discuss opportunities with interested parties. 

The Deputy Mayor was joined on stage by Cllr Georgia Gould, the Leader of Camden Council and Chair of London Councils which represents 33 boroughs including the City of London. “One area where we have come together incredibly strongly is in our shared commitment to taking action on the climate crisis,” she said. 

“The work we have done with 3Ci shows huge investment is required to get us to net zero. But there is also a massive opportunity around jobs; ensuring there are the skills required around green finance, retrofit and new ways of working.” 

Georgia added that many boroughs have large housing stocks and a “massive ambition” to make them more sustainable, but that capacity and finance are often lacking. “The job of bringing those two together is a challenge, but is also a massive opportunity and that is why the work of 3Ci is so exciting: building and deepening the relationship between private finance and projects on the ground. 

“The prize is enormous and there has never a better moment to do this. Residents are facing a cost of living crisis and there is a huge desire from citizens to see change.” 

Financers give their thoughts 

In a ‘Dragon’s Den’ style, local authorities pitched their net zero projects and identified opportunities for investment during a series of breakout sessions. Investors then gave their responses on how to make the projects more investible and advice on financing models. 

Later at the event, Greg Clark was in conversation with HSBC’s UK Head of Climate Change, Tim Lord. Greg asked Tim why investors and financiers should consider local government, cities and the public sector as great places to invest if they want to achieve net zero outcomes. 

“There is a huge willingness to invest,” replied Tim, who added that “the lens has changed from ‘we should do this to hit targets’ or ‘it is the right thing to do’, to something that is much more existential about the future of an organisation and how you drive growth.” 

Cities are where the transition to net zero is likely to progress most quickly, he added, but in some cases, there can be quite high levels of risk for consumers or financial organisations. There is a need, therefore, to work with public sector organisations to help de-risk some of those investments to get them moving. 

Tim said another challenge is around scale. “We need to be confident the scale is coming, so that we can invest in the people and skills and types of financial investment models that we need.” But the backing of the public sector and the coming together of national, regional and local governments “is really important to give the financial services industry the confidence to do that”.  

Greg Clark turned to KPMG’s Director of ESG for Financial Services, Graham Smith and asked for his views on the public sector’s role in the net zero transition. 

Graham replied that city projects often have “a political push” but also need “people at different levels to make it happen”. Organisations need champions, he explained. “Every project has bumps in the road and so you need local government to remove those bumps. Getting all levels of a city working together to tackle this is really important.”  

Greg then asked for thoughts on the potential of sustainable financial returns for capital in net zero projects, and how they compare to other investment opportunities or asset classes. 

“Green money is just like brown money,” replied Graham. “It has to be repaid and give a return on capital, and it has to have a project behind it that works. A sustainable project that fails within the first six months or a year because it cannot generate return or cash flow; that project has no sustainable value. 

“Returns are important, but most important of all is for cities and local authorities to understand that lenders and investors look at the world in a different way,” he added.

Concluding remarks 

Wrapping up proceedings, the Mayor of Hackney, Philip Glanville remarked that there was a “palpable sense of buzz” at the event among participants “in trying to meet climate challenges”. 

Good work has been achieved by 3Ci in delivering a net zero pipeline, he added. “This is a unique UK wide partnership with London helping to lead the way.  

“Now it is about taking reflections from today and having the courage to start to experiment with the pipeline and talk to investors to see how we can move from a pipeline to a deliverable programme of work.” 

Catherine Barber remarked: “The 3Ci / Catapult model offers the chance to get together, learn and solve problems; that is what I really enjoyed today.” 

Following the event, Greg Clark said that the day “enabled us to have a conversation that is not otherwise possible almost anywhere in the world. 

“We focused on combining the value of the place with the logic of capital so that local government and city-wide government with pension funds, insurance companies, bankers and financial advisors can grasp the important task of investing in a liveable planet.” 

29.06.23, LONDON, 3Ci – the Cities Commission for Climate Investment – has published today its new report advocating the case for a National Net Zero Neighbourhoods programme.

Developed by 3Ci with support from the Department for Energy Security and Net Zero, and the public and private sectors, this comprehensive report provides an outline business case for the delivery of Net Zero Neighbourhoods across the UK.

3Ci is a partnership between Connected Places Catapult, Core Cities UK, London Councils, Key Cities, Scottish Cities Alliance and supported by Department for Energy Security and Net Zero and the Local Government Association.

Net Zero Neighbourhoods is a new concept that integrates local net zero projects into attractive investment propositions by creating scale and long-term certainty for investors, thereby joining up the different types of assets that are important to decarbonisation. This includes transforming transportation, energy, housing and waste services in a coordinated way, using a blended finance model capable of attracting capital from banks, pension funds and other institutional investors. Importantly, 3Ci’s proposals include a programme of technical assistance and capacity building to ensure projects are of investment grade.

3Ci’s Net Zero Neighbourhood model has a special focus on residential retrofit, one of the biggest sources of emissions in the UK. Here, a core problem is that every neighbourhood has a different mix of housing types and tenures, which makes collective investments needed to decarbonise neighbouring homes difficult. Evidence shows it is also unlikely that most homeowners will pay toward retrofit, increasing the need for public subsidy.

But the new approach can address residential retrofit at no cost to the homeowner or tenant and reduce the need for public subsidy from around 70-80% to 35%. It does this by creating a revenue stream from energy savings over the long-term which is attractive to capital investors, blending their contributions with smaller amounts of public subsidy in an investment vehicle. The model also allows for a saving to be passed to the householder, or used to target fuel poverty, helping a just transition to net zero.

3Ci has calculated the cost of achieving local net zero at over £200 billion just for London and the 11 UK Core Cities – for the whole of the UK that figure is closer to £1 trillion, a figure way beyond the ability of public finances to address. Without bringing private capital into local net zero projects the UK will fail to meet its decarbonisation targets, and it is exactly this gap which 3Ci is designed to fill. 3Ci’s model aims to turn the cost of net zero into an opportunity, to bring significant additional investment, jobs and green growth to UK plc, delivering local environmental and health benefits, alongside community wealth-building.

Local authorities have projects which can deliver net zero and the investment community has demonstrated a growing interest in financing them, but too often these projects are not of investment grade. 3Ci’s approach therefore also offers technical assistance and capacity building to improve the standard of projects, alongside a platform to bring investors and project owners together.

Recognising these needs, opportunities and challenges, 3Ci’s new report makes the case for a multi-asset approach that avoids only cherry-picking projects that make the biggest returns, reduces the need for public subsidy and has no cost for the householder, improving the chances of community buy-in.

The report recommends a national programme of Net Zero Neighbourhood demonstrators to provide proof of concept, creating market and investor confidence.

Prof Greg Clark CBE, Chair of 3Ci and Connected Places Catapult, said: “The Net Zero Neighbourhood has several advantages over other methods of decarbonising places. It creates scale, certainty and an investable revenue stream, whilst building capacity for local authorities and enabling community buy in. Without the approach that 3Ci has developed, both within this model and its wider work, the UK will be far less likely to attract the capital needed to achieve its net zero ambitions.”

He adds that 3Ci has set up a Net Zero Investment Task Force of private investors, is creating a Net Zero Neighbourhood Community of Practice, and developing a ‘pitch-book’ of projects, bringing together places and projects that are either developing schemes which have some of the features of a Net Zero Neighbourhood, or have the ambition to do so.

“Nowhere yet has the ability to undertake a full Net Zero Neighbourhood project however, so our goal is to also set up full demonstrators capable of testing this model. The prize will be a major shift in investor appetite for net zero, shifting the market fundamentally toward this type of model, mitigating the existential threat of climate change whilst creating local jobs and other benefits. This is an area where the UK can be truly world leading, and we must now focus together on realising this opportunity.”

As a next step, 3Ci is seeking local authorities that are interested in working with them to develop demonstrators of the Net Zero Neighbourhoods concept. Local authorities have until 5^th July to register their interest.

3Ci is looking for projects to be included in a new National Net Zero Neighbourhoods Programme, which will support and raise the profile of pilot schemes looking for local investment. This is a non-competitive process.

Net Zero Neighbourhoods is a place-based concept developed by 3Ci which aims to increase local prosperity through enhanced growth in green businesses and access to associated jobs. It also looks to create vibrant and cohesive communities through engagement and collaborative design, and enhance the attractiveness and quality of neighbourhoods.

Further information regarding submitting proposals for a Net Zero Neighbourhood will be provided in a workshop on Wednesday 5 July at 9.30am

Proposals accepted will be incorporated into a UK Net Zero Neighbourhood ‘pitchbook’ to be shared across Government departments and potential investors forming the basis of a potential first wave of a national programme, subject to funding being secured.

Successful schemes are set to be profiled and presented at COP28 in Dubai, as well as other national and international investment focused events. They will also be shared with the private finance community including institutional investors, investment banks and pension and sovereign wealth funds.

Proposals should form part of an existing or planned redevelopment scheme and local authorities are invited to submit single proposals that will contribute towards proving the concept of the Net Zero Neighbourhood model.

Proposals should:

• Demonstrate understanding of the place-based Net Zero Neighbourhood model and how it could be applied within the proposal
• Include a description and identification of location, including information on building type and mix (e.g. residential, office, leisure), physical infrastructure (including mobility and energy), diversity of the neighbourhood, green and blue space.
• Provide evidence of political support at a senior level
• Identify any secured or potential funding which might contribute towards the design or delivery of the programme.
• Describe the diversity and socio-economic mix of the communities within the proposed neighbourhood

Registration of Interest

Please register your interest by submitting the name of the local authority and a contact person to Helena.Downey@cp.catapult.org.uk

You will then receive a confirmation email, an invitation to join the webinar and a copy of the Executive Summary of our Outline Business Case for Net Zero Neighbourhoods.

Interested authorities will then be invited to submit a short application by 8 September 2023.

Public Servants and Climate Change: Reaching Net Zero will support local authority colleagues to overcome the challenges to transitioning to net zero. Foundations of Delivery will enable learners to enhance delivery and performance measurement. The courses are fully funded by 3Ci.

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Via this partnership, learners can expect a world-class education experience that is backed by the latest research and expertise. These courses provide an excellent opportunity to upskill your knowledge on net zero strategy and play a critical role in achieving our national net zero targets. 

We invite you to apply for our courses based on your potential to make a positive impact in your community. Places are limited.  

Public Servants and Climate Change: Reaching Net Zero (10 places) 

Co-developed with Apolitical, Oxford Net Zero and Smith School of Enterprise and the Environment (SSEE) at the University of Oxford, this course provides a comprehensive overview of net zero, including its challenges and exploring how to promote the transition to net zero. In this course, you’ll explore the science underpinning net zero and engage with policies designed to reach it.  

By the end of this course, you will be able to: 

• Evaluate and critique a climate change memo to more clearly and comprehensively explain the science of climate change. 
• Investigate and analyse a climate action plan. 
• Evaluate the role of public servants in driving net zero. 

Estimated learning time: 10 hours  

Dates: 29 May 2023 – 1 July 2023 

Apply by 5 May 2023.

Foundations of delivery (10 places) 

Co-developed with expert partner Delivery Associates, this course focuses on delivery and related performance measurement. This course will support you in understanding of the fundamental principles and processes which underpin delivery in government, such as prioritising goals, assessing organisational capacity, developing and managing effective implementation plans, and cultivating a culture of delivery. 

By the end of this course, you will be able to: 

• Examine key factors required to build a foundation for delivery 
• Understand the delivery challenge 
• Plan for delivery 
• Develop routines to drive delivery 
• Learn how to manage stakeholder relationships during the delivery process 

Estimated learning time: 11 hours 

Dates: 29 May 2023 – 1 July 2023 

Apply by 5 May 2023.

The criteria for selection for the courses will be based on ensuring regional representation and relevance to the applicant’s day-to-day job. No prior qualifications are required.  

These courses are 3Ci’s first offering to upskill local authorities in net zero strategy, and they will inform greater work from 3Ci to accelerate capacity building and skills development to deliver net zero commitments. Contact us to find out more about how 3Ci can support your transition to net zero.

The debate was chaired by Rt Hon. the Baroness Hayman GBE, joined by Lord Martin Callanan, the Minister for Energy Efficiency and Green Finance at the Department for Energy Security and Net Zero, Lord Larry Whitty, Peers for the Planet; Kerry McCarthy MP, Shadow Minister for Climate Change; and London’s Deputy Mayor for Environment and Energy, Shirley Rodrigues, alongside representatives from HSBC, Aviva, BlackRock and KPMG. The roundtable brought together parliamentarians, place leaders and green finance specialists to explore how local action and private investment can combine so that real change can be achieved to transform communities to a net zero future.

The reception that followed, hosted by Baroness Hayman, also featured presentations from Rt Hon Ed Miliband MP, Shadow Secretary of State for Climate Change and Net Zero; Prof Greg Clark CBE, Chair, 3Ci; Alex Sobel MP, Chair of the Net Zero APPG; and Joanne Anderson, Mayor of Liverpool.

Prof Greg Clark CBE, Chair at 3Ci said:

“The discussion confirmed three important points for me. Firstly, the UK has the combination of innovation and strong place leadership needed to deliver net zero but is currently unable to meet the cost of doing so. Secondly, major private investors want to enter this space, but struggle to find an investment pipeline that meets their needs. And thirdly, that local authorities do have project pipelines, but often lack the capacity to bring them up to investment grade.

“3Ci’s programme, which now has support across the UK local government family and from many major investors, is designed to tackle exactly these issues. Since its inception at COP26 3Ci has created a unique platform between place leaders and major investors, built a financial model capable of meeting the needs of both, and created an investment pipeline of 1,000 projects worth £60billion. The debate provided some fresh thinking for the work of 3Ci, which we will take away and include in our benefits package for localities which we are rolling out across this year.”

Rt Hon. the Baroness Hayman GBE added,

“I was delighted to Chair the joint 3Ci and Net Zero APPG roundtable and reception to hear from leading figures across finance, local government and business about their ideas for unlocking the potential of our cities, towns and regions to deliver green growth. We know that the transition to net zero cannot be delivered from Westminster and Whitehall alone – it will require innovation, collaboration and strong leadership at the local level in order to deliver this new era of opportunity for our communities.”

3Ci’s Chair, Professor Greg Clark CBE, said:

‘Mission Zero is a welcome and powerful contribution to the Net Zero debate at a critical moment in time.  The report’s increased focus on the economic benefits of Net Zero, and the scaling up of green finance activity is much needed. 

‘I particularly welcome the report’s acknowledgement the vital role of local authorities in getting to Net Zero.  The role of nations in setting targets and providing the means to achieve them is vital.  But increasingly, climate change is simply too complex to solve at the national level alone, and success will come only by partnering with place leadership working in tandem with the custodians of major financial institutions, which is exactly the model 3Ci has developed.  I look forward to working with Chris and 3Ci’s other partners in making these ambitions a reality.’

The 3Ci team engaged with Chris Skidmore MP during the review that led to this report and made a written submission, as did many of 3Ci’s stakeholders across local government and the private sector, including UK100 who have been instrumental in championing the role of local authorities.

The essence of 3Ci’s submission is that paying for Net Zero is beyond the ability of the public purse alone, and the UK needs a new, innovative financial solution to attract additional private investment into Net Zero projects that will also boost jobs and growth. 

3Ci has developed exactly such a model, working with representatives across the whole UK local government family (counties districts and towns as well as cities), alongside major investors, banks and other financial institutions, who all back 3Ci’s approach.  3Ci has also had the support and financial backing of Government through the Department for Business, Energy, Innovation and Skills in developing the detail of its model.

3Ci was founded by the Connected Places Catapult, London Councils and Core Cities UK. Greg initially held the position on an interim basis since the commission was launched at COP in Glasgow in October 2021.

3Ci works to build innovative financial partnerships between Urban Investors and City Leaders. The aim is to accelerate Net Zero investment across the UK and build stronger partnerships between these sectors, which will:

• deliver a £200billion-plus Net Zero investment dividend for the UK;
• significantly reduce energy usage, fuel poverty and emissions, supporting a Just Transition;
• boost UK economic growth and productivity, creating many thousands of jobs;
• increase adult skills-levels, strengthening the labour market for the future; and
• firmly position the UK as a global leader in delivering Net Zero financing solutions.

3Ci is creating a broad partnership, including UK Government, Innovate UK, Metro Mayors, Combined Authorities, Scottish and Key Cities, Counties and Districts and a growing league of private investors, financiers, advisors, developers and built environment technology professionals.

3Ci offers a platform for a single conversation on issues relating to Net Zero financing across the UK.  As well as our founding partners, Innovate UK are providing core funding for our work and the Department for Business, Energy and Industrial Strategy (BEIS) is providing programme support.

Launched at COP26 in Glasgow, one of our partner cities, 3Ci quickly gained the backing of senior national and global investors.  It has engaged and has support from HSBC, NatWest, Lloyds, UK Infrastructure Bank, Scottish National Investment Bank, Aviva, Legal and General, Siemens, Arup and Jacobs.

3Ci has powerfully brought together place-leadership with the custodians of financial institutions to create a practical solution to a shared challenge. 3Ci’s partnership combines an innovative financing model with local convening powers, access to investment, technical assistance and ready to go projects to deliver it’s aims, in a way that will also take communities on this journey. 

3Ci has now developed activities around five practical domains for partnership between Urban Investors and City Leaders.

1. National Net Zero Project Pipeline – Development of a national register of local and regionally led bankable projects, articulated to a common and combinable format, to deliver net zero outcomes.
2. Regional Investor Events – Series of events aimed at convening cities and local governments with investors to showcase opportunities, building mutual understanding and confidence.
3. Local Integrated Investment Pilots – A programme of geographically diverse pilots which test and demonstrate the delivery of integrated local investment model that aggregates different domains and sectors to optimise co-benefits and facilitate cross-investment.
4. Dissemination of local and regional innovations – Development of a national platform to share innovations rapidly in an easily accessible and standardised format.
5. National Technical Assistance Programme – Creation of a development fund that invests in the necessary capacity and skills to bring projects forward for investment.

3Ci continues to grow in influence under Greg’s leadership and has recently hosted a major Net Zero Investment Summit bringing together investors, local authorities and others to help shape bankable, net zero projects.

Commenting on the appointment, Mayor of Bristol, chair of Core Cities, and member of the appointment panel, Marvin Rees said:

“We are absolutely delighted to have appointed someone of Greg’s calibre. He brings an immense depth of knowledge on how cities function and work along with their investment requirements. As city leaders we look forward to working with Greg on the next stage of 3Ci’s journey as we work to secure some £330 billion of investment for cities around the UK.”

Cllr Kevin Bentley, Leader of Essex County Council added,

“Counties and Cities are in the climate challenge together and our work with the private sector through 3Ci is critical to accelerating investment. We are delighted to have Greg Clark as our chair.”

Cllr Susan Aitken, Leader of Glasgow City Council said,

“We need a permanent partnership between city leaders and urban investors if our climate ambitions are to be fully realised. Glasgow and Scottish Cities are fully committed to working with 3Ci to help achieve the investment needed. We are delighted to have Greg Clark to chair this important partnership.”

Nicola Yates, CEO of Connected Places Catapult added,

“Since Connected Places Catapult, London Councils and Core Cities joined forces to create 3Ci, the Commission has gone from strength to strength. I’ve been proud to witness 3Ci grow into a wider partnership, united around helping cities to shape bankable, net zero projects. The initiative now also includes the UK Government, Innovate UK, Metro Mayors, Combined Authorities, Scottish and Key Cities, Counties and Districts, plus a growing league of private investors, financiers, advisors, developers and built environment technology professionals.

“At its heart, 3Ci’s unique model aggregates demand and fosters innovation in ways which will help drive UK enterprises and exports. We are delighted that our chair, Greg Clark, will chair the partnership on a long-term basis.”

Prof Greg Clark CBE added,

“3Ci has a vital mission to ensure that urban investment plays a key role in delivering the UK’s ambitious net zero commitment, city by city and neighbourhood by neighbourhood. That means we need a credible platform to connect and partner city leaders with urban investors. I’m proud to be continuing my work with the commission on a long term basis, and look forward to playing my part in helping cities attract investment to tackle the climate crisis.”

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3Ci’s next event, Regional Net Zero Investment Forum – Glasgow, will take place on 22 November. Find out more and register here.