Cities could play an important role in our energy system. In the energy chapter of the 'Red Paper on Scotland', I argued for greater public ownership of energy generation in Scotland by rediscovering the role local government used to play. This reflects what other countries regard as the norm, notably through the growth of renewables in Denmark.
And not just Denmark. Munich in Germany has a target to supply the entire municipality of 1 million people with renewable electricity by 2025. The city has already invested €900 million in renewable energy projects, and it has plans to invest a total of €9 billion to deliver its 2025 target. A group of councils, primarily in England, are also getting involved.
The IPPR has now published a report entitled ‘City energy: a new powerhouse for Britain’. This sets out how cities can become involved in energy and what central government could do to support them.
Cities could deliver the investment to decarbonise our energy system by raising their own finance through issuing green bonds and by making better use of their pension funds. In Scotland, over £24bn is sitting in local government pension funds, mostly invested overseas. Lancashire County Council has already done this.
Using this finance, city energy companies would deliver benefits to city residents rather than shareholders of the mostly foreign companies that dominate the Big Six. Currently, 50% of offshore wind and 69% of nuclear generation is owned by foreign state-backed companies. This means our consumer funded subsidies are going to foreign shareholders.
The IPPR report sets out a number of ways cities could get involved in energy, from becoming a licensed supplier down to joint ventures or partnerships. Aberdeen is one example of a Scottish council that is getting involved by becoming a global pioneer in the use of hydrogen produced using excess power from their nearby offshore wind farms.
The gains include cutting bills and tackling the fuel poverty endemic in our cities. Providing new investment to decarbonise our power supply, with generation that will help secure long term energy security. Not to mention jobs and sustainable economic growth.
In Scotland, this initiative should not just be limited to cities. Scottish Water is well placed to do more than the modest first steps it has taken in this area. Smaller, rural authorities could also get involved, either by linking with cities, or forming partnerships with other councils.
Local government led the way in the 19th Century by generating energy. It's time to rediscover that role and the IPPR report shows how to do it.
Cross posted at Utilities Scotland