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Clean, Green & Resilient Cities - Climate Leaders Live
21 Plays4 years ago
The panel discusses how to create green, resilient and sustainable cities. Listen to a panel of experts including Prof. Greg Clark CBR, FAcSS, Group Advisor on Future Cities and New Industries, HSBC. This clip was recorded at the Climate Innovation Forum. organised by Climate Action in June 2021.
This episode is part of HSBC’s Business Plan for the Planet podcast mini-series, which focuses on ESG insights. Hear from experts whose work is at the heart of sustainability-linked trends and opportunities, as well as from businesses that are delivering change for a better future for us all.
To find out more about HSBC’s Business Plan for the Planet programme, click here
Hosted on Acast. See acast.com/privacy for more information.
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Transcript
Introduction to HSBC Global Viewpoint
00:00:00
Speaker
This is HSBC Global Viewpoint, your window into the thinking, trends and issues shaping global banking and markets.
00:00:09
Speaker
Join us as we hear from industry leaders and HSBC experts on the latest insights and opportunities for your business.
00:00:18
Speaker
A heads up to our listeners that this episode has been recorded remotely, therefore the sound quality may vary.
00:00:24
Speaker
Thank you for listening.
Focus on ESG and Sustainability
00:00:32
Speaker
Welcome to the Business Plan for the Planet podcast, a series centered around ESG insights.
00:00:37
Speaker
In these episodes, you'll hear from experts whose work is at the heart of sustainability-linked trends and opportunities, as well as from businesses that are delivering change for a better future for us all.
00:00:47
Speaker
Join us as we shine a spotlight on their commitment to a sustainable future.
00:00:54
Speaker
Let's move ahead with more on cities, with more on resilient cities.
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How do we create green cities?
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I'm now joined by a panel of experts who can move those issues forward.
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Welcome.
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What I'd like you to do, each of you, is actually introduce yourselves because it would be much better than me trying to summarize what you do.
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Polly, can I just ask you first of all, and if you can, in a minute, just summarize, no more than a minute, just summarize what you do.
Local Leadership in Net Zero Targets
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what your view is about how things are moving on green, resilient cities.
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Each of you, I'll give you a minute.
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Polly first.
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Thanks very much.
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I think there is a lot of appetite for movement on green cities, but I think the reality is, and we keep saying this to government, we're a network of locally elected leaders who've made a commitment to act on climate.
00:01:44
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But the reality is we have a really ambitious national target of net zero by 2050 that they simply can't achieve without local leadership.
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There is literally no way because so much of this stuff actually happens in places.
00:01:58
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The national government's commitment is commendable, but without working with leaders, not only to deliver, but also to design those net zero solutions, we won't get very far.
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An understanding of what those powers are is important, and that's why we published our Power Shift report, which is an analysis of what local leaders can do.
00:02:16
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and the limits put on those powers by national leadership.
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So I would say you can have all the talk you want, but unless you change the rules to enable local leaders to do more and to take and to be a key partner in designing those solutions,
00:02:32
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those targets will stay as targets and we'll miss them.
00:02:35
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Thanks, Polly, for the moment.
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Let's go to Stefan Hockinson, who's Global Director of City Energy Solutions and CEO of E.ON Business Solutions.
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Stefan, give me your minute in a moment, just in a moment, but also explain what you do at E.ON.
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Thank
Sustainable Cities: Solutions and Accountability
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you very much for this.
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I'm leading the development and the executions of all our solution business in cities and industries.
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And what we are doing, and the
00:03:00
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Following up on Polly's comment, it's really about local accountability and local making things happen, coming into practice.
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What is exciting and really bringing hope is that the solutions are already here.
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We don't need to invent new solutions.
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We can really do it.
00:03:19
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It's about reusing what we already have.
00:03:22
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We have 53,000 data centers alone in Germany, and they're pumping out residual heat in the air.
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We're not using the existing energy flows.
00:03:34
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We can use it to heat the homes.
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In London alone, the subways are using the same amount of power as a large nuclear reactor, just when the trains are breaking, that is transforming into residual heat going vented out in the air.
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This we are right now working on using to heat the homes of London on a zero carbon way.
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This we need to do much more.
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All right.
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Well, look, that's clear.
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Christine Gamboa, chair of the World Green Building Council.
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Christine, welcome.
00:04:05
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Again, just give a summary of your view and also exactly what you're doing.
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Thank you very much.
Scaling Global Principles Locally
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Yes, so where are we?
00:04:14
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I think I agree.
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We have solutions and principles.
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And what I do at the World Green Building Council is drive forward a network that is in 70 countries with 36,000 members and scaling up
00:04:28
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global principles to be regionally relevant, but also locally that bring around collaboration, urgency and implementation of the solutions that we need to embed climate resilience and resiliency solutions across the decisions, the investments and the quality infrastructure we deserve to meet the climate goals.
00:04:51
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Thanks, Christina.
00:04:51
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Professor Greg Clark from HSBC.
Place-based Strategies in Decarbonization
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Greg.
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Well, good morning everyone.
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I'm Greg Clark.
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I'm the group advisor on future cities and new industries at HSBC, which means I work with the bank's client base across 67 countries and 300 cities, essentially working with our clients to help them define
00:05:12
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their net zero pathway and to apply finance in appropriate ways to it, driving the demand for sustainable finance.
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And my view is that sector strategies in decarbonisation are really accelerating.
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I think they need to be complemented by place based strategies.
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And I think that places, particularly cities, provide an additional dimension
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to the net zero transition.
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For example, they set a clear agenda, they can inform and shape citizen opinion, they can optimize the integration and the multipliers that come between sectors, they can reconfigure places to make them more net zero friendly and enabled.
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They can make investment opportunities more visible to the marketplace.
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They can scale up through aggregation and they can secure the extra benefits of decarbonization in the forms of jobs and savings and everything else.
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So place-based strategies are part of the investment platform for net zero transition.
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Thanks, Greg.
00:06:13
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Let's go to East London to Philip Granville, who's London Council's Chair of Transport and Environment and Mayor of Hackney.
Local Government and Community Involvement
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Philip, why don't you go ahead describing what you do?
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Okay, well that's the best start isn't it too.
00:06:28
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So you mentioned all my titles, they're not I think why this is so important.
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You know first and foremost I'm a citizen and resident of Hackney in London and I say this to build on what others have said because citizen, people, community and place
00:06:43
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are intrinsic to getting to net zero.
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It's what residents and Londoners are expecting of us.
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87% of Londoners are motivated to take action on climate change.
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And somebody in the last session talked about it's vital around re-election and long-term planning.
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But actually, it's where this whole agenda is going to succeed or fail.
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We do want more in terms of national strategy, framework, powers, funding and everything else.
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And obviously the large scale investment that have been talked about is absolutely vital.
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But if we cannot connect that to people and place and local government and cities, none of it will work.
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and I'm a huge advocate for the part that local authorities have in delivery.
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We cannot just see them as enablers.
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We provide services, we're landlords, we're planners, we shape our local economies.
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We have the responsibility for ensuring just transition, that businesses can access the EV infrastructure that they need, that houses are retrofitted.
00:07:44
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All of this is absolutely
00:07:46
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essential to our journey to tackle climate change.
00:07:49
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And what we're doing as London councils is recognising that subsidiary that inner and outer London are different places, that the 32 London boroughs in the City of London collectively have to come up with London solutions.
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We cannot rely just on our regional mayor or national government.
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And so we're leading seven major climate programmes across the capital.
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Those big themes, as I've mentioned,
00:08:10
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energy transition, just economy, retrofitting, and making sure that we're developing those ideas at a local level.
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And the last bit I'll finish on working with the Connected Places Catapult and Core Cities, because this isn't just a London issue alone, it is looking at the investment we need, bringing that together in the CCIC, which we're launching tomorrow, and creating a fundable proposition for UK cities to ensure that we're harnessing that green finance.
00:08:36
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I know the City of London wants to be the centre and capital for.
00:08:40
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So
00:08:40
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I think it's an extremely exciting time for cities to be showing this level of leadership.
00:08:45
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Philip, I heard most of that, which is great.
00:08:47
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Can I just ask you the key question?
00:08:50
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Are you comfortable with the level of collaboration?
00:08:51
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Then we'll get into a much bigger debate among the five of you.
00:08:55
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Are you comfortable as mayor and given the committee you're on, that you're getting enough collaboration with others going through the same experiences?
00:09:04
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Yeah, I think we're leading that collaboration.
00:09:06
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I think that's what's really vital.
00:09:09
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Most of us have declared a climate emergency.
00:09:11
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We've got climate action plans.
00:09:13
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We decided rather than a top-down London leadership model that we would create networks led by individual London boroughs around the seven key climate themes and share that peer-to-peer knowledge.
00:09:24
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That makes us much more credible actors when we're talking to business, when we're talking to regional and national government.
00:09:29
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I think the disconnect is with national government.
00:09:34
Speaker
And we can't wait for national government.
00:09:35
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So we're innovating and doing work, as I said.
00:09:38
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But what we really need to, I think, see is whatever commitments come out of COP, whatever comes out of the spending review, that national government is at the absolute, that local government is at the absolute heart of how we deliver.
00:09:50
Speaker
That's the critical bit of collaboration I sometimes feel is missing.
00:09:54
Speaker
All right.
00:09:54
Speaker
Well, let's get an assessment from all five of you then about where the obstacles are at the moment, what needs to be done.
00:10:00
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Stefan, quickly come in, can you, on solutions?
00:10:03
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What kind of obstacles are you seeing?
00:10:05
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And I'd like to ask each of you to answer that as well.
00:10:08
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Thank you.
Obstacles to Sustainable City Solutions
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Three obstacles.
00:10:10
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Number one is regulation is from the 19th century.
00:10:16
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Obviously not correct, but it's too old.
00:10:20
Speaker
You still penalize renewable energy.
00:10:24
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in favor of all gas solutions and we have legacy structures going into the financial systems in UK and also other countries.
00:10:31
Speaker
You need to change regulation to enable PV and heat pumps and local production to be usable.
00:10:38
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Second obstacle, the prerequisite when building.
00:10:42
Speaker
You need to build with prerequisites for low temperature and reusing, not the way we built before.
00:10:48
Speaker
And this is meaning very early in the planning.
00:10:51
Speaker
This does not cost much, but it needs to be agreed with all parties around the table.
00:10:55
Speaker
Final obstacle is about the social housing.
00:10:59
Speaker
You need to make that more simple.
00:11:01
Speaker
We don't need more PhD in the SAS system to understand how to make this profitable for companies to work and make money on.
00:11:10
Speaker
You need to make it transparent.
00:11:12
Speaker
The technology is already there.
00:11:14
Speaker
It can be used.
00:11:15
Speaker
So it's simplifying and working addressing these three areas.
00:11:20
Speaker
Thanks.
00:11:20
Speaker
Polly, what's your view?
00:11:22
Speaker
And let me go around all four of you.
00:11:24
Speaker
Polly, next.
00:11:25
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Well, I would agree with Stefan that the current rules and laws are not fit for purpose.
00:11:28
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I mean, I can come up with a lot of innovative examples from our network of our members who, but each of those innovations are limited in their ability to be replicated, scaled,
00:11:40
Speaker
or transferred elsewhere because of existing national policies and rules.
00:11:43
Speaker
And I would back up Phil on this.
00:11:45
Speaker
You can have all the collaboration you want across the networks that we've established and many others have established that shares knowledge about what is currently possible, but each one of those things will bounce up against national policy, regulation and legislation.
00:12:00
Speaker
So we actually think there needs to be a net zero local powers bill, which actually transforms
00:12:07
Speaker
the frameworks within which local authorities work, enabling, permitting and obliging local climate action.
00:12:15
Speaker
Because for every place which is like Hackney and Phil, there is somewhere else which is holding back.
00:12:21
Speaker
We need to make sure there is a de minimis action on this that is absolutely obliged in law, because without that, we will not achieve our targets.
00:12:29
Speaker
So the current rules and laws are not fit for purpose.
00:12:32
Speaker
I would also say that political will is still not as
00:12:37
Speaker
universal as it needs to be.
00:12:39
Speaker
And the other thing is making sure that we establish what we really mean by political consensus.
00:12:44
Speaker
We're an all party network.
00:12:46
Speaker
That's really important to us because we understand that to make sure that almost regardless of your other political ambitions and strategies and priorities, you're going to tackle climate, right?
00:12:57
Speaker
You're just going to do that.
00:12:58
Speaker
But making sure that that political consensus is not undermined at election time, that instead you have
00:13:05
Speaker
a race to the top rather than a race to the bottom is really important.
00:13:08
Speaker
And there are lots and lots of temptations that we see elected politicians or politicians with ambitions to get elected using, which can undermine what is currently a pretty good direction of travel.
00:13:22
Speaker
So I would say the current rules, the lack of real understanding of what that political consensus is,
00:13:30
Speaker
might be and ultimately making sure that national government understands the power of local government and demonstrates that with political will.
00:13:39
Speaker
Christina.
00:13:40
Speaker
Thank you.
00:13:41
Speaker
Yes, I'm going to build on what has been said and I would say first in that conversation of national regulation, local regulation, there is not enough clarity on the national vision of
00:13:53
Speaker
for the city systems to be aligned, for example, with the commitments of the nationally determined contributions that go into the COP26 process, for example.
00:14:02
Speaker
And so the NDCs may not be enablers for what cities want to do.
00:14:06
Speaker
And so we've been hearing cities move further faster.
00:14:10
Speaker
And in that dialogue, we have an obstacle, but it's an opportunity.
00:14:14
Speaker
And it's the huge amount of leverage that public procurement can bring as a strategic lever.
00:14:21
Speaker
And also, for example, to incentivize low carbon energy systems and providing financing models that can really upscale the renovation in partnership, of course, with the private sector and communities.
00:14:34
Speaker
And with this, I guess the last one would be
00:14:37
Speaker
that we have to go back
Financial Constraints and Innovative Tools
00:14:39
Speaker
to enforcing energy efficiency codes and resiliency standards because we have to work with asset owners, designers, developers, and the construction sector to really empower local authorities to make decisions having climate at the center.
00:14:55
Speaker
It's still in the fringes.
00:14:57
Speaker
Thanks, Prisina.
00:14:58
Speaker
Now, Greg, I've left you to this point because you have many other affiliations apart from HSBC in planning, etc.
00:15:08
Speaker
And I'm asking you for your reflection, particularly on this pretty brutal contention.
00:15:14
Speaker
Certainly, we heard from Stefan and also from Polly that really regulation and relationships are simply not fit for purpose.
00:15:23
Speaker
We heard from Stefan it's actually 19th century.
00:15:26
Speaker
Is that your view as well?
00:15:29
Speaker
Well, I might put it another way, but I think it amounts to the same thing.
00:15:32
Speaker
I would say, Nigel, that we have an incredibly compelling imperative here.
00:15:38
Speaker
We have a market that wants to respond, a massive investment opportunity, but we can easily become trapped in a kind of paradox, which is that on the one hand, the UK is a global leader
00:15:51
Speaker
in financial innovation.
00:15:53
Speaker
And yet at the same time, the UK is one of the most financially centralised countries in the world, which means that local governments in the United Kingdom don't enjoy the same financial freedoms and powers as the average of the OECD countries, for example.
00:16:08
Speaker
So this leads to a kind of absolute innovation and inventiveness requirement.
00:16:14
Speaker
We have to work a bit harder to make financial tools work in the UK.
00:16:19
Speaker
So that means on the one hand,
00:16:21
Speaker
The big barrier we have to overcome is the transition itself.
00:16:25
Speaker
Many of our cities, but also our sectors, are deeply embedded in old business models, old infrastructure platforms, old ways of doing business.
00:16:35
Speaker
And as we change, it produces a new financial model, which is hard to accommodate if you don't have much freedom of operation.
00:16:44
Speaker
The second thing then, of course, is a confidence gap.
00:16:46
Speaker
We have to be much more confident on the financial side about the financial tools we can bring to this.
00:16:53
Speaker
And we have to be confident that the transformation is going to work.
00:16:57
Speaker
And that comes back to the planning, the regulation and everything else.
00:17:01
Speaker
And then the third thing that's really important here is aggregation, because
00:17:05
Speaker
Every place is different, as Phil and others on this panel will know.
00:17:09
Speaker
But on the other hand, every place has some assets that are somewhat similar to many other places.
00:17:15
Speaker
So we have to be very good at recognising the individuality of UK cities, but at the same time recognising what they have in common.
00:17:24
Speaker
that might be put together in aggregated platforms to attract larger amounts of capital.
00:17:30
Speaker
So we have an aggregation challenge, we have a confidence challenge, and we have an inventiveness challenge around transition pathways.
00:17:37
Speaker
But all of those challenges, I would say, are the things that get us out of bed in the morning and make living life at the moment a highly motivated thing.
00:17:47
Speaker
Well, let's see if we have consensus on that.
00:17:49
Speaker
I saw Polly nodding agreement quite violently.
00:17:51
Speaker
Phil, do you see this as the way ahead?
00:17:54
Speaker
I'd like to get your comments from what you've just heard of Greg, the four points you put on the agenda there.
00:18:00
Speaker
Phil?
00:18:01
Speaker
Yeah, I think there is a degree of consensus, and I think you'd expect it on this panel.
00:18:06
Speaker
And I reflect on what Stefan was saying and Greg's support in terms of regulation and how we need to unlock these models.
00:18:14
Speaker
I think that the challenge will be...
00:18:16
Speaker
We have some really good examples of, I think, private sector, national government, mayoral government in London and boroughs working together around some of the EV infrastructure.
00:18:26
Speaker
We've got, I think, nearly over a third of the EV charging points in London.
00:18:31
Speaker
That has been a really great example of everybody working together and delivering for Londoners.
00:18:38
Speaker
I think it's more examples like that where we can take action together
00:18:42
Speaker
and citizens can see the impact, businesses can see the impact, it's value for money for central and local government.
00:18:48
Speaker
I think my biggest fear around delivery and some of the points that Stefan made, if I can just finish on this,
00:18:56
Speaker
is that we're signed up collectively as London to a Green New Deal mission which sees the growing of London's green economy.
00:19:06
Speaker
And that is really important in terms of just transition point and Londoners getting the green jobs, both white collar and green collar and blue collar in our communities and seeing and touching and getting the opportunities to deliver this stuff off on the ground.
00:19:22
Speaker
If we don't create the local supply chains, the certainty around funding and regulation, those jobs won't be embedded in our communities.
00:19:29
Speaker
They'll be delivered by national players that arrive, do something and leave again and don't leave behind the jobs or the skills to maintain those assets into the future.
00:19:39
Speaker
And Susan, I think, from Glasgow said in the last session something really powerful.
00:19:43
Speaker
We can't
00:19:44
Speaker
leave the financial burden on our citizens of all of this transition.
00:19:49
Speaker
And that can be, you know, legacy tech, it can be tariffs for energy that aren't affordable, it can be things that your landlord can't maintain.
00:19:59
Speaker
Those are all vital if we're to take forward this agenda and really unlock our local supply chains and skills and technologies.
00:20:07
Speaker
Stefan, is that a driver for the way forward?
00:20:10
Speaker
Is that in line with the kind of ways that you believe that the three points you made can be overcome?
00:20:18
Speaker
Partly.
00:20:19
Speaker
First, it's too slow.
00:20:21
Speaker
We need to speed up.
00:20:23
Speaker
Right now, we are inside London in Citigen, decarbonizing from old coal and oil power station into gas and then renewable power heat pump.
00:20:34
Speaker
But the prerequisites to be able to do that on a financial grounds is not working because the systems are subsidizing the oil gas solutions and penalizing the heat pumps.
00:20:45
Speaker
And on top of that, adding new PV and getting the permit to put up PV panels is very challenging.
00:20:52
Speaker
In the end, you also need some kind of a PhD to understand the system.
00:20:57
Speaker
Biogas, for instance, is not seen as renewable or a vehicle to go from natural gas to hydrogen.
00:21:04
Speaker
We cannot use that in the UK.
00:21:06
Speaker
We are not adopting the structures of what we know.
00:21:09
Speaker
So we need to change it and it needs to be much faster.
00:21:13
Speaker
But I need to keep pressing you.
00:21:15
Speaker
Do you think there's a recognition
Political Consensus for Local Climate Action
00:21:16
Speaker
of that?
00:21:16
Speaker
Because all of you in your own way have been pretty critical of central government, not really understanding and gripping the enormity of the challenge and the enormity of the opportunity.
00:21:27
Speaker
Absolutely.
00:21:27
Speaker
I agree on that.
00:21:28
Speaker
And there's a tremendous change over the last 18 months.
00:21:33
Speaker
So we are definitely going in the right direction, but we cannot release the pressure for a second because then it's not going to happen.
00:21:40
Speaker
I'm certainly left with an impression, and I quoted this at the beginning of today's sessions, that really in government they realize there's a lot to be done, but they're still, they all say they're working incredibly hard, but can't actually deliver the kind of policies and the kind of clarity that everyone, people like you are looking for.
00:21:58
Speaker
Polly?
00:21:59
Speaker
Yeah, I was going to say a really good example of the homes and heating strategy, which is due in spring.
00:22:04
Speaker
Now, I've worked in government.
00:22:05
Speaker
Spring lasts until the end of August in government.
00:22:07
Speaker
Right.
00:22:07
Speaker
So we shouldn't be too surprised that we haven't got it yet.
00:22:10
Speaker
But now they're reassuring us that we'll see it before COP26.
00:22:13
Speaker
Right.
00:22:15
Speaker
Which is in November.
00:22:16
Speaker
What's really making a lot of people anxious about the homes and heat strategy is that it hasn't been gripped politically.
00:22:23
Speaker
It might be gripped technically, but it's not been gripped politically.
00:22:26
Speaker
So all the anxieties that Susan and Phil and other elected leaders might have about the burdens being placed on residents have not been ironed out in that strategy.
00:22:35
Speaker
It's all about sticks, targets, banning, blah, blah, blah, and not about carrot.
00:22:41
Speaker
Now, the reason I'm talking about that in relation to cities is that
00:22:46
Speaker
quite often what is quite striking about the conversations that we have, not only with national government, but sometimes with the private sector, within the energy sector, but also more widely, is that people are still thinking about this as sort of individual consumer choices, right, when we're talking about decarbonising heat.
00:23:04
Speaker
rather than understanding that this is something that is going to happen in places and that the heat solution is going to be different in different places and that the people who know their communities best are the ones who've got a granular knowledge, not only of the housing stock, but also of the people which live in that housing stock.
00:23:21
Speaker
I can imagine that Phil is thinking about this a lot in terms of the experience that he's had in designing and delivering solutions on COVID.
00:23:29
Speaker
So when, for example, Stefan is talking about biogas, there will be some places where that might be a solution.
00:23:35
Speaker
Indeed, hydrogen may well be a solution.
00:23:38
Speaker
But this isn't a decision that individual households will be making.
00:23:42
Speaker
They need to be made collectively.
00:23:44
Speaker
We did a rollout of turning to natural gas,
00:23:47
Speaker
as well, I remember that as a child, I'm probably sort of dating myself a little bit much there.
00:23:52
Speaker
But that transformation in this country means that mentally, the UK thinks that everything has to roll out from the centre, that it's all one thing for everybody.
00:24:02
Speaker
And, and all regulation has been, it's been predicated on those assumptions.
00:24:07
Speaker
If we're going to do this properly, we need to understand what makes places unique.
00:24:12
Speaker
And this goes to Greg's point about where we are unique and where we have things in common.
00:24:16
Speaker
of where we can understand how we can do things at scale.
00:24:20
Speaker
And that is where this is really important.
00:24:22
Speaker
This goes as well to Greg's point, is that we run an all party parliamentary group on sustainable finance, actually supported by HSBC.
00:24:30
Speaker
One of the key things that keeps happening is we keep thinking this is about making finance flow.
00:24:35
Speaker
What is stopping the finance flow?
00:24:37
Speaker
It's a policy and regulatory framework.
00:24:39
Speaker
All that money is stacking up, ready to invest in investable projects.
00:24:43
Speaker
If the projects were investable, they're not investable because the regulation and the laws make them too expensive.
00:24:48
Speaker
Well, then let's go UK infrastructure bank that should be helping solve these problems.
00:24:53
Speaker
But they need to make sure there's development capital available to make those projects investable to.
00:24:57
Speaker
Greg, let's do a reality check.
00:24:59
Speaker
You actually have to serve your customers, your clients.
00:25:02
Speaker
What are you saying there?
00:25:03
Speaker
Because you just heard Polly say, and I think Phil was saying it as well, the issues are not really being gripped politically, even if the way ahead is pretty clear.
00:25:12
Speaker
Yes, well, I'm not here particularly to criticise any current government, but I think that... I hope you will analyse it, though.
00:25:19
Speaker
Yes, but it is important to recognize the system that we work in in the UK, which is different to the other markets where HSBC works.
00:25:28
Speaker
And of course, in these markets, there is a transition going on.
00:25:31
Speaker
The speed is picking up, but we're coming from a relatively low base in terms of transition in energy and transport in the built environment and everything else.
00:25:40
Speaker
So Polly's right that there is in principle capital available to lend, to invest, to partner with, but we don't always find the conditions in which that capital can be applied.
00:25:52
Speaker
She's absolutely right.
00:25:53
Speaker
It's not a supply side problem on the capital side.
00:25:56
Speaker
It's an effective demand side problem on the need for capital and the regulatory environment that follows that.
00:26:03
Speaker
The solution to this is a blended finance approach where you're using public finance to do the things that public finance can do, de-risking particular projects, accelerating perhaps very long-term outcomes.
00:26:17
Speaker
And you're using commercial finance to secure short and medium term gains, both for business and for investors and for citizens.
00:26:24
Speaker
And so this is what I mean by inventiveness.
00:26:27
Speaker
We have to be inventive on the financial models that we put together and the cocktails, as well as working on those regulatory reforms that Polly and Stefan referred to.
00:26:38
Speaker
So there are two sides to the innovation required here.
00:26:41
Speaker
But let me just be clear, you have to serve your clients wherever they are in the 67 countries, I think it is.
00:26:47
Speaker
And you say they've got to be inventive.
00:26:50
Speaker
But actually, is there a degree of constraint about how inventive they can be, even if there is all that money, simply because the flexibility in the system?
00:27:00
Speaker
What do you say to them if they want to invest in a city?
00:27:03
Speaker
Every single system is different, Nigel.
00:27:05
Speaker
So, for example, when we invest in cities in Latin America, it's often through a nationally generated sustainable bond.
00:27:13
Speaker
When we invest in cities in East Asia, it might be investing directly in the city itself because they have
00:27:19
Speaker
the fiscal and financial powers, or it might be investing through a national utility or a state-owned enterprise.
00:27:26
Speaker
In the UK, the specifics of the system here mean that we have to invest primarily with corporate partners, sometimes with national entities.
00:27:36
Speaker
But I agree that
00:27:37
Speaker
The more platforms that are created, a UK national infrastructure bank, for example, is a very important additional platform to multiply the mechanisms through which we can invest in a UK city.
00:27:50
Speaker
Some UK cities are big enough to borrow and to benefit from green bonds, sustainable loans, ESG linked loans as well.
00:27:59
Speaker
But many of them don't have the scale to be able to command an instrument like that.
00:28:05
Speaker
And that's where the aggregation
00:28:06
Speaker
point comes in.
00:28:07
Speaker
So there are multiple routes.
00:28:09
Speaker
This is where we have to be inventive.
00:28:11
Speaker
But the UK's system has particular constraints that we have to overcome.
00:28:16
Speaker
Yes, and we were talking with the NIB and NIC yesterday.
00:28:20
Speaker
Christina, your reflections on where this discussion we've been having is going?
00:28:25
Speaker
Yes, well, I see the opportunity to unlock a positive feedback loop, right?
00:28:30
Speaker
Because, of course, there's difficulties, but there's the realization that the bottom-up approach will unlock the solutions in a proactive dialogue of finding the pinch points for the low-carbon energy systems to move forward.
00:28:44
Speaker
And by that, I'm referring also to the philosophy of what Nigel Topping in the previous session was saying on the Race to Zero principles, right?
00:28:51
Speaker
There is a campaign called Cities Race to Zero,
City-led Climate Action and Partnerships
00:28:54
Speaker
right?
00:28:54
Speaker
And they are committing to enabling and unlocking, and there are several UK cities committed also in that journey, on unlocking those difficulties.
00:29:04
Speaker
And I would say also that as industry has stepped up in climate action, this will enable
00:29:11
Speaker
more bolder policies like the ones that Stefan was describing to accelerate.
00:29:17
Speaker
and that the climate regulations are synced.
00:29:19
Speaker
So industry pushes to step up again in the future.
00:29:23
Speaker
And then we now have a scale up of systemic solutions because cities can do that.
00:29:28
Speaker
Cities can scale up the integration of net zero buildings, of EV solutions, of cleaning up the grid, of transport that doesn't lock in carbon.
00:29:38
Speaker
And I guess, of course, bridging the communications gap we have with citizens for them to care that this is the way forward.
00:29:45
Speaker
bringing them into the Just Transition solution and getting communities to be engaged.
00:29:50
Speaker
How can we ensure to make cities net zero?
00:29:53
Speaker
Passive infrastructure needs to be developed so it is also net zero.
00:29:58
Speaker
Are we channeling enough to avoid biodiversity loss in planning?
00:30:03
Speaker
In other words, how can biodiversity, nature, contribute to resilience when it comes to collaboration and making the kind of leaps forward that all of you are talking about?
00:30:14
Speaker
But can I come back to, if you want to pick up those, please do.
00:30:17
Speaker
But can I also ask you about the big ideas that you feel we should be putting on the table?
00:30:23
Speaker
Who would like to come in on that?
00:30:24
Speaker
Stefan?
00:30:25
Speaker
Yeah, please.
00:30:26
Speaker
Thank you.
00:30:27
Speaker
First, I will reflect on the passive infrastructure topic.
00:30:31
Speaker
This is really great.
00:30:32
Speaker
We need to go away from a production mindset and go into a recycle mindset.
00:30:36
Speaker
And there's a little bit gray box I hold up here.
00:30:39
Speaker
What does that do?
00:30:40
Speaker
It actually transmits...
00:30:43
Speaker
district heating, piping to become a storage.
00:30:46
Speaker
We can share energy between buildings, between players in a city, and we can reuse energy a lot more.
00:30:53
Speaker
Sounds like Greek or science, scientific things for many people, but it's not.
00:30:58
Speaker
It's already happening in many places in the world.
00:31:00
Speaker
How do we then speed this up?
00:31:02
Speaker
So
00:31:02
Speaker
In a large British city today, we have been engaged with them for three and a half years.
00:31:07
Speaker
They were one of the early cities in the hundred that wants to go climate neutral, climate zero.
00:31:15
Speaker
It's just not getting the butt out of the wagon when it comes to coming to conclusion because it's so complicated.
00:31:21
Speaker
impossible and so difficult to get this public tendering of going forward.
00:31:26
Speaker
What we should do and what I think is a brilliant idea, why don't we embark on something called reverse tendering?
00:31:32
Speaker
Why don't we put instead a large pile of money next to a set of actions and we have the cities applying for it.
00:31:39
Speaker
So instead of cities asking for us coming in with tenders, the players, the cities can go for it.
00:31:46
Speaker
You don't have
00:31:48
Speaker
the public tendering perspective in the same route.
00:31:51
Speaker
You don't really dare to.
00:31:53
Speaker
You don't really would like to lose track of every sense of control.
00:31:58
Speaker
How can we be more aggressive?
00:32:01
Speaker
How can we try out new things?
00:32:03
Speaker
And how can we truly, as you said initially, make UK cities the leader?
00:32:09
Speaker
Because we're not today.
00:32:11
Speaker
Definitely not very far away.
00:32:13
Speaker
Phil, that's a big, big challenge.
00:32:14
Speaker
And I was immediately going to come to you in Polly as well.
00:32:17
Speaker
Reverse tendering.
00:32:19
Speaker
You don't really dare be more aggressive.
00:32:22
Speaker
Phil, at the other end of the chain here, how would you view that?
00:32:26
Speaker
I think there is a lot around biodiversity and green infrastructure that we should be asking of our cities, of local government, of places.
00:32:36
Speaker
The best way to make a climate resilient city is looking at natural infrastructure.
00:32:41
Speaker
It is planting trees.
00:32:42
Speaker
It is creating the sud systems.
00:32:44
Speaker
It is making sure...
00:32:45
Speaker
that new buildings are carbon neutral and resilient to climate change without the need to draw down energy.
00:32:52
Speaker
So I think there's a huge amount we can do there before we even move to retrofit.
00:32:56
Speaker
I think on Stefan's challenge, that sort of competition I think will be really exciting and really useful.
00:33:03
Speaker
What I want out of the finance discussion is where we're truly sharing risk and return.
00:33:09
Speaker
We cannot have a system where this money is there
00:33:13
Speaker
and the risk is held by the citizen, the landlord and the municipality to underpin and de-risk that investment.
00:33:20
Speaker
We need to truly share that risk in a really transparent way over the long haul, especially if we're talking about energy assets, if we're talking about retrofitting, if we're talking about smart city infrastructure.
00:33:32
Speaker
That has to be the prerequisite.
00:33:34
Speaker
And I think on aggregation, I hope I'm setting up Greg for this.
00:33:37
Speaker
We're part of a project that combines the expertise of London Councils, the City of London, the Connected Places Catapult and Core Cities to get that aggregation so that when we're in COP, we're really clear this is the need that we have.
00:33:52
Speaker
We're ready to start talking to international finance and domestic finance and we want to see it delivered.
00:33:57
Speaker
The phase one report is launching tomorrow, and I'm hopefully setting up Greg to expand on that and how we're ready to deal.
00:34:03
Speaker
Whether that truly meets Stefan's reverse procurement type practice, I don't know.
00:34:10
Speaker
I think we should put that in there because traditional ways of procurement aren't going to work.
00:34:15
Speaker
But it has to be that shared risk to leap into that new form of procurement, I think.
00:34:20
Speaker
And just to add two words there, he said you've got to be more aggressive and you've got to dare.
00:34:24
Speaker
His words, not mine.
00:34:26
Speaker
Is that doable in cities, in local government?
00:34:30
Speaker
Yeah, I think you're seeing political leadership from Mayor Kahn, from Andy Burnham, from Marvin in Bristol, from leaders in London.
00:34:39
Speaker
They are daring and they're willing to take these long-term decisions.
00:34:42
Speaker
And citizens are backing them when they do.
00:34:45
Speaker
All right.
00:34:46
Speaker
That moment, I think, then needs to lead to things that citizens can touch and feel in their communities that see that transition taking place.
00:34:53
Speaker
So I think we're in a golden moment with COP and national government, regional metro mayor government and obviously local government.
00:35:00
Speaker
And I include obviously the Scottish and Welsh governments in that discussion as well.
00:35:04
Speaker
All right.
00:35:04
Speaker
You all want to say something.
00:35:05
Speaker
Polly first and then Greg.
00:35:07
Speaker
Polly.
00:35:07
Speaker
Yeah, I was going to say in terms of de-risking, I totally agree with Phil.
00:35:12
Speaker
And that's one of the reasons why we need to be asking the UK Infrastructure Bank to play a role in doing that de-risking.
00:35:19
Speaker
We understand that attitudes towards risk, the political leadership that Phil is talking about notwithstanding, is very different in local authorities.
00:35:28
Speaker
You're a different kind of person who deals with money if you're a director of finance in a local authority, as distinct from being an investor.
00:35:37
Speaker
You take money from council tax and from parking levies and from national government and you deliver services.
00:35:43
Speaker
Right.
00:35:44
Speaker
That's what you do to become an entrepreneur, which thinks about rate of return and risk and so forth.
00:35:49
Speaker
Basically, especially since your boss is Phil or somebody like that, who says, well, I don't want to end up on the front of the Gazette because I've spent money in the wrong way.
00:35:56
Speaker
That is a reality.
00:35:57
Speaker
So the dialogue of the death between investors and local authorities is really profound.
00:36:02
Speaker
We need to be able to improve that.
00:36:04
Speaker
And that's what the UK infrastructure bank needs to do, as well as providing the development capital that will significantly de-risk the kind of things that the politically ambitious want to achieve and access the investment kind of capital that should be available swilling around.
00:36:19
Speaker
If the UK infrastructure bank does not do those two things, it will be massively missing a trick of harnessing that political will and harnessing that finance.
00:36:28
Speaker
At the moment, local authorities bid for small amounts of money for grants.
00:36:32
Speaker
they then get that they do something with that and they therefore have an innovative project which they cannot scale, replicate or transfer because entirely the business model was predicated on the on the small amount of grant that they got and nothing was was designed in for people to learn and to do it in a bigger way.
00:36:48
Speaker
Again if the bank doesn't do that they've got something wrong and procurement is basically where we need to be finding ways of changing the rules around how local government delivers its own services.
00:37:00
Speaker
because that's where it creates supply chains, that's where it creates skilled workforces, and that's how it can transform a whole place into someone which thinks in a different way about the kind of economy it has.
00:37:11
Speaker
There are a lot of nodding heads there.
00:37:12
Speaker
Greg next, and then Christina, please.
00:37:14
Speaker
Well, thank you.
00:37:15
Speaker
I don't want to be complacent in this conversation about how the financial sector and the financial markets are ready, but I think you've heard enough over the last two days to know that many financial institutions, not just banks, but also pension funds, insurance companies, sovereign wealth funds, fund managers, and many others are really up for this and the pressure is on them.
00:37:37
Speaker
So I think that a lot of the work needs to be done on the demand side of this equation.
00:37:43
Speaker
And I'm going to agree with
00:37:44
Speaker
with what both Phil and Polly just said, and I'm going to say three things.
00:37:48
Speaker
So thing number one is that I do think this aggregation imperative is very important.
00:37:53
Speaker
So Phil and I and the leaders of Glasgow and Bristol, the core cities and the London councils are working together with the Connected Places catapult of which I'm the chair.
00:38:04
Speaker
to try to develop a national commission on investing in UK cities and their net zero pathway.
00:38:11
Speaker
The focus on this is going to be practical.
UK Infrastructure Bank and City Investments
00:38:14
Speaker
We're looking at what the cities are trying to do, what the investment requirement is, and we're going to problem solve the route for capital into those projects through aggregation, through innovation and everything else.
00:38:26
Speaker
In other words, the time is right to really do that.
00:38:30
Speaker
I think there are two big implications for this.
00:38:33
Speaker
The first one is the blended finance implication and Polly just said this very clearly.
00:38:38
Speaker
We will need a national infrastructure investment bank that is prepared to create a new cycle of blended finance in the UK.
00:38:46
Speaker
using guarantees where appropriate, using subordinated funds, creating special investment funds.
00:38:52
Speaker
This is exactly what a national infrastructure investment bank is for.
00:38:56
Speaker
And it can be a brilliant partner for private sector investors, institutional investors,
00:39:02
Speaker
that want to be part of that.
00:39:03
Speaker
So that's the big new opportunity, it seems to me.
00:39:06
Speaker
The second big implication of this is about city finances.
00:39:10
Speaker
It's going to be very important to unlock the investment potential of every city, their asset base, their infrastructure, their amenities and others.
00:39:19
Speaker
And the sooner we can move towards cities having their own holding companies,
00:39:24
Speaker
their own portfolio funds, their own proper asset management systems, the more it will open up the potential for that blended finance to make a big difference to it.
00:39:34
Speaker
So there are two big reforms that we need there.
00:39:37
Speaker
One is about the role of the Infrastructure Investment Bank.
00:39:40
Speaker
The other is about how we treat city finances and treaties, city assets and make them investable again.
00:39:47
Speaker
Well, those are two significant initiatives we can take away, as well as other things you all said.
00:39:52
Speaker
Now, Stefan, I'll come back to you in a moment, but, Christina, your view of what you've been hearing.
00:39:57
Speaker
Yes, thank you.
00:39:57
Speaker
To add to the conversation,
00:40:00
Speaker
I heard biodiversity
Nature-based Solutions in Urban Planning
00:40:01
Speaker
in the questions.
00:40:01
Speaker
We haven't talked a lot about that, but adding to this conversation, I would say that cities also in this space through the assets the city owns can commit today to start understanding how to measure and report on full life carbon emissions.
00:40:17
Speaker
And that will unlock also the conversation with the finance sector, because then the benchmarks, the reduction targets towards net zero are clear.
00:40:26
Speaker
And that will pave the way for those financial institutions to have more demand for the development banks to be giving a premium to loans that go into energy efficient solutions.
00:40:38
Speaker
And beyond that, of course, it is promoting nature based solutions.
00:40:42
Speaker
We were talking about in that biodiversity question from the audience.
00:40:46
Speaker
That infrastructure, of course, we have to prioritize energy efficiency as a passive solution, if you like, the highest energy efficiency, but also nature-based solutions that promote the green, blue infrastructure.
00:40:57
Speaker
We go away from the lineal systems in the...
00:41:02
Speaker
government procurement and we promote a new way of thinking of total whole life costing and that is a big challenge for cities because the timing of a city official is different from the implications of all this infrastructure through its life cycle.
00:41:17
Speaker
And going into Stefan, of course, the circular economy principles are going to be a huge, let's say, answer in this conversation and that is something that is growing as an unlocker of this finance
00:41:30
Speaker
procurement, policy signals, businesses, conversation.
00:41:33
Speaker
Thanks, Fisina.
00:41:34
Speaker
Have we risen to the challenge you put and are you comfortable?
00:41:37
Speaker
Do you feel the other voices we've heard are responding positively to what you were suggesting, being aggressive and daring?
00:41:45
Speaker
I would say partly, only partly.
00:41:48
Speaker
Our latest analysis shows that heat pumps might fly in the UK market 2025.
00:41:59
Speaker
And it's like, come on, guys.
00:42:02
Speaker
It's 2025.
00:42:04
Speaker
Who can wait four years?
00:42:06
Speaker
It's going to put UK another century behind.
00:42:10
Speaker
So look to what we have on other places.
00:42:14
Speaker
We don't need to invent the wheel.
00:42:15
Speaker
You can go to a city quarter in Munich called Werksvitter, talking biodiversity.
00:42:21
Speaker
We can go to how the Tegel Airport in Berlin is being built by reusing the energy.
00:42:27
Speaker
Or you can go to
00:42:28
Speaker
Stockholm, where we are really putting a place, a circular economy where we are recycling gas, resources that was looked as being waste.
00:42:38
Speaker
And, you know, a plastic bag of food waste actually carries a car 2.5 kilometers on biomethane.
00:42:47
Speaker
There's not one single silver bullet.
00:42:50
Speaker
I really like what we heard earlier today.
00:42:52
Speaker
You need to look to the local prerequisites on each local place.
00:42:56
Speaker
You need to liberate yourself.
00:42:58
Speaker
You need to go.
00:42:59
Speaker
The words are saying the right thing.
00:43:01
Speaker
We need to give the mandate locally.
00:43:04
Speaker
We cannot wait for national governments.
00:43:06
Speaker
The cities need to take the pin, the challenge and really go.
00:43:11
Speaker
What kind of financial structures can support?
00:43:13
Speaker
All right, you've all got to be bolder.
00:43:15
Speaker
Yeah, we need to really go.
00:43:17
Speaker
And so partly is my answer.
00:43:19
Speaker
Right, Greg, I've got to just
Leadership in Sustainable Practices
00:43:21
Speaker
pick you up.
00:43:21
Speaker
Do you reckon you can give me, you can generate this kind of urgency at being braver, being bolder, being less conformist?
00:43:30
Speaker
Yes, and I think we have to.
00:43:32
Speaker
And I think we are.
00:43:33
Speaker
I mean, I think it's important to say back to Stefan that the UK cities are in the lead on congestion charging, on low emission zones, on low traffic neighbourhoods.
00:43:42
Speaker
There are things that UK cities are in a global lead on.
00:43:46
Speaker
On the issue of heat pumps, yes, we're further back, but we've got to be proud of what we're good at, too.
00:43:51
Speaker
And we've got to be able to promote that.
00:43:53
Speaker
And I see in all of this, and this is the catapult role, that we're generating innovations, technologies and platforms that we will be able to export and we will be able to generate green jobs from these.
00:44:06
Speaker
So it's not just that we're doing the right thing for the planet, but there's a major enterprise opportunity in all of this for us as well.
00:44:13
Speaker
We're good at some things, we're less good at others, but we need to get good at all of them.
00:44:17
Speaker
One of the issues the private sector has raised in working with local government on carbon reduction projects is the quantity and quality of data around buildings and their use of energy.
00:44:27
Speaker
How has Hackney been looking to resolve this?
00:44:29
Speaker
But you've also got another point.
00:44:30
Speaker
Data is so fundamental in everything we're discussing here.
00:44:34
Speaker
Shortage of data, shortage of good data, reliable data.
00:44:37
Speaker
Your view there from Hackney, but also the other point you want to make.
00:44:41
Speaker
I think there has been historic challenges with data.
00:44:44
Speaker
I think that is common to big landlords, it's common to people in big organisations.
00:44:50
Speaker
I think a huge amount of work is now going into at a borough level fixing that.
00:44:56
Speaker
The work that's happening, I mentioned the seven climate change programmes that London councils are running.
00:45:02
Speaker
The work that Enfield and Waltham Forest are leading on Retrofit London is providing a really interesting data set that we're going to then be able to aggregate up through that network and then feed into the work of the Commission.
00:45:14
Speaker
So what we have though, I think is historically, and it's the challenge of this funding dilemma,
00:45:21
Speaker
is very short-term national funding and bidding rounds where you suddenly have to have shovel-ready projects, which you then submit into a competitive process, and you're either successful or you're not, and then you're waiting for the next one.
00:45:33
Speaker
What we're engaged in here is making sure that we've got those long-term data sets.
00:45:37
Speaker
We know where we're moving our buildings in terms of EPC efficiency and energy use beyond that as well, and making sure that we've got that platform.
00:45:47
Speaker
I'm also a big fan, as I mentioned, the EV work.
00:45:51
Speaker
We have a London Office of Technology and Innovation, which is also part of London Councils and connected to the GLA, is creating open data platforms.
00:45:59
Speaker
We need the sort of data platforms that citizens can hold us to account, that businesses can see where they can invest and challenge locally, and that sort of city leaders, whether they're planners, asset managers,
00:46:10
Speaker
energy procurers can see what is happening out there on the ground.
00:46:14
Speaker
And if we don't have that, I think the days where somebody sat in a town hall holding and hugging all of this information and they wouldn't share it have to be gone.
00:46:23
Speaker
Otherwise, we won't have credibility on what we're doing.
00:46:27
Speaker
Can I just say why I think this is hard very briefly?
00:46:32
Speaker
If you are a stock holding authority, so if you're a council that owns its own council housing,
00:46:38
Speaker
You had a decade of austerity, welfare reform, four years of compulsory rent cuts, Grenfell, all of the fire safety and building standards challenges that are going forward, and now this agenda.
00:46:53
Speaker
And all you have to fall back on are your assets and rents.
00:46:57
Speaker
And I think that is a really difficult set of dilemmas and challenges.
Workforce Transition and New Technologies
00:47:02
Speaker
And if I step back five years, we thought that communal heating fired by CHP gas boilers, perhaps feeding in energy to the grid was the answer to new build and the degree of retrofit.
00:47:15
Speaker
And now we're moving to individual heat pumps, ground source air pump, depending on the location, and then aggregating those up into energy centres.
00:47:26
Speaker
That is a great speed that we are moving at.
00:47:30
Speaker
And then we are
00:47:32
Speaker
sitting on a fantastically technical skilled workforce in our direct labour organisations.
00:47:38
Speaker
But that is a workforce based around gas, water and electricity at the moment, not these new technologies.
00:47:45
Speaker
And to get all of this right, we cannot have a situation where we're bold and daring and say it's heat pumps now, tomorrow and for the rest of this decade, and we don't have a workforce that can maintain them.
00:47:57
Speaker
It isn't acceptable to just sign up to a, I want 30,000 heat pumps.
00:48:02
Speaker
I'm going to outsource that to a private contractor and they're going to maintain it.
00:48:05
Speaker
And then I'm going to sack all my gas fitters.
00:48:07
Speaker
That will not work.
00:48:08
Speaker
It will not fly.
00:48:09
Speaker
And we won't be able to maintain that infrastructure when our residents come to us and say, why isn't it working?
00:48:16
Speaker
We must have credibility in that space as well.
00:48:18
Speaker
All right, Phil, well, thank you very much indeed.
00:48:20
Speaker
Great speed, I've written it down, the great speed that you believe you're all moving at, even though Stefan says you've got to be more daring and you've got to be more aggressive.
00:48:30
Speaker
I think there are takeaways there.
00:48:32
Speaker
There's a consensus at least that things are moving in the right direction, but it underscores much of what we've been discussing in these first 24 hours of this forum, the urgency that is needed, but there's even greater need to be more urgent.
00:48:46
Speaker
So look, thank you very much indeed to all of you, to Polly, to Stefan, to Christina, to Greg and Phil.
00:48:52
Speaker
Thank you very much indeed for sparing time to join us, to discuss cities.
00:48:56
Speaker
Thanks very much indeed for joining us.
Conclusion and Future Episodes
00:49:00
Speaker
This has been a special podcast in the Business Plan for the Planet series.
00:49:04
Speaker
More episodes will follow shortly, so please do keep an eye out for those.
00:49:07
Speaker
For more information on the programme, visit business.hsbc.com forward slash sustainability.
00:49:21
Speaker
Thank you for listening today.
00:49:23
Speaker
This has been HSBC Global Viewpoint Banking and Markets.
00:49:27
Speaker
For more information about anything you heard in this podcast or to learn about HSBC's global services and offerings, please visit gbm.hsbc.com.