yard sign promoting Ann Arbor City Council climate action tax

Funding council Climate Emergency action plans

Funding is a key challenge for local governments who have adopted ambitious Climate Emergency Action Plans. That is one of the main topics that will be discussed on 3-7 October at Daring Cities 2022, along with engaging the entire community and ensuring climate actions are equitable. You can register for this free online event here.

Daring Cities 2022 registration invitation

In the meantime, below are a few of the funding strategies local councils are already adopting, and a proven and empowering funding model being used by a grassroots non-profit group.

Ann Arbor City Council, USA: Community to vote on proposed climate action tax

Ann Arbor adopted its A2Zero carbon-neutrality plan in 2020, with a target of achieving community-wide carbon neutrality by 2030 and 100% renewable energy for the entire community. But this ambitious action plan requires funding, so as part of their elections in November they are asking the community to vote on a proposed 20-year tax. This would cost the average householder around $200/year and bring in $6.8 million in the first year, all of which would be spent on actions to help the entire community become carbon neutral.

Importantly, council has published action lists showing how the money would be spent so that residents know what their money will be achieving, and local climate groups have joined in a campaign to help build a ‘yes’ vote for the tax.

Often local councils seem reluctant to ask much of their residents even though the goal of their climate emergency actions is to protect their local community (and the rest of the world). But rises in rates or taxes tend not to be popular, so it is hoped the transparent planning and collaboration with local climate groups will prove to be an effective way of building community support.

Brighton and Hove Council, UK: Reallocation of budget

Reallocating budget is one of the simplest and quickest ways of funding at least some climate emergency action. Brighton and Hove Council was one of the earliest UK councils to declare a Climate Emergency, on 13 December 2018. Just prior to that they had set their new budget, but they quickly decided to revise it via the following budget reallocation decision:

£500,000 which was earmarked for the redevelopment of Brighton Town Hall will now be used for investment in “sustainability and carbon reduction”.
Labour leader Daniel Yates said: “We need to deal with the climate emergency facing the city and create a fund for those who wish to fight climate change.”

West Berkshire Council, UK: Community climate bonds to raise funds for climate emergency action

People in West Berkshire can invest in a ‘community bond’ for as little as £5, which will go towards plans to install solar panels and plant trees across the district and hopefully raise £1 million. The interest rate would be a bit lower than other options for borrowing, so it would save council (and ratepayers) money, but it could also be a very effective means of empowering local residents who want to ‘do more’.

Several other UK councils are also raising funds via climate bonds as promoted by the Green Finance Institute and administered by Abundance Investment.

Leicester Council, UK: Bid for government funding for £8m home insulation scheme

Leicester Council is retrofitting hundreds of older social housing and other affordable homes with wall insulation, enabled by a successful bid to receive £1million from the UK Government’s Green Homes Grant Scheme.

Stage 2 of the insulation scheme will be backed by £7million from the Government’s Social Housing Decarbonisation Fund, following a successful joint bid by the city council and local housing associations.

Grants from higher levels of government may require council to match the funding, but even so it’s a good way of stretching a council budget further than otherwise if council can come up with a compelling business case for a grant bid.

Many local councils, everywhere: Schemes facilitating community expenditure on climate solutions

Bulk buy schemes are a classic example. Local householders and businesses might hesitate to install solar or upgrade their space heating to heat pumps, for example, simply because they don’t know which products are best and which tradespeople will do a good job. Councils can leverage climate-beneficial expenditure by the local community simply by organising a quality-controlled bulk buy scheme that the community can trust.

Or it could be a scheme that is partly funded by local government and partly by the local community, such as the scheme adopted by the Government of Jersey for subsidised commercial auditor training. They also subsidise audit costs and energy efficiency upgrade costs for both householders and commercial premises.

CORENA, Australia: Crowd-funding to pay for practical Climate Emergency projects

Not a local council! CORENA is a tiny non-profit community organisation run by volunteers, so the scale of their funding model is small compared with what a local council could manage with its much greater resources. However, their successful donation-sourced revolving fund provides proof of concept and could easily be adapted for local councils.

The funding model is incredibly simple and takes advantage of the fact that many of the practical initiatives that reduce carbon emissions, like energy efficiency and solar installations, also reduce subsequent operating costs. CORENA uses donations from the public to give interest-free loans to cover the upfront cost of practical climate projects. The loans are repaid into a revolving fund via subsequent savings on operating costs, meaning the donated money is used over and over again. Accordingly, the $500,000 donated so far has paid for $1 million worth of climate projects.

revolving fund cartoon showing donations coming in, loans going out, and loan repayments coming back in

Adapting the revolving fund model for local councils

For a local council, the first step is to identify an appealing goal that suits local circumstances. For example, the goal might be for everyone in the community to replace oil or gas space heating with efficient reverse-cycle air conditioners (heat pumps), with the added benefit of keeping vulnerable people cool during heat waves. Or it might be solar installations, or insulation, or whatever else would reduce local community carbon emissions most cost-effectively.

For householders who cannot afford the upfront cost themselves, council would use the donated funds to give interest-free loans to cover the cost, with the repayments set to fall within expected savings on operating costs. (For everyone else, they could organise a quality-controlled bulk buy scheme to make it easy for those who are time-poor rather than cash-poor.) If loan repayments are attached to the property rather than an individual, then loan repayments could be a simple extra payment added to rates payments, and even people who are unsure how long they will continue to live at their current premises can participate with confidence.

Empowering the local community

Finally council would ask everyone in the community to donate to help achieve the stated community goal. Quite apart from providing necessary funding, this is a great way of engaging the local community in collective action, with good opportunities to give visibility to the number of people ‘doing their bit’ to tackle the climate emergency. We all know we can’t do it alone.

For donors it is very empowering to see tangible climate actions they are helping to achieve, and even more so when they see their money being used over and over again in subsequent climate projects. By setting up the above type of donation-sourced revolving climate fund, council is providing a structure that enables everyone to ‘do more’.

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