Local authorities have a critical role in delivering the UK’s transition to Net Zero by 2050. According to the UK Government’s net zero Strategy, 82% of all UK greenhouse gas (GHG) emissions are within the scope of influence of local authorities, underscoring their
importance in ending the UK’s contribution to climate change.

Local authorities have acknowledged their important role in this endeavour, with over 300 councils in the UK declaring a climate emergency since April 2019. Translating these climate ambitions into reality, via the successful financing of green projects and infrastructure, presents both a considerable challenge and investment opportunity.

During 2022 the Green Finance Institute (GFI) held several round tables and interviews with local authorities and other key stakeholders to identify the challenges facing local Net Zero success. The findings from these interactions, as well as from desktop research completed by GFI, indicates that there are ongoing short- and medium-term challenges that local authorities are experiencing on their net zero journeys.

This report primarily seeks to help address the financial advisory gap – by setting out the broad range of finance approaches, products and providers local authorities can consider to raise capital to support the implementation of their Net Zero ambitions. The list is non-exhaustive, but we hope it will help raise awareness among sustainability and Section 151 finance officers of the broader range of sources of capital and financial solutions that may be available to them and that they might consider replicating, where success has been demonstrated.

The report also provides examples of sources of grant funding to address the development finance gap. In the annex, we discuss the practical steps needed to bring projects forward for financing. Finally, we then make some recommendations about how the market can develop further.