Good morning everyone! Welcome to the 21st meeting of the Nets, Zero Energy and Transport Committee for 2022. Today we have apologies from Mark Ruskell MSP. At agenda item 1 we have consideration of whether to take items 3 and 4 in private, items 3 is consideration of evidence we will today hear and item 4 is consideration of the draft report on the Energy Price Rise Inquiry. Do we agree to take those items in private? That is agreed, thank you very much. Thank you very much. Items 3 and 4 will be taken in private. Our next agenda item is an evident session in relation to our ongoing inquiry into the role of local government and its cross-sexual partners in financing and delivering a Net Zero Scotland. Today, we are going to hear from two panels. The first panel, we are going to look into co-financing and how local authorities can secure private investment in projects to deliver the transition to Net Zero. I welcome three members who are joining us remotely, three guests who are joining us remotely. Jeremy Gorlick, strategic adviser of the Green Finance Institute, Emma Harvie, programme director for the coalition for the energy efficiency of buildings, also of the Green Finance Institute and Ben Howarth, manager of climate change and open data policy association of British insurers. Good morning to each of you, thank you very much for joining us today, it's much appreciated. We've got around 70 minutes for this session and we'll move straight on to questions if that's okay. The first question I have relates to a report published by the Green Finance Institute, which estimates that 82 per cent of all UK emissions can be influenced by local authorities. But the report, which was published in April of this year, goes on to say that pathways and mechanisms to finance the necessary projects at local authority levels are not in place or historically have not been in place. I would like to explore with each of you the main reasons why you think it's been so challenging so far to leverage private capital into local authority projects. I know that the Green Finance Institute and the ABI have been doing a lot of work in this area, so I'd like to get your views on what you see as being the main challenges, as well as, potentially, some of the solutions that we might see in the months and year ahead. Jeremy, I saw that you were nodding, perhaps I could start with you, Jeremy, and then move on to Ben and Emma and just indicate, if you want to come in, indicating the chat box as and when you want to come in. So, Jeremy, over to you please. Great, good morning. I'm just going to give a couple minutes of background so everybody has a sense of who I am and the place from which I'm speaking. As stated, my name is Jeremy Groelich. It's an honour to speak with you today and provide some insights on how we might collectively help Scottish subnational governments to achieve their net zero AMs. I was invited today, based on my position as the Senior Strategic Advisor for the Green Finance Institute, which is a position I've held for over two years, but my credentials are far deeper. I've spent over 20 years in financial structuring, mostly supporting subnational governments to access the money required to deliver capital intensive infrastructure programmes. I wrote my doctoral dissertation on the prospects of municipal bond issuants for development countries. However, although I have spent much of my career working in middle income countries, and just as a point of reference, I'm joining you today from Indonesia. I'm normally based in South Africa, although I travel quarterly to the UK to work with my colleagues. I've noted that the problem is facing subnational governments and their efforts to access money across the world, and in particular in their search for money for climate smart projects, are fairly uniform, and this is really the meat of what I'd like to share today. The first, despite the fact that we recognise that local governments do play a critical role, there are significant challenges that they face. First one, there's a significant lack of in-house technical expertise. Second, a lack of in-house financial expertise. And third, a lack of familiarity with the appropriate tools to access capital for long-term, long repayment projects. So my first point today really addresses this challenge on the demand side for money in the financial ecosystem in the relationship between subnational governments, who we will call seekers of capital, and financial institutions, so the sources of capital. Over the past five years, working in collaboration with entities like C40, the Rockefeller Foundation, and most recently in a collaboration between Innovate UK and the GFI, I've had the chance to confirm these obstacles firsthand, working directly with a number of local authorities, and for your benefit, one of them being the largest and arguably one of the most climate ambitious cities in Scotland. To be as comprehensive as possible, my team engaged Arup as the engineering consultant to perform a deep-dive analysis of the entirety of that city's climate smart portfolio, and we identified 11 projects that had progressed beyond a conceptual phase. However, of these 11 projects, less than half were at a state of advanced feasibility, and none were shovel-ready or prepared to accept capital that would be immediately deployed for construction purposes. Further, and this was a major concern, there is no clear understanding on necessarily which instruments would be most appropriate to match against the useful life of the assets with financing structures. The challenge, though, is not unique. Each of the cities that we analyzed across the UK demonstrated the same difficulties. So what we see is that on the demand side for finance, there is a tremendous challenge as far as the expertise of local authorities. However, there is another challenge, and that is on the supply side of the financial ecosystem, namely the sources of capital. As part of the Green Finance Institute's broader work, I am leading a team that is supporting the Greater London Authority as it prepares to launch the country's first free and municipal bond. I am pleased to share that we have hosted multiple one-on-one engagements with the country's largest institutional investors and received soft commitments to participate in the inaugural issues. However, those investors are frustrated as there are otherwise seemed to be very few options that allow them to participate directly as lenders to subnational government. So we have a challenge on both sides. There is a challenge on the demand side as far as the ability to articulate projects that are well suited for private sector participation, and we have a challenge on the supply side as far as the right sorts of mechanisms for them to use. This is particularly troubling because the more traditional concessionary sources of finance are reaching their lending limit. As an example, the Public Works loan board is nearing the top of its debt capacity as far as its current funding, and other lenders are still nascent. As an example, the UK Infrastructure Bank has celebrated its first anniversary and yet is still not lending at pace or at scale. For those reasons, I think that it is important to encourage you and others to consider new ways of answering these four challenges, which again are in-house technical expertise, in-house financial expertise, better appreciation of financial products by subnational governments, and finally new financing mechanisms that encourage participation from a wider range of entities. I hope that during the course of today's session we can talk through what some of those direct solutions might be that are well aligned to both large and small subnational governance across Scotland. As I hand the virtual podium to my fellow panellists, I want to particularly highlight one thing that is extremely important when we think about this. I have been talking largely about the concept of local authorities as project sponsors, and yet my colleague Emma Harvie will talk about them in a different role, which is critically and equally important—the idea of them being project enablers. Again, if we coupled together the idea of local authorities as project enablers and local authorities as project sponsors, those two account for that often cited figure of 82 per cent of all greenhouse gas emissions being within the scope of influence of local authorities, which underscores their importance in ending the UK's challenges as far as climate change, and in particular thinking about what that could mean for Scottish subnational governments and local authorities. With that, because I know that I only have a short amount of time to answer the question, thank you very much, and I look forward to continued engagements over the course of this session. Thank you very much, Jeremy. That was a very useful oversight. You raised a number of issues that we will explore during the course of this session. Perhaps you mentioned local authorities as effectively project borrowers, sponsors and also enablers in terms of them being able to quarter back financing and other arrangements that can tackle climate change at a local level. Perhaps I can then bring in your colleague Emma Harvie to talk about that second aspect of local authorities acting as enablers. Emma, can I hand over to you on that question, please? Yeah, of course. Thank you and a real pleasure to be here today. To also provide a bit of background for why I'm going to talk about local authorities as enablers of projects and enablers of finance, I'll just give a quick overview of some of the work that we've been doing through the coalition for the energy efficiency of buildings. The coalition has brought together to date over 400 experts from the built environment sector, from finance, business, academia, local government and central government, with the aim to explore residential buildings, the barriers to retrofitting them and how finance can help to overcome some of those barriers. Over the past two years, we've been working through various different data solutions, opportunities to scale up existing financial solutions and brand new financial solutions, drawing on best practice internationally and brand new ideas. The reason I mentioned that is that our work is not focused on how local authorities themselves can raise and then deploy capital, but rather the role that local authorities can play to attract private finance into their local area. That is specifically referring to finance that can be used by local citizens. The examples that I'll be providing are particularly focused on buildings, but we do have expertise in transport and nature. As an example, we are just about to start a collaboration with one of the major combined authorities in the UK to work alongside the combined authority to pilot five financial solutions in their area, which will bring in mortgage lenders and institutional investment that will be deployed directly to citizens. The local authority will not be acting as a middleman or a provider of capital, but instead is using their trusted relationship with citizens and their deep, deep knowledge of the decarbonisation activities that are required in the area to help finance to be directed most efficiently. For example, we are going to be working with local and national lenders, mortgage brokers and other organisations that are connected in with consumers to raise awareness on the role and opportunities that green mortgages provide. Those are mortgages that can be used to fund energy efficiency improvements in a building or to purchase an already energy efficient building, but the major barrier to this market scaling at the moment is the lack of consumer awareness that these products exist. A local authority backed campaign to raise awareness on these financial solutions can not only support citizens in being able to access this finance, but will also help to create a thriving market in the UK, where the UK is one of the leaders in green mortgages. Another example that I will point to is something that we like to call property-linked finance, or in the United States it is known as PACE finance, property-acestically and energy finance. This finance is linked to a property rather than the property owner, so it helps to overcome the payback period barrier that many homeowners experience when they are retrofitting their property. The way that we think that this can be introduced in the UK is through local land charges and local authorities are some of the designated authority bodies for bringing into effect local land charges. If we were looking to bring in a property-linked finance scheme into the UK, local authorities would play a critical role in bringing in the enabling local land charges that can then link finance into a property, but they themselves would not have to be involved in capitalising that scheme. That would be achieved by institutional investors and administered by third party bodies. Those are just a few examples of how local authorities do not just have to raise and deploy capital, but there is a huge swath of citizens, companies and businesses underneath the jurisdiction or within the geographical region of a local authority who can be helped by the local authority in bringing in private finance. I am sure that we can dive into some of that in much more depth as we go forward, but I will stop on my comments for now. Thank you very much Emma, that was a great introduction and you are absolutely right, we want to explore some of those issues. I would like to bring Ben Howard in now, because Ben, your members have long-term capital, the figures that I do not have in front of me, but it goes into the trillions of dollars or trillions of pounds. Clearly, there is that supply of capital available. I would like to get your perspective on how best local authorities and partners working with local authorities can leverage that finance and get access to that finance. Any thoughts about how that might work in practice would be fantastic. Like my other panellists, thank you for the invitation to speak this morning. As you say, we represent, through the ABI, some of the biggest institutional investors in the UK. Also, when we can come back to this, we will represent the general insurance sector, who I think will also play a key role in this, but I will focus on the investment side for now. I think that from the local authority perspective, and this might seem like an oversimplification, but there are two different things that they can do on one hand. If you are an institution investor looking at your decision making and the portfolio investments that you will make over the next five to ten years, realistically, do you want to go around all 32 local authorities in Scotland and speak to them individually and have slightly different variations of the same conversation? No. If you are looking at the technical financial instruments that my previous panellist was talking about, the more consistency you can have there, the better. That is not just for the individual investors' way of their decision making, but for many of those, particularly the investments that ABI members make, they will require regulatory approval. The more consistency you can get in the structures that underpin this, the better. I would flag particularly for our membership, because they are investing people's pension assets. They are at the lower end of the risk scale, so they are not looking for high-risk, short-return investments. What they are really looking for are long-tail investments that deliver a steady and predictable return. One of the things that local authorities can really do to help our members is to think strategically about the range of different investment opportunities that are available and to think about the different kinds of investors that will be attracted to them. Our members will have some appetite for some of the bigger infrastructure projects and schemes where they have a clear long-term business case, but they have also got an appetite in some of the supporting and connecting infrastructure. It is an example that I might give its electric vehicle charge points a potentially really attractive investment opportunity for our members. It is not just about big schemes and big projects, it is also about all the stuff that underpins this. I would say that is why the local authorities really kick in. My point is that local authorities, the more consistency in the technical, financial instruments, the better. Where individual local authorities can add value is by understanding their local areas and working to make a case for those specific investments. If local authorities can work together on the structures, that will help. They can individually bring in the needs and priorities for their own local area. One final point from me—I think that I could come back to that—is an initiative that is going on at the moment. The Government is consulting on transition plans. All our members will be required to produce a transition plan looking ahead at their next five to ten years. The more individual local authorities can do to collaborate with that initiative, the better. If they can produce their own transition plans and set out really clearly where they are likely to build in a particular technology into their local plan or look for investment in a particular area, that can give people some advance insights so that they can manage this and understand where the opportunities are likely to rise in the next few years. Also, to be transparent about the things that they do not know to build that collaboration. There are plenty of things that we can come back to, but I would say that it is that collaboration on the financial instruments and a really clear transition plan, so investors can start to plan ahead. Okay, great. Ben, thank you very much. I want to come back to one of the issues of scale that you mentioned. Before I bring in other members, I want to follow up with Jeremy. Jeremy mentioned a green bond financing that is taking place in London. I am not quite sure which entity might be the issuing entity, but I also understand that the Green Finance Institute is promoting a local climate bond pledge with some local authorities across the UK. Looking at the papers, I understand that there are seven signatories to the bond arrangement, but so far none of the seven signatories include Scottish local authorities. What engagement has GFI had with Scottish local authorities generally more generally and also in relation to the local climate bond pledge? Do you see, in addition to London, this mechanism being used in the months and years ahead? I will answer very happily on the London question and I will turn for Emma to talk about the LCB side, because that is part of Emma's workstream. Before I even respond on the GLA question and the green municipal bond, I want to pick up on something that has been shared as far as the question of standardisation and how we scale up into large enough instruments. I do think that that is one of the roles that government can play in a meaningful way. One of the challenges that many sub-national governments and local authorities have is that, especially for the smaller ones, they do not necessarily have the technical expertise. I feel like if there is a way to almost roll out something where there is standardisation from that technical perspective, that can in fact allow for those institutional investors to have a degree of confidence in the instrument that they participate in. I also feel like there is potentially a role for any government entity, any public entity, to stand in as a sort of a guarantor to help to give that sort of upliftment or credit enhancement so that this would in fact be something that institutional investors would find worthwhile. I think that both of those might end up being important things to consider. As far as the GLA's perspective green municipal bond, the green muni bond is anticipated to have use of proceeds for three different areas. The first is going to support the work that TFL is doing, so looking at the transportation side. The second is going for a broad mix of different public entities that are held within the GLA group. The third is opportunities for some of the boroughs that have got the GLA to be able to participate in a meaningful way and to be able to borrow. When we talk about this being a green municipal bond, this is a traditional capital markets instrument that allows and enables for institutional investors to participate. The likely size of this is between £500 million and £600 million, so this is a fairly sizable transaction, definitely not the size of sovereigns, but nonetheless, since this is the inaugurations for the GLA, this is the size that they feel comfortable with and is responsible based off the pipeline of projects that can be invested into. That is, to me, a direct contrast with what some of the LCBs look at. I will turn over for Emma to provide a little bit more clarity as far as LCBs are concerned. Thank you. Thanks very much, Jeremy. Local climate bonds are one of the solutions that the Green Finance Institute has been supporting for several years now. Just a quick background, if you are not too familiar on them. Local climate bonds were pioneered by Abundance Investments, one of the members of our coalition. They provide an opportunity for local authorities to raise capital via effectively a crowdfunding platform. What is really important about this is that it allows local citizens to invest into the local climate bond from as little as £5, and they can see the proceeds that are raised through the local climate bond being invested into climate positive activities in their local area. Those funds can be raised at lower than public works loan board, which is the primary source of capital for local authorities. The most important piece about local climate bonds is that it has very high levels of engagement from citizens and helps to drive citizen engagement on the local authorities' decarbonisation plans. To date, we have seen six issuances, predominantly in the mid and south of England, and we have also launched our pledge campaign, which encourages local authorities to pledge to issue a local climate bond and therefore signal their intent for local climate bonds and gives them an opportunity to start engaging with local citizens ahead of their actual issuance. We have nine organisations that are pledged to the local climate bond. This is a relatively new solution. When we started working with abundance investments, only two local climate bonds had been issued by them. One of the challenges of adoption dates or in the early days of local climate bonds was the lack of a track record of local climate bonds. Local authorities were not clear on whether they would fill their subscription, whether citizens would be interested in it, whether the process would be simple or too tricky. However, now that we have had six issuances, we have seen them be very successful and become subscribed very quickly. Those high levels of citizen engagement on the decarbonisation agenda are also very important. There are a few brilliant examples of where citizens have foregone their annual interest payments for their interests to be reinvested back into further environmentally positive activities such as rewilding in the local area. The other area challenge is just in terms of engagement and being able to get past the relevant approvals internally for organisations to either pledge or issue a local climate bond. We would welcome further engagement with councils in Scotland to be able to introduce them to the concept of local climate bonds and to have further conversations or to connect them in with abundance investments that manages the local climate bond platform. The nascent market is getting a lot of traction. It is an attractive piece of the capital stack for local authorities, but we just need to continue banging the drum and having that deep and meaningful engagement with local authorities to help them to get more comfortable with this solution. Okay, thank you very much Emma. Just a couple of very brief supplementals just to clarify the size and scale of those bonds. What is the average size of the LCBs issued? Are those effectively almost like a shadow municipal bond market, as you would see in the US, albeit at a different scale, presumably a smaller scale? Are those listed capital market instruments, are they freely tradable or are they less liquid compared to what you would typically see with the GLA-type of bond issue? Very good questions. Typical size that we have seen to date, the first few were about £1 million, we have seen a couple that are half a million but with ambitions in new issuing. There is obviously a ceiling that we can hit in terms of local citizens who are able to invest into a local climate bond. In terms of how they operate, they are not a bond in the traditional sense, they are a crowdfunding instrument. I believe that there is the opportunity for investors to be able to trade their investment back into the abundance platform, but it will operate not like a shadow market but actually is an entirely separate entity, an entirely separate asset class as well. We will be happy to share further details on those questions with your committee members at a later date. Okay, that's great. Thank you very much. I've taken up more than one share of time, so let me bring in other members. I'll start with Fiona Hyslop and I'll hand over to Fiona. Thank you very much. Is my mic on yet? For joining us this morning, I first come to Jeremy Gorlick. One of the challenges seems to be the amount of due diligence and financial readiness that is required for an investment of £1 million is the same kind of effort that is needed for a package of £100 million and therefore there seems to be a gap between the propositions at local level and the desireability for investors. One of the jobs, potentially, of Government is helped to help to facilitate that. The First Minister in Scotland is going to be chairing a proposed investor group, which is marshalling the investors. We also, in Scotland—I'll declare an interest because I launched it in 2020—have a green investment portfolio worth currently £1 billion of 10 projects. I promise to increase now to £3 billion. Those are the investable propositions. You talked earlier about the gap being some of the projects are just at concept stage or feasibility stage. What you need to do is get some kind of agreed mechanism that is almost like an authority to invest and understanding because they've hit certain benchmarks to make them investable. Do you see that the role of national government in Scotland—obviously a country of £5 million and a devolved administration—could help to get local authorities to that stage of investability? That's a great question. Thank you for it. Absolutely. To me, one of the most important roles that Government should be playing is to help those projects to get beyond preliminary concept, beyond even feasibility, to full detailed engineering design and to full financial sustainability. If we look at some of the US examples, there are some very clear examples of that, in fact being the case. If you take, for example, the Connecticut Green Bank, the Connecticut Green Bank in the US has been able to mobilize billions of dollars because of the fact that it has played that role of supporting getting projects to a level of financial readiness and the ability to effectively shovel ready. One of the biggest challenges for those of you who are financiers on the panel, if you are a borrower, you don't want to take on money that you can't immediately deploy because there is a carry cost from the second that you draw that money down. One of the things that we need to be sure of is that when projects have the ability to receive money, they can immediately start to build with that money or do whatever is required to generate the revenue so that they can service the debt and pay back their sources of capital. One of the big challenges, and this is my caution or caveat, when we look at aggregating, so it's terrific to hear that there's a billion pounds of projects upwards of three billion, the problem is that oftentimes those projects are not all simultaneously ready to deploy money or to have the funds come back as far as user fees or whatever else is the source of repayment. My big concern is that despite the fact that often it's great to be able to say, we are coming to market with this large package issuance, sometimes the laggards end up piggybacking and getting a free ride off of those that are at earlier stage and already generating revenue, so it's an important balance to strike to make that work. To that point, what I've seen in some countries is that rather than going to the market with a full issuance, there is that intermediation body that goes out and borrows on behalf of a number of different local authorities or a number of different projects brings that in and almost acts as a municipal development fund or a specific agency that has the availability and mandate to intermediate and then on-land and be able to collect those funds back so that the local authority is not sitting there with this obligation on its books without having the ability to deploy the funds but instead structure that in a certain way. If that's helpful and if that sounds like that aligns with where you'd like to see things be, I'm more than happy to share some papers that I've written on the topic as well as some general thinking about that from around the world. Thank you. That would be very helpful, although we're constrained in terms of borrowing that the Scottish Government can do, but there might be possibilities if we're creative about how we look at things with local authorities. In relation to the local authority role, I might come to Emma Harvie. The skills that are required, my colleague will go into some of them, but in terms of what we're looking at it's almost like a regulatory standard to get that kind of investability. There's a difference between project and the process of it and in terms of what policies and mechanisms can be put in place in relation to what local authorities can do to get that standardisation to help to scale up the level of investment opportunities for local authorities. I will come at this from the financing within a local authority. I'm sure Jeremy will have some further considerations for how capital raised and deployed by local authorities can support investment. In terms of standardisation, I'll probably draw on some of the points that Ben mentioned, which is around having dialogue amongst local authorities through formally convened forums where they can share best practice. For instance, we have seen the likes of the UK Climate Change Investment Commission and the Scottish Cities Alliance, for instance, who are sharing best practice and ideas amongst organisations and local authorities. For instance, some of the work that we have been doing through the coalition for the energy efficiency of buildings on, if I take green mortgages again, a property-linked finance, being able to share that and have those deep conversations with local authorities can be really important. We know that there are regulatory standards, ambitions and targets that local authorities have set themselves, whether they have accepted that there is a climate crisis within that area and that they have set particular targets. That, again, can help to drive impetus to get towards net zero. As I say, my work focuses much more on the enabling role that local authorities play. From our perspective, we are testing some of these financial solutions within an individual local authority. We are trying to get lessons that can then be shared or broadly. Sometimes, a big bang approach across all local authorities can lead to operational and implementation challenges. To Jeremy's point, you can have these large facilities that deploy capital, but the first movers can be penalised by having to go through all the teathing pains whilst the laggards can benefit from the fact that all those challenges have been worked through. From our perspective, it is piloting at a smaller scale with individual local authorities identifying what works and then working through which local authorities want to be involved in such pilots and working with the private finance sector to understand with their interests lie. I am sure that Jeremy will be able to talk a little bit more about some of the standardisation approaches that his research has thrown up as well. From our perspective, coming at it from the enabling role that local authorities can play, we think that there is a real need to test development and scale. On the testing, we have had a great deal of focus on a place-based solution to net zero. It is interesting that we are talking about the role of local authorities, not just as in the demand supply side but enabling. For the private sector, home ownership for example and green mortgages, local authorities may not see that they have a key role in helping to promote that in a place-based, street-by-street process. Is that something that you mean when you talk about local authorities enabling and leading in the information sharing? Absolutely. We have anecdotally heard that when retrofitting schemes for instance or financing schemes have a local authority badge on them, an endorsement badge, scheme providers have up to five times more engagement from citizens in those schemes. An example that I will give from the UK is something called Solar Together, which is a demand aggregation scheme. Citizens within a particular region will be able to take part in a scheme where they can sign up to have solar panels put on their roof. When a certain number of households are signed up, let's say it's 100 or 200 of signed up for the scheme, the scheme administrator can then go out and bulk purchase the technology, bring in economies of scale, mass-install these technologies with all the appropriate guarantees. We see this being very successful to date. Part of the success of that has been that it has been sponsored by local authorities. They have given it the seal of approval, so it helps to bridge that discussion between private finance or private decarbonisation schemes and citizens if they have a local authority's endorsement and effective equality tick on that. It is local authority's involvement in easing the transition of those quite exciting solutions into the public psyche. I think that the committee is looking forward to visiting Llanlysgol, my hometown, that did a community bond on solar panels, but it was a very small scale. I can move on to Ben Howarth now. Obviously investors are looking at rewards and I suppose it's the mechanisms and the financial packages and products that would be helpful to bridge that gap between a clear demand for net zero investment and supply investment. You talked about standardisation that gives us some comfort to investors. What would they be looking for? You talked about low-level long-term rewards and returns to investors. What shape does that look like? What policies and mechanisms need to be put in place at local authority level or at the Scottish Government level to enable those products to be developed or are the ones that are already there that you would like to use for investment? The examples that my previous panellists on the specific mechanisms and bonds are the things that ABI members are looking for, particularly green municipal bonds. One of the biggest policy things that policymakers can do right now is to think about regulation, but not just the regulation of the people providing the technology, but also the regulation that the investors face from the Bank of England and the SCA. One of the challenges that members face when investing in infrastructure is that it can take a long time to have a new asset class approved. Some of that is on ABI members to demonstrate that they understand the asset class and have properly thought about it within their mix of investments. However, if you are designing a new investment opportunity, the earlier you can really think about how will this get regulatory approval from the Bank of England as an asset class can really help investors to move forward with confidence. Also, it just slows down. It stops a practical delay, which is that what we do not want ideally for something that we would see as strategically significant as delivering net zero is for the investors to come in and say, yes, we are really interested in this asset class and we think that it is appropriate. However, we will have to wait six months, 12 months, two years in order to get asset class approval at which point other investors may have swooped in or the opportunities lost because people have not been able to get the assets moving. That is a really practical step that the Scottish Government and to a certain extent local authority can play, which is to make sure that where something is deemed to be strategically significant, particularly if it is infrastructure, it has got that regulatory approval at the financial end. I think that the other point about it is to think both in terms of short term and long term where the returns are going to come. Going back to the point that I made earlier, I think that in the short term a lot of pension funds will not be looking for massive returns straight away, but what they want is to guarantee that they are going to get a steady and predictable stream of income. That is just to make sure that they are protected against things like if they have got a fund, a certain number of policy holders choosing to move out of it each year, they are able to meet those claims. If people move out of a DC pension scheme, they have obviously got to provide the finance for that, so they have to have a certain amount of predictable capital that they can raise each year. In the longer term, if they know that they are going to get steady and predictable growth in their technology, that will be deemed a suitable one. It is not about providing for our members a very large return straight away, but it is about demonstrating that there will be a certain degree of predictability. That might be, in the short term, where there is no obvious clear market mechanism to drive those returns. The Government is providing some kind of guarantees that will maybe get it through the first five to ten years, and at a later point it moves into a purely market solution. Those are some of the ideas that we would look at. Again, if those things are being supported by the Government, making sure that that has got approval as an asset class that investors can have it approved by their financial regulators. The Clearly Financial Regulation is reserved to Westminster, and we can encourage that kind of mobilisation of a regulation system that meets net zero and encourage that. However, in Scotland, what we can do then is look at standardisation of infrastructure products in particular. I think that that is really important. I noticed that Jeremy Gorlach Emma referred to you in terms of what would standardisation look like. If you want to give us some indication just now about anything that you can follow up in papers, that would be quite helpful, because it is how we get quicker investments, but appropriate investments for investors at the right time. I was very taken by what you said that they have got to be investor-ready. Jeremy, can you tell us a bit more about what you think is required in terms of that standardisation of the asset? Absolutely. When I think of standardisation, one of the things that I am often struck by is the fact that between different local authorities there is not necessarily a full appreciation of what this can look like. Oftentimes people go immediately to energy generation. Energy generation to me is not necessarily the right solution for this when we consider it. When I think about standardisation, for me, when we start talking for example about transportation, that is actually something that is far more easily standardisable, not only because of the fact that we know that we can predict what user trips look like as an example, but we also can imagine what the ultimate usage looks like, for example, of buses. If we imagine a bus rapid transit system, we can see what that looks like, what the current users are, and that is something to the point that Ben made earlier, as far as his institutional investors and what their expectations are. They want to be able to base this off of a track record. For a lot of the things that we talk about when we discuss net zero, many of these are nascent technologies and not things that are necessarily well understood. If we can make the opportunity standardisable but also familiar for the institutional investors who are coming in, that actually delivers something that they can imagine and say, so we are replacing the technology but not necessarily replacing the financial structuring that makes sense to us. The standardisation needs to be as much around the technology itself, so we imagine what is best practice, what is good practice for this and what is in fact something that is harmful to take on as a approach, but let us keep the financial structuring more or less standardisable and something that is familiar to the institutional investors. So, when Emma discusses the idea of energy efficiency at buildings, this concept is not necessarily something that is foreign for the investors who are coming in, because they can say, we more or less understand what this looks like if this yields a cost savings for the people who are in a home, so it means that their utility prices fall. And I know right now, utility prices are a big concern for everybody. If we can find ways to replace traditional approaches with new ones, but we can keep the financing structure more or less familiar, that is what I think we really need to be looking at. When I hear people talking about standardisation, and in the case of the Greater London Authority, we have talked specifically about, let us not jump in with sectors across the spectrum. Let us take an approach that is sequential. We will start with one lending window or one particular area. We will talk, for example, about energy efficiency of buildings, or we will talk about district heating. We will talk about nature-based solutions. We will talk about circular economy, but each of those, rather than throwing it wide and making institutional investors get skittish because they say, we do not know where our money is going, let us be really measured about that approach. Let us look at long-term investment that matches the useful life of assets. Let us try to imagine that the revenue that comes in off of that is well-aligned with investor expectations, but also what people can afford to do. One of the things that I get very scared about is when we talk about net zero and green. There is a lot of men on the street or women on the street who get concerned because they say, we do not really know what you are talking about. We do not know what you are asking either us to borrow for ourselves or what you are saying, and our local taxes will look like as a result of this. We need to make this accessible. We need to make this something that is financially a smooth approach, so it is not as though there is going to be a huge jump at any one time, which means that we need to be looking at institutional investors for that long-term money. We need to make sure that this is, again, a standardised approach so that the small local authorities can jump on. To close out on my comment, this thing echoes what I have said earlier, as well as others, a lot of smaller local authorities. I know that Scotland does not just look at big cities. What is the capacity of a small local authority? They are lucky if they have enough people working in municipal offices to cover day-to-day functions. They do not have the ability to start thinking about whether it would be great if we did x or y additional thing. If we can have a standardised approach, they can appropriately contextualise it for their particular local authority and for their environment, which means that they do not need to bring on a lot of external technical assistance to deliver. I feel that that is what is going to accelerate the delivery of net zero, not trying to be creative and funky with all these things. Let us try to find easy cookie-cutter approaches that can be tweaked here and there because it will help the implementation on the local authority side, so the demand side for money, but it also helps Ben's institutional investors to feel far more comfortable as far as the supply side of money in the financial ecosystem. Thank you very much. I will pass that back down to the convener now. Great, thank you very much. Fiona, let me bring in Natalie Dawn, who is joining us remotely. Natalie, over to you, please. Thank you, convener, and good morning to the panel. In last week's session, we spoke at length about the needs for more education and information for the public, and we have touched on that this morning. Given that a significant part of the transition to net zero concerns energy efficiency improvements in existing buildings, it appears that that is going to be key. Emma, I know that you mentioned raising awareness of the benefits of green mortgages and how green bonds can help to encourage participation in green agendas. I will go to Emma on what more you feel could be done in that area to encourage homeowners into making those changes. At the very outset of the GFI's work into the built environment, we took a couple of months to assess the landscape for owner-occupiers, private renters and social renters to understand what barriers and challenges were for them to decarbonise, but also the potential levers and financial opportunities that could support and overcome those barriers. What we found was that we had to look at different housing tenures and address them in different ways. For instance, for owner-occupiers, the long payback period of energy efficiency measures is a huge deterrent, because if you are looking to move house in two or three years' time, where is your incentive for investing £5,000, £10,000 or £15,000 into energy efficiency measures that you are not going to benefit from? If you look at the private rented sector, one of the biggest challenges is the split incentive between landlords and tenants, where landlords are responsible for investing into energy efficiency improvements, but the tenant gets all the economic benefit because they are typically responsible for repaying energy bills and therefore get the energy savings or the benefits from the energy bill savings. In the social rented sector, the biggest challenge is the different draws on social housing providers' funds. They need to develop new homes, building fire safety improvements and zero consideration. The first thing to say is that there is not a cookie-cutter challenge and therefore we need to have a mixture of different solutions for different tenures. One of the key outcomes from our initial analysis was the fact that data and availability of data, both for the finance sector, local authorities and actual property owners and tenants, was a big challenge to energy efficiency improvements. At the moment, home owners do not know where to go to try and get information on how to improve the energy efficiency of that home. One of the solutions that we identified and started to develop was something called a building renovation passport or a building renovation plan. This is a rich digital tool that consists of two pieces. One is a historical logbook of energy efficiency improvements and energy performance of a property. The second is a step-by-step forward-looking plan for how a home owner could retrofit their property. We worked with over 30 data specialists from across the UK to design out a framework of best practices for what a building renovation passport should include, including the data inputs, the data outputs, how you assure quality, who should be responsible for producing those data, those building renovation passports and then the role of government in supporting the adoption. I will be very happy to share that paper with the committee after this call. Those have been successfully developed in mainland Europe and have helped to encourage home owners to retrofit their properties because they have been given decision-useful information at the appropriate time. One of the other big challenges is having ready on how much energy has been saved from an energy efficient improvement. We worked with an organisation called EP Group, formerly EnergyPro, on some pilots for muted energy savings. How could you in real time get information on the energy saved from a retrofit measure? This is helpful not only for homeowners to quantify the benefit of a retrofit measure but also for financial institutions who are developing financial solutions that depend on the energy savings from a particular retrofit measure. That is a quick example of data is one of the key pieces. Putting data into consumers' hands in a digestible consumer-friendly way is really important. One of the other pieces that I will mention briefly is not just putting information into the hands of consumers and citizens but also putting information into the hands of the finance community. One of our more recent publications was something that we called the Lenders Handbook, which was an easy-to-use guide for financial professionals to understand different retrofit technologies that are available, how much they cost, average energy savings, investment useful information and potential risks associated with those technologies, as well as some further information on policy trajectory across the UK, quality assurance and reputable trade bodies and installers. We have had overwhelmingly positive feedback on the Lenders Handbook, particularly from the mortgage industry, who say that they use it very frequently to help them in developing and designing new financial solutions, whether they be green mortgages or green loans, etc. However, what we have found is that with day-to-day interaction of consumers with the finance sector, it is primarily through, if we are talking mortgages here in particular, brokers and financial advisers and mortgage brokers. What we are currently doing in collaboration with UK Finance, the Building Society Association, Equity Release Council and the Association of Mortgage Intermediaries is exploring how we can develop our Lenders Handbook for other professional audiences. Initially, we started with mortgage brokers, but we are potentially expanding that to estate agents who have very strong contact points with consumers and to conveyances and beyond. I think that there is a need not just for putting information into the hands of consumers and, as Jeremy was saying, into the hands of local authorities, but actually up-skilling the finance community as well on some of the net zero risks. Importantly, because financial organisations are profit-driven, the opportunities of the net zero transition. Thanks very much. There was a lot in there, but that is really, really helpful. Focusing on current homeowners or that sort of group, in terms of private capital, again, sorry, Emma, I am kind of directing this to you, just based on your earlier answers. In terms of private capital, what sources are there available to help fund this? I know that you have spoken about the role that local authorities can play to attract finance into the individual areas. Perhaps you could expand on that a little bit more and advise if you feel that there are any other opportunities to attract capital. Again, I will go to Emma first and happy to bring other members of the panel in following that. Yes, so capital will be attracted to where there is demand for projects. Again, I will speak to energy efficiency of buildings here, but I am very happy to provide some examples from transport and nature through written documents later. At the moment, demand for retrofitting is highly fragmented. Lenders or institutional investors are struggling to find the critical amount of demand that merits and warrants them to develop and design new financial products or to put significant resource and effort behind providing capital to these areas. One of the solutions that I mentioned earlier, which we are starting to pilot with one of the major combined authorities, is demand aggregators. How can you aggregate demand for particular retrofitting technologies where you then have a homogenous portfolio of technologies that could attract in either an institutional investor to fund it? It could be funded through the local climate bonds that we mentioned earlier or you can partner up with one, two or several financial institutions that would be wanting to provide retail finance to homeowners looking to retrofit their properties. Being able to aggregate demand both within a region but on a homogenous technology can be very important. This comes back to Jeremy's point earlier around having those investment windows that look at particular typologies or particular technologies that can be quite important for attracting in investment. Again, I would say that awareness raising campaigns on particular technologies or particular solutions can be important for creating that critical mass of demand but also making people comfortable to use particular financial solutions. Again, I mentioned around our green mortgages work. We are doing a similar approach with some of our work on green rental agreements, which is a way for landlords and tenants to split energy efficiency savings between themselves and address that split incentive that I referred to earlier. There is awareness raising, there is aggregating demand, whether that is through digital platforms or local authority-led projects and then the upscaling piece. Those are the headlines that jump out from my side. That was very helpful. I was going to bring Jeremy and I am not sure if you feel that you have anything to add to that. I know that that was a very thorough response there. Nothing in particular is important to make sure that we are bringing in the homeowners as much as possible. The one thing that I would flag, and I am not sure what that looks like in Scotland, but I know that, in some of the examples that we have been looking at across England, a lot of local authorities have at least some degree of involvement in social housing. I feel like when we look at social housing, there might be an opportunity for the local authority itself as the owner of social housing to be responsible for the retrofit and to borrow in their name rather than to have the borrowing be in the name of the homeowner. I think that when we talk about energy efficiency and retrofits for social housing, there might be an opportunity for the local authority to not just play the role of enabler but also for them to play the role of project sponsor itself. Put that into your overall thinking when considering what is the mobilisation of capital look like. Other than that, Emma really went through that in great detail, so I have nothing to add. Thanks, Sherry. We know that that is an important point. Thanks very much. I have no further questions. I am happy to pass back to you. Thank you very much, Natalie. I think that Ben may have wanted to come in on some of those discussion points. Ben, if that is right, I am very happy to pass to you. Oh, apologies. That is all right. Do not worry. It is a challenge of doing all this through screens. Just a couple of points from me on that. One, going back to the question around education and information for the public, I think that one area that it would be really important to address here is this point around prioritising who is entitled to what and when, and where we really think that it is most important that we do the retrofits quickly. The reason I say that is in particular an opportunity to educate and inform the public and make some progress is when people make an insurance claim under property insurance. That might may well occur when someone who was not previously considering having any work done in their homes and would not want the disruption suddenly finds that they have had a major leak and they are having lots of repairs come into their homes. In the next few years, that is an opportunity to really promote the wider energy efficiency solution. There may be some challenges to that, so someone may not be entitled to the full cost of that work under their insurance policy, but what you could do is bring the people together and say, well, you can have this work, but you are also entitled to claim maybe this government support, or there is another financial product that you can utilise to get a loan to do all this work. I think that the advantage is that you can have all the work done at once. I will make that simple point about utilising that potential opportunity that comes when someone makes an insurance claim, which is an unexpected event. The other point that I just wanted to quickly make is that there is a lot of parallels between the energy efficiency agenda and flood resilience and all that adaptation of resilience to climate change, and I think that it is really important to look at this agenda in the round. In the insurance sector, we have recently launched flood reas build back better campaign for flooding, and that is essentially, if you look at the way that that would be financed and structured, a lot of the challenges are the same. It is really about persuading people to think a bit differently about how their home is rebuilt after an event, and I think that if we can align the energy efficiency agenda a bit more with the resilience and adaptation agenda, I think that that will make it more effective. One final point is around skills. From ABI members who invest significantly in property, one of the things that they are concerned about is the pace of this work happening very, very quickly. It might be a small minority, but if a number of these retrofits go wrong and cause more damage to people's homes, that is a huge amount of risk exposure that the insurance sector would face. I think that we would welcome from local authorities, and it was mentioned earlier about them using their credibility and credentials to demonstrate who is a reliable supplier. I think that that is really, really important that we do not allow this to be an unmanaged and rushed process, but that we actually make sure that people have got really good skills to do all this work. Some of it is very complicated so that we do not face problems down the line. A lot of this technology goes wrong and it causes huge risk and more insurance claims in the future. No, absolutely. I believe that this is going to be a big upheaval for people, so trying to make that as concise and simple and easy for people going forward is definitely important, so I think that that is a really important way of thinking. Thank you all for your responses and, as I said, I will pass back to the convener now. Okay, great. Thank you very much. Natalie, next up is Liam Kerr to be followed by Monica Lennon. Liam, over to you please. Thank you, convener. Good morning, panel. I will direct my first question to Emma directly. It was just on that answer that you gave Emma to my colleague Natalie Don. You talked about owner occupiers in particular, but how do you see the attractiveness of the products and the measures that you are talking about being raised amongst those who would not see a return on the investment? For example, in terms of buy-to-let landlords, for example, or those who do not have the ability or indeed the inclination in the current climate to take on additional borrowing? Yeah, it is a very good question. I think that we do see a role in particular for those who are in the less able to pay sort of free of homeowners. Do you see a really important role for the Government or public funding to support this? In particular, credit enhancement guarantees, which can make debt investment more affordable for homeowners. We have seen it be successful in supporting other sectors of the economy, whether that is sort of high-grade startups, or adopting or there being government schemes that are similar to the KFW model that we have seen in Germany, where the Government provides low-cost funding to financial institutions, which is then directly on-lent by those institutions to homeowners for home efficiency improvements. We have seen that the KFW scheme ran out of money very quickly because it was a highly attractive proposition that was available to a much wider group than, let's say, what the traditional private finance market would address. I will also bring in a few statistics from some consumer research that we commissioned in the past year exploring consumer attitudes towards energy efficiency and financing for energy efficiency. When we tested, it was a sample of 1,800 households representative of England, Scotland and Wales. When we asked them about their perceived importance of energy efficiency last year, 83 per cent said that it was important or very important. When we retested this back in March this year, that had increased to 9 out of 10 people that we spoke to. Energy efficiency and other net-zero activities are growing in importance to homeowners driven, predominantly by a want to bring down their own energy costs and protect themselves against future energy shocks. What we found was that homeowners were also less likely to want to use traditional forms of finance at the moment because of concerns about affordability. It can make a very good point that some people are going to, particularly in the current cost of living crisis, perceive some forms of finance as being challenging to use. That is partly why we are exploring innovative new financial solutions that are low-cost or have other benefits, such as with the property-linked finance where repayments are spread over 20 or 30 years and the repayment obligation will pass to the next homeowner when, if that property is sold to effectively making this an energy efficiency service charge, which can be highly affordable and spread over a long time. Ultimately, we need to have some new innovative financial solutions that help to address that concern that we would directly raise. We also need to tap into some of that growing interest in energy efficiency, because that is quite unique for the first time that people are interested in energy efficiency and net-zero. I will move to a question for Ben. Ben, you talked about skills and local authorities co-ordinating with insurers and pensions to ensure that investments go where they need to. Do you think that there is a sufficient skillset and integrated thinking across and within our 32 local authorities to achieve that? If not, what needs to happen and led by whom? It is a really good question. Skills are developing. I wonder whether it is not so much about the technical skills of an individual person, but it is about the accreditation and being able to assure that they have the required skills and that this is a fast-moving event. I would look at the example of electric vehicle roll-out as just one example of this. Clearly, we have a well-advanced repair and maintenance sector in the UK and Scotland. It is well established, but we are about to see a major change. The targets to switch to electric vehicles are quite ambitious in their place, rightly so, but we need to know that repairing an electric vehicle is significantly different to repairing a conventional car. There is no reason why we cannot get to the point where our engineers can do that work. They adequately can, but we need to train people very quickly and give people who are commissioning them the confidence that they have had that training. We need an appropriate way to verify that someone is genuinely an expert on an electric vehicle because there are differences. There are things that can go wrong when you take a battery out of a car that would never apply with a combustion engine vehicle. I do not think that it is about a fundamental lack of people or a fundamental lack of will, but we really need to move quite quickly in training people. The insurance industry is making a lead on this, so that is a research that the industry funds has started an EV training course. I think that we are making progress on that particular issue. I think that it applies across a lot of these technologies. It is particularly around the repair and maintenance side that we might have a potential skills gap, and that is where I would encourage people to really focus, not just on the original technology providers, but to really think, can we repair, maintain this technology and keep it operational over the long term? Also, that protects you against a long-term risk, which is that those things start to go wrong. I am afraid that I probably do not have a simple policy solution for you to suggest. I think that it is just a sustained effort to really think about what are the key technologies that we are going to be utilising to deliver at net zero and actually the existing employee base, or people who work in sectors that may have to transition to have the skills that you need and how do you verify that they have the skills that they need? If you are an insurer and you are thinking of commissioning someone's work in a garage, how do you know very quickly and easily that they have the required skills to repair an electric vehicle? That will be my main point around skills. Also, adaptation and resilience is really important. That is an area where decision makers can actually drive this by sending some quite strong signals. It is easy to look at these two things separately and to look at the attractive and fun side of net zero as there are lots of new technology enrolling that out and worrying about adaptation and resilience somewhere else. However, if you are giving planning permission or funding or grants to a new technology—the things that we were talking about earlier about incubating new technologies so that they are ready for investment—where local authorities are playing a role in that, if local authorities can send a really strong signal about adaptation and resilience, that is very good for those projects because they will be more resilient. Once you make that condition, you give the people who would be investing in skills and training the confidence and the signals to say that it is worth upskilling our people to do this because we know that there are a lot of projects that depend on having this particular maintenance done to this particular standard. If we could start by sending that strong policy signal in the new net zero technologies and infrastructures that are getting planning permission, that would mean that you have a skills base that could then also roll that adaptation and resilience stuff out to the wider society, which is perhaps less directly involved in the net zero transition. To me, it is about strong signals and being able to verify and clarify exactly what skills people have. Thank you. Taking that forward and picking up on something that you said earlier, you talked about insurance work being carried out and carrying out work on repairs and things. What role does the insurance industry have in the transition to net zero? For example, in how the industry handles claims and repairs, perhaps more sustainably, and sustainable supply chain sourcing? I think that we have a really big role and it is possibly overlooked because we are often seen as part of the financial services sector just involved in the money. Obviously, we commission a huge number of repairs across the UK every single day, mainly in housing and vehicles. There are a few things that we can do. One that we have already touched on is the touch points with customers when they make a claim. In particular, that is about giving them the right information and the right choices and encouraging them to think more sustainably. We have to accept the reality that, in some of those cases, that might require them to accept a different choice to the one that they were used to. One example that I heard recently was around flood resilience, where a claimant was entitled to around about a £25,000 kitchen claim, but after some discussion, they were persuaded to accept a cheaper, lower-quality kitchen than the one that they had before of about £10,000 that sustained the rest of their claim on flood resilience. That is a example that we could look at about being creative and a bit more smart when we manage a claim. That is part one. The other one around supply chains is that our industry has a huge volume of small businesses that we work with on a day-to-day basis. We know that small businesses are not committed to net zero, but some of their science and some of the methodologies to calculate carbon are pretty complicated and not easy for a small business to do. There are some useful resources that they can use. From our supply chains, it is important that, first and foremost, the insurance sector encourages people to use those simpler resources. There is a science-based targets initiative SME track and there is also something called the SME climate hub that was launched to coincide with COP26 last year. What we want to see from AVI members is consistency in that, so that every small business that they work with in the small supply chain is asked the same questions and is asked to provide information in a consistent format. What we do not want to see is that every single insurer in the UK, when they commission a motor garage, is sending them a different variation of a survey, so that they have to spend half their time filling in climate surveys and providing variations of the same information in a slightly different format. We are trying through the AVI to drive a lot of consistency in the supply chains, but the end message is actually that we have a really useful role that we can play in equipping the large volumes of small businesses, a lot of them alone trade us particularly in home repairs, with the information that they need around net zero and what they need to do. We have a massive role to play in our supply chain. Just for absolute full transparency, I asked a question earlier on in reference by-to-let, and just so that the committee is aware, I have a property that is occasionally let out, but is not generally a by-to-let, but just for full transparency. Okay, Liam. Thank you very much for that. Let me bring in Monica Lennon to be followed by Jackie Dunbar. Monica, over to you please. Thank you, convener, and good morning panel. This has been really interesting and really useful for the committee so far. Thinking about the role of local authorities as projects, borrowers, sponsors and enablers is clear that having the right financial skills and the right people is very, very important, but during the inquiry we've heard a lot about the challenges around skills generally, but in particular a lack of financial skills. I'll come to each of you in turn and perhaps Jeremy can maybe give an international perspective, but can you give some examples of really good practice where you've found it? Have you seen any examples of people being seconded into local authorities, whether that's from the private sector or other parts of the public sector? We've not had a chance to talk about the Scottish National Investment Bank today in any great detail, but do you see opportunities in terms of what role the bank could play in supporting local authorities with the important work that they have to do? Perhaps I'll come to Emma first and then I can come to Ben and then Jeremy. Yes, of course. You touched on a very interesting point around the conments and collaborations between local authorities and the finance sector. For instance, we are going into a strong partnership with Greater Manchester. We are conning in one of our new colleagues who will be working very closely with the local authority and other local organisations to try and pilot a number of financial solutions within that area. I think that that's very important to have that close collaboration. We've also seen that collaboration through the Scottish Government's GreenHeat Finance Task Force, which is convening a number of financial trade bodies and organisations themselves to work with policy makers on potential pilots as well. I think that there is a real need to have that very close collaboration with joint objectives that are aligned and that are the same. That is one way of doing education. We know that there are a number of different education standards out there—the Green Finance Institute, the Green Finance Education Charter, which encourages professional bodies to educate people in their professions. Again, there is a mixture of collaborative projects and professional training that can help to upskill the finance sector and provide that education and training through to local authorities as well. There are specifics around financial skills and literacy really well. Specifically to net zero, one of the points that I'd make is that I don't think that AVI members are expecting local authority personnel to understand all of their nuances in massive levels of detail. I think that what they are encouraging is that they are genuinely willing to sit down and engage. I think that the point that members often make to me is that it is at the incubation stage of projects where a technology itself is relatively well proven. The science side has been done. I know that I am slightly over simplifying, but the science has been done. We know that the technology and theory works, but it is about building a business case. I think that that is the point where they feel that they are sometimes left out by people to build a business case and then go out to investors. I think that they feel that they would like to be involved in that stage of saying, actually, we can sit down with you and talk about how the business case works so that we can provide, going back to the points that I made earlier, exactly what we would be looking for as investors. There is a real appetite from AVI members genuinely to sit down and be part of that and participate and to pass on their expertise. Actually, I say that if you go to the rationale for that, a lot of our members—89 per cent of the UK's long-term savings market now that our members of the AVI have made net zero commitments under the UN Rest of Zero Campaign, but that is only part one. They now need the things to invest in instead. They have made their commitments around how they are moving their assets away from carbon-intensive centres over time, but they need to see a different platform of things to invest in. They are genuinely committed to sitting down with local authorities and making that happen. I am very confident that if you can get the opportunities to bring our members in, they would come to the table and share their expertise. Obviously, in the long term for them, I think that most of them are confident that those investments are of good value and are things that they would want to invest in anyway, so they do not want to miss out on good opportunities. That is the broader point that I would make. I think that that is helpful. Thank you, Ben. I will come to Jadamie now. I am listening and I am really excited by everybody's optimism, but at the same time—I do not want to be in the rain cloud—when we met with the institutional investors around the proposed London issuance, I asked them, do you have resources that can go in to provide support? While everybody said that we would love to invest in this transaction, nobody put their hand up to say that we have this fair floating resource that can prep the transactions or that can help with the financial structure. I think that, while it is great to imagine that the private sector would be the investors, which is their role, I do not know how much any of them are going to jump in to provide direct support over the entire process of preparing a project, largely because of the opportunity cost for putting somebody on succumbent. I do not think that it is necessarily realistic to expect that the private sector is going to come in, but I do think that it is realistic to, for example, think that the Scottish National Infrastructure Bank could provide exactly that support, because this is the natural pipeline for them. We are having very similar conversations with the UK Infrastructure Bank and asking them, what is—they are at their one-year anniversary and they are talking about the support that they are providing. Our question directly to them is, what sort of technical assistance will you provide to local authorities? How will you help them to have a reliable pipeline of transactions? Just to give a sense of it, they have £4 billion that are set aside for investment into local authorities to help them to get to net zero, but they have not really been able to move much capital because the pipeline of projects does not exist. That actually becomes not just helpful, but serves their goal of being able to invest into these opportunities. I would say that that is the same sort of opportunity that the Scottish National Bank can be looking at. I do want to come back to an earlier point, though, and just as a point of clarification for everybody, when we talk about the fact that projects themselves are now financially weak and we just need to get the contractors in, one of the biggest challenges. I do not know how many of you have tried to retrofit your own homes or know if people have tried this, but there is a lack of contractors. One of the things that is important is not just the financial capacity building for local authorities or the technical side on the structure of the transactions, but there is also the need to build up the capacity of some of the contractors, some of the labourers, some of the tradespeople who have the ability to do this work but do not actually know how to do it in line with net zero expectations. This is one of the things that I have encouraged the Greater London Authority to do with some of the profitability from the proceeds that come back on repayment on their transaction. Invest that into technical assistance facilities not necessarily just for the local authorities or for the borrowers you have, but also into the tradespeople themselves so that you can deliver this at pace and at scale. I think that that might be another thing for you to consider when looking at how do we help local authorities to get to this point? The local authorities themselves are going to say that we would like to commission, so we have drawn down the money that we are ready to go and we do not actually have contractors who are prepared to do this work. So, as much building the financial capacity and technical capacity of local authorities as it is of some of the people who are responsible for doing that work, but as far as the concept of succumbent absolutely is something that could work. The big challenge is going to be we have 30 plus local authorities across Scotland. Every single one of them is going to say that they need that support. How are you going to be able to source not just one or two, but 30 each of whom will have some degree of specific knowledge and expertise on the needs of that particular local authority? Thank you. Thank you, Jeremy. That was really, really helpful. I am watching the clocks that I will pass back to the convener now, but thank you again. Thank you very much, Monica. A final question from Jackie Dunbar. Thank you, convener, and good morning, panel. In regards to supporting transition to net zero, ABI has suggested that currently there is just not enough investment opportunities, and also the process is too complicated to fully utilise the insurance industry's investment capacity. I see Ben's nod and so I am going to go to you first, Ben. Can you set out what more the Scottish local authorities, the public bodies and also the Scottish Government can do to simplify the process and increase the number of opportunities that they are hopefully going to be? Much of what we have already talked about is what the Scottish local authorities and the Scottish Government can do. What I would say—I just re-emphasise my point around—we know that technologies are not suddenly just going to come online like that, so we are not unrealistic, and there is going to be a lot of time. I think that one of the practical things that the Scottish Government can do, and then thoughtfully down to local authorities, is to be really clear and publish very clear transition plans so investors can plan ahead. That hopefully won't be too complicated, and obviously we appreciate it. There will be some uncertainties in that, but that is set out really clearly. Those are technologies that we are expecting to start to filter out, say, in five years' time. These are the decisions that we are going to face. These are the opportunities to input. The more planning ahead that we can do for investors—again, I am sure that local government will say that they do not fully understand the views and attitudes of investors and what they are planning, but I think that the same is true of reverse, that a lot of our members will say that we do not fully understand what exactly is going to happen when, what decisions have definitely been taken, what are still uncertainties, who is looking at what when, what—even really simple things like what meetings are going ahead actually—I think that it is tempting to think, oh yes, we know all the big investors. Some of the biggest institutional investors in the ABR Membership are not outside names and would not naturally get invited to those kind of meetings, so I think that there is just a bit of transparency around what decisions are being taken when, so that is the stuff that the Scottish Government could do. I think that in our climate change work, when we have talked about the complexity of the process, to be frank, the biggest challenge is probably the part that I spoke earlier about actually getting those asset classes approved by the Bank of England and by the financial regulators, and that is a complex process that can slow things down. To be frank, it can, at times, lead to opportunities being lost. At the UK level, we are responding to the Treasury's consultation on solvency, too, and we would really like to see that reform go through. I appreciate that that is not something that the Scottish Government has direct influence over, but I think that, going back to my earlier point, one of the things that Scotland can do when it is developing investment opportunities is to make sure that it is spoken to the Bank of England and that the Bank of England has a really clear understanding of what they are and when they are coming, because the Bank of England has to sit down and approve those asset classes and say that they are something that insurers can invest in safely. If the Bank of England can do that at an early stage, it just speeds the process up. That is a really proactive thing that the Scottish Government can do, is to be as close to the Bank of England as possible. Can I just ask how much investment could ABI leverage in, if everything was— So, we have not broken those figures down for Scotland, I am afraid, but across the UK we commissioned Boston Consulting Group last year as part of our climate road map to look at what we could leverage. The overall amount is 0.9 trillion, so 900 billion, of which we think that that breaks down to around £60 billion a year. I appreciate that those are very big figures, and we would emphasise that that could, not would. If everything gets right, there is significant capacity there. I hope that it does not sound like we are overclaiming that, but what we are trying to illustrate is that there is a significant amount of capital that could come from the UK long-term savings sector and general insurance sector to finance this, which means that it is worth trying to unpick those roadblocks. We are not promising that all of that investment will definitely happen. What we are saying is that it is there that there is an appetite to invest. If you can give us the opportunities, that is the kind of money that we are looking at, so it is worth working with us. Okay, thank you very much. I am not sure if Jeremy or Emma would like to add anything in if I could go to Emma and ask her. You were speaking earlier, Emma, about the local climate bonds and that you would welcome more engagement with the Scottish local authorities. Is there a sticking point that you are not getting engagement with the local authorities or just because it has not happened yet? The local climate bond market is very new. It has been to date pioneered by abundance investments and ourselves playing some of the roles. It is a small team developing an exciting new market, and we want to try and get as much traction with local authorities across the UK. If there is an opportunity for new Scottish Government to act as a conduit or to provide information to local councils and Scottish councils about local climate bonds, that would be welcome, but it has been predominantly not a sticking point but just a capacity piece as this market evolves and grows. We would welcome conversations with those councils, but it has not been that there has been a particular deterrent to date. Okay, so there has just not been any contact with them rather than there being a sticking point then? Yeah, I think that there has maybe been some kind of intensive contact, but yes, I think that it is more around having that sort of dedicated targeted engagement. Okay, thank you very much. I am very weary of the time, convener, so I will just pass back to yourself. That is great. Yes, thanks very much, Jackie. We are up against the clock, but there are one or two specific questions to follow up. First, a very brief question to Jeremy. The question of standardisation and looking at the GLA bond issue, which might set the market precedent for some of this, is it rated? Are the rating agencies involved in this in order to provide a level of standardisation in the structure? Emma, the question for you I had was on skills and expertise at a local authority level presumably there is going to be an issue about pay rates to attract the necessary people with the right expertise, because local authorities will be competing with a private sector. Even if the local authorities train people in this area, they might be at risk of losing them to the private sector, so I just wondered if you had any thoughts on that. So Jeremy, first to you very briefly and then Emma, please. Absolutely, I will answer very quickly. Yes, this is absolutely going to be a rated instrument. There is no way that the institutional investors would feel comfortable with this. The expectation is that this will be investment grade, which allows for the bulk of the institutional investors to come in. Not only is it important in primary issuance, but also in secondary trading, we want to make sure that this is as liquid as possible. There is really no way around it. People have said at various times that maybe we can find a way to more creatively do this. There is no creativity when it comes to having a financially rated instrument where we want to see liquidity. In a short answer, yes, it absolutely needs to be rated. We have not yet determined who it is going to be, but it is going to be one of the big probably moody's or S&P. That is great, Jeremy. If and when the prospectus is issued, it would be great if you could send a copy of that to the committee if that is appropriate. Absolutely. It is going to be a public document, so I am happy to share that. Okay. I will hand over to Emma for that question on pay rates at local authorities. It is a really interesting point to raise. A couple of points to say, this is where the comments can be really important. Somebody coming in with financial expertise who can then upskill local citizens in the area, so that can be councillors and civil servants within the council, so that those skills are transferred when it is common ends. One of the other pieces to say is that those roles, particularly if you are looking at green and climate finance, can really appeal to people because they have a really strong purpose, really strong outcome. Some people may actually be willing to take a slight pay cut to go and actually work in an area that is really strongly appeals to them. We have seen many, many people starting to move into some of the sustainability finance areas and willing to take a temporary pay cut to do something that has massive outcome and massive impact. It is a multiple approaches for being able to attract that talent into the area. That brings us to the end of our allocated time. Thank you very much for taking part. It was a fascinating discussion. Thank you for sharing a very wide range of insights and your expertise in this area. You have given the committee a lot of good information, a lot of good background to focus on and to take forward our inquiry. Thanks once again.  Jeremy, I appreciate that it is probably about six o'clock in Indonesia, so enjoy your evening in Indonesia. I will now briefly suspend the meeting for the setup of our next panel. Welcome back everyone. We are now going to hear from our second panel and explore how councils use nature-based solutions to meet climate change and biodiversity targets, the resources and skills required to do so and what partnerships and financing projects exist between local authorities and cross-sectoral partners. We have a larger than usual panel to discuss these issues today, so perhaps I invite the panel members to introduce themselves and their organisations in turn. I will start with our guests in the committee room, Julie and Simon. I will then ask John, Nick and David Online to introduce themselves and perhaps introduce their organisations very briefly. Julie, if I could hand over to you first of all. No problem, thank you. I am Julie Waldron and I am a senior planner from the City of Edinburgh Council. I am a landscape architect, so I do landscape and water issues in the council. I work on projects alongside the Scottish Water and Seeper and NatureScot looking at climate change adaptation. Good morning everybody. My name is Simon Parsons. I am one of the directors from Scottish Water, where I sponsor the majority of our sustainability activities, including net zero, and all the activities around investment in climate change. John, Nick and David Online to do likewise, please. Biner John Cunningham, from Western Isles Council, Cornwall and Newlandshire, local authority for the Western Isles and the Outer Hebrides, working in energy solutions onshore wind, offshore wind into hydrogen and obviously climate change mitigation and adaptation. Morning, I am Nick Harfide. I am director of nature and climate change at NatureScot. We are at the Government's national agency looking at right across biodiversity nature issues, working at both national level and also working strongly with many local authorities around monitoring regulation and supporting through a range of grants. Thank you. Good morning everybody. Good to be here. My name is David Harley, interim chief officer for circular economy at SEPA. The Scottish Environment Protection Agency is the country's environmental regulator and flood authority. Great. Thank you very much. That was very seamless and thank you very much for accepting our invitation. It is great to have everyone here at the committee meeting today. We have allocated around 70 minutes for this session and we will move straight to questions. My first question is an introductory question to help set the scene and we have a number of members who want to cover a number of issues. First of all, can you briefly outline the main challenges faced by your organisation in relation to working to address climate change and biodiversity loss? Perhaps if we could address that question in the same order. First of all, Julie and Simon, and then online, John, Nick and David. Julie, I can hand over to you, please. The main challenges from the perspective of the council is partly to do with resourcing, the fact that this is a shift and that the resource is available. I would say that personally being a project manager to this type of work, it is very complicated funding streams for application to the funding, so you have Sustrans, which is obviously you have an active travel stream, you go to Sustrans and it's very well organised, it's very easy to put your application in and it's all sorted out, and then you don't have anything in the same space for the planning and the design of the green blue infrastructure. You have it in the shovel ready on the site, but it's it's complicated, so what ends up happening is you end up applying to five different beds with five different project managers each receiving small amounts of money, so I was jokingly to say it would be better if we had a Sus Green, which was green blue infrastructure, that you could do a multidisciplinary multifunctional application form that covers biodiversity and surface water management at the same time creating beautiful places with active travel and footpaths involved, because if you take an area of the city, which is what we're doing in Edinburgh, so we've done a strategic project across the whole of the city, something called the Green Blue Network project, and we've put all the information together, and that has given us a strategic Green Blue Network, and then there's also highlighted areas that need action. When you move into that area to do the action, you're not just looking at one aspect of climate change, you're trying to cover everything together in a multifunctional way, so you want to work with a multidisciplinary team of consultants doing a multifunctional project, so I think that's one challenge we've had in the city. The second challenge is slightly a personal one being a landscape architect. There are very few landscape architects in the public sector, so in order to bring in that design expertise, which sits in the public sector in terms of engineering, we go to the private sector, so therefore we need money to go and access that expertise to make more of a multidisciplinary sort of situation. In terms of biodiversity loss, we have the Edinburgh Nature Network that we have set up, and that was embedded in the Green Blue Network project, so very much looking sort of across the city in what can we do for nature. Again, the challenges are exactly the same, we're working very closely with our nature loss, our Edinburgh Nature Network colleagues, because they're all part of the same team, so we very much work in this multidisciplinary faction. I think the other key issue to mention is trees, so in terms of what trees give a city, particularly like Edinburgh, water attenuation is perhaps not the first thing people think about, but actually they're very important for water due to evapotranspiration, due to the canopy holding back the water getting into the gullys, and our TPO legislation is difficult, needs a bit of an update, because when you're trying to prosecute somebody is a lengthy process and obviously it's not top priority with the way that it's done, totally understandably, and also there is potentially the character in a conservation character area, trees are protected, but we can have 800 applications a year, we only have six weeks to whether or not to get a TPO on to that tree, it doesn't happen, we lose the trees, and even though people can replant putting in one or two very small trees when you're losing a giant mature oak, it does not in any way compensate for the loss of that tree, particularly for the loss of the water attenuation, not to mention the bad diversity and the canopy cover and the heat loss and everything else, and of course mental wellbeing that we're all very aware of after Covid, so I think we were wondering if there was any possibility of doing something around, like a conservation area character appraisals which give you conservation area areas, could we do something similar that captured water sensitive areas of the city, that captured the possibility of trees being protected in those areas, but also altering really being careful about changing impermeable surfaces in those areas, because we know in Edinburgh where our water sensitive areas are, but we haven't got the ability and planning to actually protect them. We can take away permitted development rights, we know it does say in the permitted development rights that if an area is impermeable and you're making it impermeable, but we don't have the resources to actually go in and enforce that, and we can't be on the streets seeing whether people are paving over their gardens to put in charging points for their electric cars, which is obviously what people are doing, which is fantastic, but if we could protect these areas in the city that are particularly sensitive to water, that cause flooding further downstream, then we would have some sort of mechanism, and at the same time, if there's anything we could do to improve the way we can protect the trees because functionally the system is not quite slick enough and we need some more support when it comes to trees, and I think with that, and then working in a multidisciplinary way with Scottish Water and Seaper, and we really have a chance to move everything forward. Thank you very much, Julie. A number of those issues will be picked up in questions from members. Simon, if I could bring you in on the same question, please. In terms of our challenges, well, opportunities and challenges we face both on getting to net zero, so Scottish Water made a commitment to get to net zero by 2040 across all of our activities and accelerated all of our work around our operational footprint to get there 10 years, 10 years earlier, but we're also very dependent on the environment to provide the services that we provide every single day, so adapting to climate change in terms of flooding or droughts is hugely important for us to continue to provide that high-level service. We face many challenges across both of those areas. If I look at getting to net zero, one of the biggest challenges that we faced in the last year has been around planning, but also around power, access to power and connections into power, and also the availability of resources, skilled people who understand renewable power, for example, or access to the raw materials that we need as we go through, as we develop our kind of renewable power activities. I'll build on some of Julie's points around adaptation, so I think that we all now know that the cities across the world and in Scotland are going to face big challenges associated with climate change and how we adapt to that. These are just complex puzzles that we have to solve, and Blue-Green infrastructure and nature-based solutions have got a real opportunity to help us deliver solutions for flooding, which tends to be a lot of our focus for biodiversity, for heat sinks. It does provide us with many, many benefits, as well as making often very beautiful places in our cities as well, but because it involves lots of people, so Julie talked about the work that we're doing here in Edinburgh with David and his team at SEPA, and it's quite complicated about how do we fund that type of work, so where does the funding come from, how do we actually make sure that's a priority for organisations such as City of Edinburgh Council or other councils as well, because it's not always a priority error in terms of dealing with that, but the opportunities out there for going to nature-based solutions are huge. We can point to lots of them, we can point to arts if possible, and the challenge that we've really got is now is how do we turn that from the arts if possible into the art of the normal. Okay, that's great Simon, thank you very much. Same question to John, Nick and David Donne line in that order, so John over to you please. Thanks convener, probably three challenges for us, one internal and two external. First on our own funding, just echoing Julie's point there at the beginning, that the local authority funding is not equipped at the moment to provide solutions for the problems that we face. In the Western Isles, because the funding formula with the largest reduction really in central funding or the local authority, we do need some external injection of funding and support for what lies ahead of us. Externally, we have a challenge in the natural environment. We have a Western Isles 120-mile-long archipelago, largely with a soft mobile coast on the Atlantic Seaboard, so we've front line of climate change facing the full force of Atlantic weather systems. A hard infrastructure that we've discovered is not necessarily the answer, it's carbon intensive, it tends to be very expensive and it just displaces the damage further during the coast. We are looking actively at green interventions, non-infrastructure interventions in that space. Thirdly, we'd like to accelerate decarbonisation, but we've been constrained by the grid network, which is the very layout of our electricity network. How difficult it is, it takes years to change the regulatory system in favour of places like islands, rural areas, so we really need to accelerate how adaptable the grid is to allow us to decarbonise. Thank you very much, John. Nick, same question to you please. Yes, thank you very much. I'll try and keep this brief. I think our first biggest challenge is the pace and the scale of what we have to do. If we're looking at emissions for climate change, we know that how we manage the land and the sea is about a quarter of our emissions, so we see how quickly other sectors, particularly the electricity, are decarbonising. We see the scale, our pace and the volume of resources going into that. We need to do something similar for the 25 per cent of our land and the sea that is producing those 25 per cent of emissions. That's one challenge. The second is around adaptation, which we've already heard from the Outer Hebrides, but we know across Scotland that there are £15 billion worth of assets protected by our natural coastal systems, and many of those are at risk as sea levels rise. Those are the levels of scale and the pace at which we need to move. I mentioned resourcing, the volume of money. In the earlier session, I was looking at how we can get that private sector money in. We know that it's there, but how do we put together projects in what is very complex, many different actors? How do we pull that together? Something around skills. Do we have the right skills in the right places? We know that there is a huge volume of jobs coming online within the climate change and in the biodiversity sector, but many of those are difficult to fill and many of those are in our more remote areas, where things like housing and other provisions are challenging. Then there is the capacity, whether it be in local authorities, within the ENGOs, within the farming or the fishermen sector. We are talking about a major cultural change as well as new skills and having just the right people and having enough people to put together projects and have enough basic climate and nature literacy. I think that those would be the few that I would run through. Thank you very much, Nick. Finally, David, same question to you, please. Just very much building on others' contributions. I guess what we're talking about in many cases, particularly when it comes to climate change adaptation, is a natural systems failure. Of course, there's a cascade of problems there, and if you think of the water environment, you get poor water quality, you get flooding, sewage discharges, biodiversity loss, health and a kind of a cascade, a negative cascade, however, if you rebuild that natural system, you equally get a virtuous cycle of multiple benefits. You get less flooding, healthier cities, better air quality, active travel, biodiversity, and so on. My main point, then, is that it's a complicated system and therefore requires many players to work collaboratively to get that right. That's different players within organisations such as the local authority or different agencies, including themselves around the table. The main challenge is finding that space for deeply collaborative work, which should become the default of how we work, rather than the transactional way of working. There's a capacity issue there, which is a key issue. There's also something about standardisation that came up in the last session a lot. There's something about using standard approaches and learning from each other. I think that we could strengthen planning to make some of those requirements the default. We could strengthen those requirements. Thank you very much, David. Thank you for those opening remarks. You've raised a number of issues, which I'm sure members will want to explore. I believe that Monica Lennon has a supplemental in this area, so I will hand over to Monica. Thank you, convener. Julie, I thought what you said about trees in your opening remarks was really fascinating. I declared an interest as the Parliament's oak champion and a former planner, so I recognise a lot of what you said. We've just been joined by a lot of the young people, so my question is even more relevant now. In our earlier session this morning, we talked a lot about finance and unlocking opportunities. Clearly, city and urban planning is really exciting and the role of landscape architects is really important, but young people tend not to hear about those jobs and opportunities. Clearly, you're very passionate about trees and their amazing role in our climate. What can we do to ensure that the importance of trees is given higher priority? Is it something that can be done through national planning framework 4, for example, or are you looking for more guidance to come from Scottish Government? In terms of the teams that you talked about, which work best when multidiscipline approaches in-house are having to pay for it through expensive consultants, are there opportunities for apprenticeships in other ways? In terms of apprenticeships and that type of thing, I think that there are opportunities in the maintenance side of these systems because maintenance is not seen as very exciting, but it's absolutely key. We're moving from a dead system of pipes under the ground to a living system of things above the ground, things that are alive, that grow like rain gardens and trees, and we need to maintain those and help those systems to survive. I think that that's an area because I can only speak from half a city council. We have a parks department and, obviously, we're people who are very skilled at maintaining parks and horticulturalists in terms of cutting grass and looking at the planting, but they don't yet have the skills in the wet side, the rain gardens and the water side and the suds trees. Trees can not only be fantastic in the street as it stands and evaporatransferating, getting all the reducing the amount of water going into the rivers, but there's something called a suds tree that has a completely different structure underneath the ground that water can go in underneath. It's quite a clever system, a fewer species survive, but that tree can take flooding if you're in an area that actually you couldn't fit in a rain garden. There's a whole side of maintenance that I think potentially could have apprenticeships and training programmes that could really inspire young people as well. When it comes to design, that is quite a long training course, but it's, I would say, very worthwhile. Obviously, at the end of the day, as a landscape architect, you have the skills to design the public realm and the spaces between buildings, bringing on board all of these issues about trees, et cetera. You don't necessarily have to come in from being a landscape architect. There are different ways into doing that type of work. I think that we need to advertise that more so that more people perhaps are attracted towards it because it's not always seen as, how can one put it? It's not always seen as the top thing to do. Maybe you're being an architect and building an amazing building rather than a landscape architect looking out in looking more for the soft side, so we need to make that sound more exciting. When it comes to trees and protect them, yes, we do need more help. The TPO system, as I was saying, it's very difficult to get a prosecution. People feel confident of taking trees down and nothing happening, so we need to protect them either through this, perhaps this new piece of legislation that can create conservation areas but for vegetation and particularly for trees and making things impermeable rather than impermeable, but we need to do more to realise that if a developer does take a tree down and then come back three years later and say, oh, there's no tree, can I put my building in? No, that's very, very badly found upon. At the minute, it's quite difficult to get those prosecutions because of the timescales that are in place and because of the priority given to how those prosecutions happen. That's not in any way meaning that I completely understand that if you have, there are different competing priorities and if you have somebody cutting a tree down versus something that's perhaps more significant personally, that is put down the bottom of the list, so we're not getting those prosecutions. My suggestion would be that if it's possible to do a consultation with the Arboroculturist in the councils, they're probably full of ideas about how to make the system slicker, so I think that that would be really helpful if there was some sort of movement in that area of protecting trees because, yeah, they're absolutely key going forward. Really helpful and just really briefly for clarity then, so in terms of the tree preservation ordered legislation, you believe needs to be updated. Do you mean beyond enforcement and penalties? Are you talking about the scope of that legislation? Well, I think it would be, if it was possible to do a consultation asking the Arboroculturist in the different councils, I think you would get quite an interesting reflection because I can only reflect on what happens in Edinburgh, which is we have people who are very frustrated that we can't get the prosecutions and we can't seem to change, stop the time of losing our trees. Now, it might be slightly different in different councils, so I think that that would be very interesting for you. As I said, as a council, we're always going to say this, we don't have the resources to go out and do the checking. That's a real problem, so we don't have the resources to go out and check to see if they've done what they say they're going to do because we have a limited resources and we understand we have a limited resources, so it's how can we work with that so that things happen. I think it is that revisiting of the TPO legislation, is there anything we can do, getting suggestions from the other Arboroculturists and see if we can move it forward and just give trees, I think now that trees are recognised for mental wellbeing, not just biodiversity and nature, but that is really key, but on top of that, we have this whole issue around water, which people don't appreciate when they're talking about trees, they don't realise what an amazing job they do stopping the water going into the drains and just giving that time lag so that we don't get flooding. I think that people don't realise that incredibly important part of a growth of a mature tree, so I think that that would be very helpful if we had a movement from that area. Thank you, Julie. Back to you, convener. Okay, Monica. Thank you very much. Let me bring in Fiona Hyslop. Fiona, please. Good morning. I want to talk about private sector finance and I'd like to question Nick Halffide first. How well does the public sector currently leverage support and finance from the private sector for nature restoration and nature-based solutions? What are the key barriers and hurdles to achieving this and what returns are the private sector looking for for nature-based solutions? Nick Halffide, please. Okay, thanks very much for the question. The short answer, it varies considerably, so some of the markets are more mature and some are very immature. The more mature markets are, I would say, in the peatland restoration and in the native wood area, where we are particularly in the peatland in quite advanced discussions with private sector investors. It's terribly complicated, as you can imagine, and part of our challenge to date has been that we understand very much the ecological side of things and investors understand investing, so it's been how we can help each other to understand what it is that we require. The investors largely obviously want to return to how can we package together sort of blended finance between some public money and get the private money in so that our public money can unlock that type of investor and give them confidence that there's a long-term product there, that we as the broader public sector aren't going to change our minds year down the line to giving them that long-term confidence. I mentioned earlier on about some coastal areas. I think that that's an area where there's probably also very significant opportunity and we might want to come back to that in more detail, where we've got particularly other public assets such as a railway or buildings, where investment in the natural coastal defences would help protect those. I think that that's another area where we need to continue to explore. We have a project called Dynamic Coasts, which is kind of moving in that direction. In an instance, one good example of that is working with the harbour authorities in Montrose and the council there and other axes to see how we can work with the coastal defences and bolster those to protect those harbour facilities as well as the town. The game is really complex, but if you get the main axis together it can work really well. Can I ask Professor Parsons if you get any comments in this area of leveraging private finance? Not directly in terms of leveraging private finance, all of our activities are funded via customers' charges and government borrowing in terms of our own activities. Nick talked around about Peatland's quite interesting angle because we have significant ambitions for Peatland restoration in Scotland. That is a fantastic opportunity, fairly unique to Scotland to be able to look at that. The downside of that for us as an organisation is that we rely on that Peatland for water quality. Improving Peatland is a benefit to us, but there is definitely a bit of a lag at the moment because of the uncertainty about whether or not that Peatland is—if it's not our own, for example. If it's Peatland or our own land, we will work very often with Nick and his team to improve that Peatland. If it's Peatland on other people's lands, I think there's a bit of a lag while people are waiting to see what the true value of that Peatland is, so work improving it is not necessarily always happening at the pace that if we were delivering it to ourselves, it would have actually happened. That's something we've noticed over the last year. It may be a very small problem, but it's something fairly clear that we've seen over the last year where we've had packages of Peatland that we would like to have improved, but because of challenges about whether or not there's a greater value elsewhere for that Peatland, it's paused it. The opportunities are there. How do you link the speakers that you had this morning with Nick, Nick Scott and his team or the national parks in particular in terms of finding those opportunities? I was very struck by what you were saying as we need a nature-based equivalent of Sustrans, perhaps we need a nature-based equivalent to the heritage conservation areas, but city deals are clearly another mechanism that is bringing together public and private finance in strategic planning. Do you think that city deals are adequately aligned with nature restoration goals and the use of natural infrastructure to achieve net zero, or do we perhaps need to revisit some of the city deals with the net zero lens that some of them have been established for some time? I admit that I'm not an expert on the city deals and where the money is used for that, but my suspicion would be just in the world of me as a project manager trying to bring money in, is that it's very net zero based rather than adaptation based, and it's this issue around net zero being really exciting and new and different and adaptation being quite hard work and it's about maintenance and you've got to retrofit, and even that word retrofit is quite heavy. Just in terms of the city deal and money side, I've found, and I might stand to be corrected, that the nature restoration fund is fantastic, but it starts at shovel ready only, so it starts at when you've done the designs, and the bit that I'm struggling with, and I think a lot of us are in the area, is the organising of where should that be, what strategically how should it be, then where's the project area, then we need to actually design it in a multidisciplinary, you know, in a big multidisciplinary group, and then we're ready with our construction, and then we can go and build it and we can get money, so it's that planning stage, now maybe that isn't the city deal, but I've not been pointed in that direction by our finance people who understand the city deal and obviously know about it, so it might be that it's because I'm too far down the line, and I'm sitting doing the projects, but I'm afraid I can't give you a very good answer on the city deal, aren't question. Is it interesting perspective that the city deals are more net zero focused rather than biodiversity crisis and nature solutions focused, and perhaps knowing the losian area that actually the equivalent of sustrans, but from a nature point of view would be a weighted channel, but that's public funding, but that doesn't necessarily get the private funding leverage that we think is needed, so that's the gap. I think that is the gap, and obviously the private funding, public funding is very complicated and very complex, and I know there's a large piece of work being done at the minute within the organisation I work in the Blue Green City Partnership, which is the SEPA, Scottish Water and the Council, and SEPA are leading on looking at the financing side with their experts in this co-financing and green financing, so that piece of work is being done at the minute with the council, I'm sort of, if you like, in the more practical project, so I'm sitting there saying, I need money to do this multidisciplinary project, where do I go, and I actually end up going to Sustrans quite a lot, because it's there, and it's straightforward, and they have applications at various times, and I'm as a project manager, I can go and get that money, and then I have to persuade them, can I use it for something that's not quite, you know, so it's not their main focus, and they'd be fantastic and funded the projects like my Green Green Network projects, but what I'm saying is the focus of surface water management, getting money for surface water, because obviously the money that comes in for flooding is primarily for river flooding, and the cost-benefit ratio for that in Edinburgh doesn't tend to get, and the section of that money goes into the council coffers, not specifically targeted at surface water and green and blue infrastructure, so again there's another source of money that's not coming quite into the my small area of work, if you like, I'm very conscious it's a very limited area that I'm knowledgeable about, but it is green, blue infrastructure adaptation very specifically, and biodiversity. Thank you. Now, if we could come to John Cunningham, if you could maybe give me from the west now, your perspective of leveraging private finance into nature-based solutions from your perspective. Yeah, we have a huge petri source, obviously, and peat restoration is becoming a really big deal here. 50 per cent of our land area is owned by the community now through the community right to buy, which means that there's a driver there in terms of economics for these community states to participate in peat restoration, as well as the biodiversity argument, so that's starting to gain traction, and we do have investors looking actively at how can they invest in peat restoration. It's difficult to attract investors to old-fashioned hard infrastructure, so the local authority is really on its own a limited budget in terms of building hard grey infrastructure, and that's a reason why we're moving towards the softer solutions. In terms of the city deals, I'd reflect what you've said yourself that very much net zero, I drive towards net zero towards generation, but the byproduct of that is that we're engaging with developers who are coming to the city deal arrangement, looking for opportunities to generate hydrogen, to generate green electricity, and once you engage with these developers, they're then looking for what a big community benefit, how can they benefit the wider community, and a key part of that benefit for us is climate action. There are various things like donation of electricity to communities for fuel poverty or for local hydrogen production, for retail, but a key part is climate action, so these big developers, particularly through the Scotland scheme, are actively looking for ways in which they can contribute to climate action locally, so we can indirectly engage them through the regional deal, although I don't have to say that the deal itself is very net zero focused. There's more recently the island deal, which is in terms of using that mechanism, but thank you very much for that. I'm conscious of time, convener, so I'll pass back to you. Okay, Fiona, thank you very much. Next up is Jackie Dunbar. Jackie, over to you, please. Thank you, convener, and good morning, panel, and welcome. With your experiences of working together across the sectors and where there have been examples of good practice and successful project delivery, what do you think are the main things, or the key ingredients, that contributed to this? Moving forward, how might these good practices be replicated? If I can maybe start with John, and then I'll go to David and Simon first, please. It was quite active cross-sectoral work in terms of heat, transport and circular economy. We do a lot of work with the local housing association on heat, so they would attract in government funding on making homes more energy efficient. There's a particularly close relationship with the Scottish Gas Network's SGN. We're looking to decarbonise their entire Stornoway Town Centre gas network in 2027. That's 1,700 consumers on a single network to be converted from propane to green hydrogen overnight in 2027. A very close constructive work in relationship with SGN in particular. We're looking to work with renewable energy generators to see where we have shared ownership agreements in onshore wind. Is there some way that we can use maybe 80 megawatts coming into the hands of the community and we use that to supply consumers on the island directly from generation to consumption so that we avoid UK-wide transmission charges, tradeholder dividends, and we reduce the cost of energy because fuel poverty is a real big issue here. We're working with colleagues across islands and islands on EV charging points and various other initiatives around transport. On the circular economy, the big thing there is aquaculture. We're using fish waste into anaerobic digestion, into methane electricity, and then creating hydrogen for council fleet by product oxygen going back into the fish farm hatchery. It's a real good example of circular economy. It's a strong collaboration across the sector. Okay. Do you have any advice for anybody that maybe wants to move forward with some of the projects that you've already done? How's the best way to make contact with them, do you think? I think it's—we really have to engage with industry. Historically, the local authority has not engaged with industry. It's now becoming critical that we engage with the private sector. We're very active in that. We deliberately go after the private sector, after the investors. As budgets decline within the local authority, it is the only option open to us. The only advice would be for local authorities to really get out there and promote your offer to the private sector and really engage with it. Okay. Thank you very much. Can I go over to David now, please? I've got some general reflections, and I'll give an example. I think that you've got to have good governance, you've got to have a good structure. You've got to give the people involved the time that comes back to this collaboration piece. It does take time, and it doesn't happen by accident that you really need to invest in that. I think that it does require—there's a bit of luck in this. It does require the right people, the right champions, and if you get the right champions together with the time, it can get great results. I think that all of that then results in the kind of confidence that can help with the private sector, the funding element, and the community that's involved can feel that and see that confidence and seriousness. I'd just like to point to an example, which I think is a great case study, almost at a global level, which is range mouse. There's an area in which the petrochemical industry has historically contributed to the climate emergency. The waters are rising, and it is under flood risk. We've got an issue of just transition. What is the net zero, just transition solution for an area like Grangemouth and its importance for the country? What we've set up with local authorities, Scottish Government as well, and the private sector is quite an established governance framework in which to set about trying to make inroads on this problem. Particularly for SEPA, we sit in what's called the Grangemouth regulatory hub, which thinks about how we work with others, think about investment, think about the regulatory landscape, think about making sure that we don't have environmental deterioration while we transition, think about the potential of transitioning models. It's got huge potential. It's been up and running for a while now, but I think that it's a good example and a great case study. If we make it work there, it's a fantastic example for the world actually. Okay, thank you. Simon, have you got anything to add on the Scottish Water side of things? I think just to build on the previous two speakers' comments actually. So I think for some of the big challenges that we face, either getting to net z