London stalling: Why the capital’s stellar climate resiliency progress is at risk

The Economist Impact, in partnership with the Tokio Marine Group, published a new report ‘Resilient Cities Index 2023’ this week, assessing 25 global cities on their capacity to navigate, withstand and rebound from a range of shocks and long-term climate challenges.

According to the report, London ranks third globally for overall climate resilience, with New York leading the list followed by Los Angeles.

The report underscores that London stands among just six cities with emergency services capable of responding in under ten minutes. Additionally, the city attained a high rating for its innovative business ecosystems, as measured by indicators such as patents filed and R&D expenditure.

Nevertheless, the study highlights that while cities in emerging economies grapple with particular challenges in recovering from droughts, flooding, extreme heat and rising sea levels, residents of cities in wealthy nations are similarly ill-equipped to face the impending shocks associated with the climate crisis.

Tokio Marine Group’s delegated property head Stuart Heath said: “The world is facing unprecedented challenges. Extreme weather events, from hurricanes and wildfires to flooding and heatwaves, are becoming more frequent and their effects more devastating.

“Our cities are exposed to all of these risks and more. Lives and livelihoods depend on our ability to understand and mitigate the evolving threats to our urban centres.

“With urban areas becoming increasingly vulnerable to heatwaves, it is crucial for governments, businesses, and communities to take immediate action to mitigate the risks and build resilient cities.”

Resiliency reviews

The latest interim report for the London Climate Resilience Review (LCRR), commissioned by the Mayor of London, also reveals that the city remains unprepared in the face of climate-induced hazards, as the world is projected to experience a temperature rise of 2.5-2.9C above pre-industrial levels by the end of this century.

The LCRR analysis indicates that London is already confronting substantial risks, including heightened and more frequent heatwaves, intensified rainfall, the threat of flash flooding and rising sea levels. This underscores the critical necessity to enhance the city’s adaptation strategies against the escalating impacts of climate change.

The Resilient Cities report underscores the importance for cities, grappling with the increasing impacts of climate change, to prioritise future-proofing their infrastructure and transport using green innovations such as energy efficient heat pumps and electric vehicles (EVs).

According to the report, London demonstrates stronger resilience in environmental aspects compared to infrastructure, socio-institutional and economic resilience. The Mayor’s interim LCCR report has underscored the economic impacts of climate change on London.

In July 2022, for example, heatwaves resulted in Transport for London (TfL) reporting an £8.4m revenue loss from its operations alone. Additionally, the report predicts a water scarcity issue that could incur a daily cost of £500m to London’s economy by 2050.

Compounded by recent governmental policy U-turns, London, like many other UK cities, may well struggle to future-proof its infrastructure and protect its residents.

Green policy rollbacks

In September of last year, Prime Minister Rishi Sunak unveiled a series of adjustments to Government policy proposals concerning home heating, building energy efficiency and EV manufacturing.

Among these changes, Sunak extended the deadline for banning oil boilers in off-grid homes from 2026 to 2035. Additionally, the plan to phase out 100% of domestic gas boilers by 2035 was scaled back to 80%.

These alterations were made in acknowledgment of the upfront costs associated with heat pumps.

Moreover, proposals for new energy efficiency regulations on homes slated for implementation in 2025 were scrapped, alongside plans to penalise landlords for failing to upgrade homes to enhance their Energy Performance Certificate (EPC) rating.

This week, the Government is reportedly set to eliminate a target calling for the installation of 600,000 heat pumps annually by 2028. To provide context, only 55,000 heat pumps were installed in 2021.

In tandem with this target, a proposed ‘boiler tax’ was scheduled to take effect in April 2024, obligating heating system manufacturers to ensure that at least 4% of their sales comprised heat pumps, or face a fine of £3,000 per unit. However, indications suggest that this tax is also poised to be axed.

Additionally, the House of Lords recently cautioned the Government about the long-term success of the UK’s transition to electric transportation, pointing out several loopholes in the Government’s strategies, including a lack of necessary policy support.

They also criticised the Government for focusing solely on challenges without adequately highlighting the benefits of the transition, leading to a lack of public confidence.

This barrage of weakened policies is likely to dent approaches to long-term transformation and UK cities, much like businesses, are waiting for policy clarity as to what solutions they should be investing in to decarbonise and boost resiliency.

Inadequate funding for adaptation

Similar to policy support, the financial backing essential for strengthening the climate resilience of UK cities has also been insufficient.

Last week, a report on local authority funding from the Levelling Up, Housing and Communities Committee, revealed that funding for local councils from council tax, retained business rates and Government grants has not kept pace with inflation and increasing service demands.

This has contributed to a forecasted £4bn funding shortfall over the next two years.

Moreover, in the past six years, eight local authorities have filed for bankruptcy (Section 114), whereas none had done so in the previous 18 years. Furthermore, one in five local authorities express concerns about facing similar circumstances by 2030.

This means councils are stretched in the delivery of vital, day-to-day services – let alone in the development and delivery of plans to cut emissions and improve climate resilience in the long term.

In May of last year, cities across the UK urged the Government to devolve more funding and powers to local areas to enable the transition to net-zero emissions, claiming that many urban areas are facing long-term finance challenges. It is clear that UK cities want to respond to the challenge, but do not feel empowered to do so.

Global economic resilience

The Resilient Cities report also highlights that the vulnerabilities of the local economy extend beyond national borders, emphasising the interconnectedness of economies globally.

Since the late 19th century, globalisation has created intricate dependencies on external goods and services, with global trade reaching a record $28.5trn in 2021.

Hence, global resilience to climate change becomes indispensable for ensuring the stability of the local economy.

Nevertheless, the report unveils that that four fifths of the 25 cities surveyed are exposed to flooding, extreme heat or both, with Hong Kong, Jakarta and Dhaka having extremely limited defences to flood risk, while New Delhi, Dubai and Cairo are some of the most at risk from rising temperatures.

Research finds that the current annual spending levels on climate resiliency are less than $50bn, which is well short of the estimated $160bn to $340bn required to improve responses to the climate crisis across the globe.

According to the REF Synthesis report released last year, the failure to secure additional finance could render a fair global transition to net-zero emissions more vulnerable to significant economic setbacks akin to those experienced during the war in Ukraine and the Covid-19 pandemic.

For UK cities, boosting resiliency in isolation through infrastructure alone will not be enough to avert the impacts of the climate crisis. Collaboration across policy, the private sector and local communities will be vital to delivering comprehensive resilience strategies that strengthen cities and supply chains alike. And, as research shows, investing in adaptation and resiliency can yield impressive benefits.

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