Appendix 8 - Cornwall and Isles of Scilly LEP Investment Strategy/Appendi… · Superfast Cornwall,...

Appendix 8Investment Cases

The overall aim of digital investment within the EU SIF Strategy is:

- To build upon the significant Superfast Broadband infrastructure investment to grow our companies and enhance skills to maximise opportunities

Since the year 2000 and first generation broadband, Cornwall and the Isles of Scilly (C&IoS) have led the way in the UK and EU in terms of rural connectivity, and the area is on track to be one of the best connected rural areas in the EU on completion of the Superfast Cornwall programme in 2015. The proposed investment under the 2014-2020 programme builds on the significant achievements of the current programme by ensuring that as many businesses as possible have access to and are able to exploit superfast broadband.

The Digital Agenda for Europe (DAE) http://ec.europa.eu/digital-agenda/ is the EU's strategy to help digital technologies, including the internet, to deliver sustainable economic growth. It sets out a number of key actions to aim for by 2020. This includes superfast broadband (30+Mbps) and ultrafast broadband (100+Mbps) services to ensure that: 100% of premises have access to broadband speeds of at least 30Mbps and that at least 50% of premises actually subscribe to services of at least 100Mbps.

Other actions include Research & Innovation; Enhancing digital literacy, skills and inclusion; ICT enabled benefits for an EU society, including reducing energy consumption, supporting ageing citizens’ lives, revolutionising health services and delivering better public services.

The national policy www.gov.uk/government/policies/transforming-uk-broadband is currently aiming for 95% coverage of 24+Mbps superfast broadband by 2017, and exploring ways to extend this coverage to remaining areas. It should be noted that the national policy currently falls short of the more ambitious EU targets.

Premises vs Businesses

The benefits of rolling out a widespread network rather than just focussing on known businesses are significant, and it has been demonstrated in the current Superfast Cornwall programme (see below) that this approach has delivered significant economic growth as well as wider socio-economic benefits.

From a telecommunications investment perspective, delivering superfast broadband to just businesses is an unviable proposition for a private sector investor because 90% of connections come from households. In order to ensure that any investment in digital infrastructure continues to be maintained and invested in by the private sector beyond the lifetime of the programme, business models need to include all possible premises that can connect.

Additionally, the unique size distribution of businesses in C&IoS means that businesses are often inherently embedded in residential areas and difficult to unpick. The most effective way of reaching as many businesses as possible is to build a widespread network.

Cornwall and Isles of Scilly EU Investment Case – Digital Infrastructure

Summary

Strategic Context

TO2

Investment Case – Digital Infrastructure

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http://ec.europa.eu/digital-agenda/

http://www.gov.uk/government/policies/transforming-uk-broadband

Evidence of need for this type of investment to support economic growth:

The current Superfast Cornwall programme is investing £53.5M of ERDF funding. Although this is delivering a widespread fibre broadband network, the investment is primarily a business focussed investment aiming to connect 10,000 businesses, helping them to access new markets, improve productivity and innovate new products and services. With poor road and rail connectivity, superfast broadband helps to overcome our peripherality by providing one way in which businesses in Cornwall can connect beyond our borders.

Taking this approach for the Superfast Cornwall programme is ensuring widespread economic benefits can be delivered. This is demonstrated in the latest Superfast Cornwall Evaluation Update, April 2014 independent report, which shows that the programme is on track to deliver:

• 10,000 businesses connected • 5,000 jobs created and safeguarded • £218M GVA created and safeguarded

The inclusion of households in the rollout has also been shown to stimulate the creation of start-ups, with 5% of connected households reporting starting a business influenced by superfast broadband.

Wider socio-economic benefits delivered by the Superfast Cornwall programme as a result of the wider rollout to all possible premises include telehealth and telecare (12,000 people are now using these services in C&IoS), environmental sustainability (e.g. reduced travel) and digital inclusion (2,700 people trained to use the internet for the first time).

Details of the published research, which includes both the above quantitative research and a qualitative research programme examining the impact on SMEs in greater depth, is available at www.superfastcornwall.org/about-sfc/research-innovation/superfastimpact.

The effects of poor connectivity on businesses unable to connect are significant, and evidence by the FSB (Federation of Small Businesses) shows that 1 in 7 businesses have been held back as a result www.bbc.co.uk/news/business-27186354.

Superfast Cornwall, funded through the current Convergence Programme, is making a significant investment in digital infrastructure of up to £53.5M.

The latest data from Superfast Cornwall shows an improvement in the expected coverage by the end of the current programme. It is now expected that 96% of C&IoS will have access to fibre broadband, with 86% able to access superfast speeds of at least 30Mbps. It is also estimated that 30% of premises will have direct affordable access to ‘ultrafast’ Fibre to the Premises connectivity. A substantial legacy will be left - C&IoS will be one of the best connected areas in the EU and 10,000 businesses will be connected to fibre broadband.

This leaves an estimated 35,000 premises (14%) beyond superfast speeds. These remaining mostly rural premises represent the most challenging and expensive to deliver superfast broadband services to. Although new technologies are emerging that could be used to extend the fibre footprint, the cost per premise continues to increase as smaller and smaller cluster sizes are addressed. These increasing costs demonstrate a clear case of market failure for delivery of superfast speeds into the harder to reach areas.

Cornwall and Isles of Scilly Current Situation


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http://www.superfastcornwall.org/about-sfc/research-innovation/superfastimpact

http://www.superfastcornwall.org/about-sfc/research-innovation/superfastimpact

http://www.bbc.co.uk/news/business-27186354

Businesses not in the 30% ‘ultrafast’ footprint will have access ultrafast speeds although the associated connection charges will deter many businesses from accessing ultrafast speeds.

Digital Infrastructure Funding

Superfast Coverage - In order to reach 99% coverage of superfast broadband, a further 33,000 premises will need upgrading, requiring an estimated £16M investment (e.g. £11M ERDF and £5M match).

Ultrafast Access - Additionally, a complementary ‘ultrafast’ programme to ensure key businesses can connect to FTTP (Fibre to the Premises) technology would require an estimated £2M investment (e.g. £1.5M ERDF and £0.5M match).

Total Digital Infrastructure investment: ERDF 12.5M Match £5.5M

Digital Infrastructure a. Evidence / issue: in 2015 an estimated 14% of our region and businesses will remain unable to access

superfast broadband, and access to ultrafast broadband for many businesses will carry a significant connection charge.

b. Objective: Investment in digital infrastructure to support delivery of strategic aims and to develop and maintain competitive advantage. (Note: partners have an ambition to ensure as close to 100% superfast coverage as possible to support isolated rural businesses to access economic benefits and to promote social inclusion across all of our communities)

c. Inputs: £12.5M ERDF d. Activities: Activities that will continue to drive economic growth and maintain competitive advantage through

investment in digital infrastructure: additional roll out to 13% of premises to reach 99% coverage of superfast broadband; bespoke solutions to connect remaining businesses; ultrafast connection for key businesses requiring such speeds

e. Outputs: either in detail here or in an outputs section after these descriptions of what investment is being proposed Demand Stimulation

a. Evidence / issue: By the end of the current programme, 10,000 businesses will be connected to superfast broadband, meaning that the majority of our 22,000 registered businesses will not be benefiting.

b. Objective: To drive exploitation of digital technology by businesses to support business growth c. Inputs: (needs to be stated - £3.8m left in the pot after £16.2 infrastructure amount is taken out) d. Activities: Marketing to drive take-up, ensuring the numbers of businesses benefitting from superfast

broadband is maximised, and encouraging investment our network e. Outputs: either in detail here or in an outputs section after these descriptions of what investment is being

proposed Demand Exploitation

a. Issue: Businesses will need support to ensure they maximise the benefits of connectivity, to ensure that GVA is improved and jobs are created.

b. Objective: Advice and support to ensure that businesses make effective use of digital connectivity. This will them to overcome peripherality, access new markets, improve productivity and innovate new products and services.

Analysis of C&IoS proposal


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c. Inputs: £xm (needs to be stated - £3.8m left in the pot after £16.2 infrastructure amount is taken out) d. Activities: Investment to build business awareness of the opportunities afforded by superfast broadband and

support to exploit these opportunities: including launch of new products and services, improvements in productivity, access to new markets and tackling peripherality.

e. Outputs: either in detail here or in an outputs section after these descriptions of what investment is being propose

The key outputs that will be delivered are the vast majority of the 4,500 Enterprises using ICT, made up in the following way: Businesses connecting in new superfast broadband areas – 2,000 Businesses connecting to ultrafast services – 1,500 Businesses connecting in enabled areas – 1,000 In line with the Superfast Cornwall evaluation findings, this is expected to lead to an estimated 1,000 net jobs created. In addition to the above proposals, addition investment in ‘digital’ is as follows:

Digital Skills a. Objective: Development and delivery of skills programme relevant to the exploitation of digital technology b. Activity: Superfast Business Skills Programme: working with businesses & skills providers to ensuring

businesses have access to the skills they need to maximise their potential using ICTs including , maximising e-commerce potential through web presence, online training, use of cloud technology, use of communication and collaboration tools, use of flexible and agile working, big data opportunities Digital Inclusion

a. Objective: Supporting digital inclusion by progressing community and individual access to technology helping excluded people to understand and benefit from the internet

b. Activity: Digital World Programme: Developing community access across Cornwall, skills development to improve access to Government digital by default services, collaborative digital buying projects, Digital services developed to meet community issues and improve digital inclusion, access to work, trading online etc.


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According to the Organisation for Economic Co-operation and Development (OECD), climate change threatens to undermine economic development; and whilst global government consensus to reduce greenhouse gas emissions is reflected within TO4 (Supporting the shift towards a low-carbon economy), climate change in terms of adaptation, risk prevention and management adaptation is the focus of TO5. The purpose of TO5 is to address the significant uncertainties surrounding future vulnerability, exposure, and responses to climate change in order to facilitate economic growth in C&IoS through the following objectives;

Objective a. Investment to enhance current physical and knowledge assets, and address identified gaps in climate change adaptation, risk prevention and management Objective b. To catalyse collaboration between local businesses and leaders in the knowledge economy to identify the economic opportunities and threats associated with climate change

a. European strategy/policy context The Intergovernmental Panel on Climate Change (IPCC) have documented impacts arising from recent climate-related extremes of temperature, water shortages, flood & storms which reveal ‘significant vulnerability & exposure of some ecosystems & many human systems (including disruption to supply chains, infrastructure, productivity & water supply) to current climate variability’. Such vulnerabilities present a very real risk to economic growth at both EU and national level and are already impacting on the C&IoS economy. Activities set out with the TO5 logic chain are aligned with the following EU strategies & policies associated with climate change adaptation, risk prevention and management;

- The EU Strategy on Adaptation to Climate Change (2013) which recognises the need to enhance

‘preparedness and capacity of all governance levels to respond to the impacts of climate change.’ - The EU Common Provisions Regulations cover climate change adaptation, resilience, risk prevention and

management; activities funded under the SIF should demonstrate how these will be addressed. - An important component of the Europe 2020 Strategy is the mainstreaming of climate change policy

(adaptation, resilience and mitigation) into its headline targets. Integrating such policy into the EU budget and financing programmes is critical in turning objectives into actual achievements.

- Across Europe, adaptation policy and planning is recognised across all levels of government; the challenge is now for effective integration into business

b. National strategy/policy context EU policy on climate change (including adaptation, resilience and management) is translated nationally within a number of policies and programmes. Further to the Climate Change Act 2008, the Climate Change Risk Assessment (CCRA) (2012) helps clarify specific risks that climate change poses to the UK, whilst the National Adaptation Programme (NAP) (2013) sets out what is required from government and business to better adapt to the changing climate. The CRRA recognises the challenge climate change represents for the Business, Industry

Cornwall and Isles of Scilly EU Investment Case – Climate Change Adaption, Risk Prevention and Management

Summary

Strategic Context

TO5

Investment Case – Climate Change Adaption, Risk Prevention and Management

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and Services sector, ‘with both tangible and intangible asset value potentially affected’. It also acknowledges the ‘potentially significant commercial and competitive advantages’ to be gained for businesses that take up the challenge. The NAP specifically recommends further research on the risks and opportunities for businesses to help support future economic growth detailing the importance of supply chains and their role in delivering productivity and growth. Through the NAP, the UK Government also recognises the role of helping businesses to understand the potential risks and opportunities through the development and dissemination of information and tools. The 2013 report also supports the CBI position that that the challenge of climate change is ‘not just about addressing risk but also about cultivating opportunity and establishing leadership in the development of new adaptive technologies and expertise’. In addition, there have been a number of significant publications (most notably the UK National Ecosystem Assessment (NEA) (2011) and the Natural Choice white paper (2010)), which set out the role of the natural environment in underpinning the economy, and make clear recommendations to Government as to how to achieve sustainable economic growth within a changing climate. According to the Government advisory body, the Natural Capital Committee, there are substantial economic benefits to be gained from maintaining and improving natural assets; a key component of TO5 is to evaluate the quality and quantity of C&IoS’s natural capital in order to inform decision making and economic planning. An assessment of C&IoS’s stock of natural capital and how its value may be impacted by climate change is fundamental to the local economy and will be essential in determining future economic growth.

Evidence of need for this type of investment to support economic growth: Climate, along with the physical and natural environment, has been, and will continue to be, fundamental to the economy of the UK, as recognised in the NEA and Natural Choice white paper. In C&IoS, due to our specific vulnerability to sea level rise and extreme weather events, our significant SME economy, and less educated (skills & qualification attainment) work force there is an explicit need for investments which help us to understand the risks and opportunities associated with climate change. For example, the NAP recognises that adaptation goods and services is a growing international market; in 2010-2011 provision of goods and services which improve adaptation and resilience to climate change in the UK was worth £2.1 billion; investing in links between local businesses and leaders in the C&Ios knowledge economy within this area may yield significant economic growth. As a further example, economists have estimated that, across Europe, every £1 spent on increasing climate change resilience now could yield £4 in damages avoided; the need for businesses of the C&IoS to adequately respond to the challenge of climate change is imperative if the region is to achieve strong economic performance in the future.

The economy of C&IoS is particularly vulnerable to the impacts of climate change for a number of reasons. In terms of physical factors, our position on the SW peninsula of the UK makes C&IoS particularly susceptible to predicted increases in storminess and extreme weather events (including flooding and drought), and our proximity to the sea (no place is more than 20 miles from the coast) means that predicted sea level rise poses a very real threat to businesses throughout the region. These physical influences are compounded by the structure of the C&IoS economy and composition of its workforce. Government figures indicate that 2/3rds of UK businesses are not taking action to adapt to climate change, with large businesses more likely to take action than SMEs – within C&IoS, 99.8% of enterprises are classified as SMEs (2012) with 88.7% of these being micro enterprises. This has shaped a C&IoS business community that has struggled to engage with and implement climate change measures due to lack of capacity and resources. Similarly, C&IoS remain below the UK average for higher skills level (NVQ4+) which may have also contributed to the historic lack of business community engagement with the risks and opportunities associated with climate change. The population of C&IoS continues to grow, leading to increased demand on space (including work space) and resources (such as water). Such demands are likely to be compounded, in the future, by climate change; there is a real need to drive innovation and support for businesses to enable future economic growth within this context.



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To date, there has been significant investment into a low carbon economy for the region. However, there has been a noticeable lack of investment into supporting the growth of businesses through maximising opportunities and minimising risks in response to climate change. Investment has tended to be piecemeal and restricted in terms of reach. Similarly, there is little evidence so far to detail market failure, although this may be more forthcoming in the future as the economic costs of failing to address climate change begin to rise. The investments proposed below are also designed to provide increased intelligence about the local impact of anticipated global challenges, thus enabling the identification of areas for market development.

C&IoS have been impacted by unusually cold temperatures & snowfall during several recent winters (2009, 2010 & 2011); water shortages in 2011; and the winter storms of 2013/2014. Costs to C&IoS’ economy have included repairing physical damage to businesses, loss in productivity, interruption to supply chains and insurance claims. Though the cost of repairing damage to business infrastructure is relatively simple to calculate, and an element of TO5 outlines a demonstrated need to understand how the local economy (including natural assets, supply chains etc) will be affected by climate change and how such information can be applied to enable new and existing businesses to develop and expand with the backdrop of greater frequency and intensity of extreme weather events.

This investment area sits within the Strategy under ‘Conditions for Growth’ (Investments which will address continuing blocks to growth, in infrastructure and human potential). In terms of infrastructure the Strategy describes some existing issues as peripheral nature of the region, geographical dispersal of settlements and some of the challenges of both national and local connectivity, creating a pressure to create more sustainable travel options. All of these issues are exacerbated by the need to mitigate for and adapt to climate change. However, potential impacts that enable locally bespoke and responsive solutions have not yet been modelled or the information currently available has not been assimilated with other information sources to enable coherent local strategies to be developed for businesses and communities to follow. The investments under TO5 seek to address this gap in knowledge infrastructure to enable planning for social systems and physical infrastructure to become more positively sensitive to the predicted changes and thus resilient.

The Strategy also sets out how the regions environment has provided growth in the past offering a knowledge and skill base in engineering that can be utilised in new industries to unlock the future potential of the natural capital of the region, particularly in marine and geothermal renewables, which will receive significant funding support. As stated above the adaptation to climate change impacts within the environment is equally important as the decarbonisation of energy production, TO5 demonstrates recognition and commitment to this aspect of the climate change challenge.

The previous investments in the world class research institutions, Environment and Sustainability Institute and European Centre for the Environment and Human Health demonstrate the value that higher education establishments offer but that the specialist knowledge regarding the role of the environment is in demand and offers significant opportunity for expansion and thus market development. This next round of funding offers the opportunity for these institutions to create innovative partnerships with businesses and the public sector to create policy, products and services that recognise the interconnection of the environment to community and economic prosperity. Ensuring the knowledge generated within these institutions (which has a significant focus on climate change and its impacts) is applied locally is a critical aspect of realising the widest benefits of the institutions’ presence within the region and an opportunity for growth within the knowledge economy.

Noted within the Strategy is the role for the regions bedrock industries, agriculture, food production, fisheries and tourism to take advantage of best practise, new technologies and new market opportunities. All of these business development opportunities will be found in the changing conditions of production and trading, upon which climate change will have a profound effect. Increasing the knowledge about the changing conditions for business



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will have a significant impact on the speed and efficiency of response interventions and investments, thus increasing business competiveness and productivity.

To summarise the investments in TO5 will contribute to both LEP Priority 2 ‘Creating value out of the knowledge economy’ and Priority 4 ‘Using the natural environment responsibility as a key economic asset’. Our investment proposals under TO5 are designed to provide, knowledge, products, services and demonstration projects from which our society will develop an understanding of the value of the natural capital upon which the economy operates; that can provide immediate and long term opportunities for growth. The investments are focused to baseline and benchmark our natural capital stocks and the creation of an accounting system for the stocks and condition of the assets. This will be achieved through innovative research and the provision of the equipment to create an environmental monitoring network providing data in real time. Investments will also be made in the capacity to record and analyse this data resulting in the translation of raw data into intelligence for sound policy making and business planning. The ambition is for businesses and communities to access and monitor the data to respond to immediate extreme weather events (e.g. extreme rainfall or temperature events) and for the data to provide localised trends that enable more accurate business practises and investments to be made in response to fluctuating conditions. This will provide economic benefits to businesses within the region and create products and services that can be applied in other areas. The investments proposed will be made in a mix of products to create the monitoring network, research services to assess the data and business engagement activities to embed the network around the region and ensure businesses engage with the technology and understand the opportunities it provides to them and their local communities. This investment will take the concepts of natural capital and climate change impacts make them real locally and illustrate how to effectively respond in the immediate and long term. It is anticipated that later in the programme some businesses will develop products or services in relationship to this increased intelligence regarding the conditions in their localities that would provide new market opportunities. Funds are identified to help support the development of these products.


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Cornwall and Isles of Scilly’s (C&IoS) location and characteristics pose a unique set of challenges and opportunities for business investment and economic growth. The Strategic Economic Plan for C&IoS recognises that the region will not be able to compete on the national or global market without improving the infrastructure that connects it to the rest of the world. Accessibility and sustainability within Cornwall will also be critical with regard to mobilising community resources and exploiting development opportunities. Underlying difficulties have been C&IoS’s peripheral position within the UK which has meant distance from markets, and decline or change in traditional industries. Peripherality has made it difficult to respond to these changes without adopting a strategy for connectivity through complementary broadband, rail, air, sea and road developments. Whilst transport connectivity alone will not address these challenges (business and skills support leading to stronger productivity is the other major measure), research has shown that growth can be achieved in peripheral regions, and that transport infrastructure will play a key role. This annex provides an overview of the general circumstances, considerations and factors considered in selection of transport priorities for the SIF programme.

The Council of the European Union Recommendation on the UKs 2013 National Reform Programme1 states that ‘The UK has a challenge to renew and upgrade its energy and transport infrastructure ….shortcomings in the capacity and quality of the UK’s transport networks are a structural problem for the economy, especially for goods producers, distributors and exporters. There is currently a significant gap between committed funding, public and private, and the pipeline of transport investment needs which the government is seeking to address by prioritising public spending towards infrastructure and by attracting additional private investment. Unit costs in transport construction and maintenance also remain high in the UK1’ In the UK National Reform Programme2 it is stated that ‘the European Council addressed specific advice to all Member States to help address constraints on growth and employment over the medium term. In the case of the UK, these recommendations focussed on six specific areas [including ……] the need to prioritise support for network infrastructure’. The European Commission White Paper on Transport 20113 strongly supports the role of transport in economic growth:

• ‘efficient transport is a precondition for maintaining the EU’s prosperity’ • ‘is also key to a well-functioning internal market and the ability of all of our regions to remain part of a

fully integrated world economy’

1http://register.consilium.europa.eu/doc/srv?l=EN&t=PDF&gc=true&sc=false&f=ST%2010660%202013%20REV%201 2 HM Government (2013) Europe 2020 UK National Reform Programme 3 European Commission White Paper on Transport 2011 – ‘Roadmap to a single European transport area — Towards a competitive and resource efficient transport system’

Cornwall and Isles of Scilly EU Investment Case – Sustainable Transport Infrastructure

Summary

Strategic Context

TO7

Investment Case – Sustainable Transport Infrastructure

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http://register.consilium.europa.eu/doc/srv?l=EN&t=PDF&gc=true&sc=false&f=ST%2010660%202013%20REV%201

As a less developed region that is both peripheral and has structural economic weaknesses a range of issues related to investment in transport infrastructure are of critical value. Evidence of need for Transport Infrastructure investment to support economic growth:

• Transport links to economic growth • The relationships between transport and growth • Criteria for selecting transport schemes for the SIF • Stakeholder survey feedback on infrastructure proposals (A30)

Transport links to economic growth There is a significant body of work and general understanding of linkages between economic growth and infrastructure, although definitive links are difficult to model, particularly on a regional or international scale. Whilst in some regions the impacts can be subtle and difficult to identify, Cornwall has a clear barrier with regard to geographic position, accessibility to markets and movement of labour. Transport user benefits are used to assess and prioritise UK national funding on an equitable basis. However, recent research has shown that transport benefit cost ratio assessments do not capture the wider economic benefits for schemes in remote rural areas. Case studies (Laird, Mackie & Johnson4) indicate that the benefits can be underestimated between 5% and 35%. The impacts can be diverse and wide ranging. Very little conclusive research has been carried out to define and measure wider economic benefits in transport cost benefit analyses, particularly with regard to remote rural areas. Nevertheless, the relationship between transport and growth is evident and widely acknowledged. Significant recent work in this respect is provided the Eddington Review5 which identifies seven ‘Micro Driver Mechanisms’:

• Increasing business efficiency, time savings and improved reliability for business travellers, freight and logistics operations.

• Increasing business investment and innovation by supporting economies of scale or new ways of working.

• Supporting clusters and agglomerations of economic activity. Expanding labour market catchments, improve job matching, facilitating business to business interactions.

• Improving the efficient functioning of labour markets, increasing labour market flexibility and the accessibility of jobs. Geographic and employment mobility in response to shifting economic activity e.g. in response to the forces of globalisation, new technological opportunities, and rising part-time and female participation in the labour market.

• Increasing competition by opening up access to new markets. • Increasing domestic and international trade by reducing the (transport) costs of trading.

Whilst these benefits are more easily identified and measured in densely developed city environments, OECD research and analysis5 demonstrates that remote rural areas can achieve economic growth and that transport connectivity plays a fundamental role in this respect. The OECD research6 concludes that infrastructure is a

4 ‘Wider Economic Benefits of Transport Schemes in Remote Rural Areas’. - Conference on Wider Economic Impacts (WEI) of Transport Infrastructure Investments. Molde University College, Molde, Norway. September 2013, Laird, Mackie & Johnson, University of Leeds 5 The Eddington Transport Study The case for action: Sir Rod Eddington’s advice to Government, December 2006 6 ‘How Regions Grow: Trends and Analysis’ Organisation for Economic Co-Operation and Development (OECD) Publication 2009 Investment Case – Sustainable Transport Infrastructure

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necessary component of regional growth. However this must work in conjunction with measures to develop human capital and business innovation. The relationships between transport and growth Two decades of intensive EU investment in Cornwall and the Isles of Scilly have had a positive impact on economic performance, especially in comparison with other parts of the UK. However, despite impressive growth rates achieved, structural economic weaknesses still remain. The economy generates less added value per head than other areas and is less productive, with contributory skills base and participation issues. These factors are characteristic of C&IoS’s peripherality. Peripherality remains a continuing constraint for C&IoS with distance from markets a key issue and capacity within the strategic transport network. C&IoS’s settlement pattern of a dispersed network of key towns and rural villages, hamlets and communities does not generate the same measurable agglomeration effect of a large city region. However, experience and research from other regions provides clear evidence that investment in appropriate strategic transport is a necessary ingredient to underpin growth. A review of the C&IoS economic profile indicates low wages, low productivity, low levels of R&D investment, a high percentage of people who are economically inactive and relatively low skills attainment linked to the type of jobs that have been ‘created’ historically or inactivity amongst people with L4+ skills, partly due to lack of suitable and accessible opportunities. Looking at these factors in relation to accessibility and transport the following relationships can be identified:

• Peripherality, and constrained accessibility internal to the region has an impact on the cost of goods and materials, the cost of production and the cost of access to the markets through lack of choice.

• The dispersed settlement pattern in Cornwall makes the provision of quality public transport at lower costs particularly challenging and accessibility to rural settlements more difficult.

• Low wages, combined with higher personal travel costs, particularly for 16-24 year olds, can be a significant deterrent to entering the job market. The options are involuntary unemployment or out-migration. ‘Out migration’ was identified (OECD7) as a common threat to all rural regions studied.

• This can seriously limit the volume of labour available for new business development • These increased costs and limited skilled labour pool can be a deterrent to new investment and

expansion of existing business • Lack of private sector investment can be a constraint on the development opportunities that exist,

particularly in terms of complementary infrastructure such as workspace. • This lack of investment affects the quality of transport services and infrastructure and exacerbates the

effects of peripherality A simplified illustration of the relationship is shown below


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‘Infrastructure investment – a necessary but not sufficient condition for regional growth7’ Criteria selecting transport schemes for the SIF With the above factors in mind transport priorities have been identified for the SIF programme on the following basis;

• Improving the capacity and reliability of the main regional corridors and inter urban links, and support key access to markets

• Supporting the vitality and viability of town centres as a focus for investment and new development. This will in turn support the commercial viability for improvements in public transport, walking and cycling facilities, providing affordable access for employment, education and key services.

• Schemes which support key areas of development and potential growth • Public transport improvements which should improve commercial sustainability and reduce the

individual costs of transport to the community (thus increasing wages net of travelling costs) Providing a business friendly environment which supports existing opportunities for development will retain and expand existing business, and attract new investment. However this will not be delivered solely through transport connectivity. OECD research6 indicates that whilst economic growth in remote rural areas is achievable under these conditions, it will be the result of a number of key determinants:

• Infrastructure provision as part of a regional integrated approach • Investment in human capital • Support for Innovation and R&D

As indicated by OECD6 –

7 ‘Investing for Growth: Building Innovative Regions’ - Meeting of the Territorial Development Policy Committee (TDPC) at Ministerial Level 31 March 2009 - Organisation for Economic Co-Operation and Development (OECD)

Investment

Peripherality

Quality

Economic Performance

Funding support

Employment Skills

Development

Innovation support

Cross sector development

Self- Sustainability

Transport Infrastructure

Relationship between Transport and Economic Performance


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‘Infrastructure investment – a necessary but not sufficient condition for regional growth’

Stakeholder survey feedback on infrastructure proposals (A30) Stakeholder surveys invariably confirm the concerns about transport infrastructure and the implications for business. In 2010 a business survey was carried out in relation to capture the views of various stakeholders with regards to the economic impacts of the potential dualling of the A30 at Temple. When asked about what was important for the regions business prospects, ‘connectivity’ was the word that was frequently cited. The general consensus was that the peripherality of the county is something that needs to be ‘broken down’ if business is to prosper in the county and that road linkages are of huge importance to this breaking down of peripherality/enhancing connectivity. Stakeholders were clearly not happy with the current state of the A30. Multiple respondents commented upon the extra time it added onto the journey to Cornwall for businesses. The general consensus was that the economy of Cornwall suffers significantly from the congestion caused by this stretch of road. Many stakeholders were concerned that the road gave a negative perception of Cornwall. The food production industry was repeatedly quoted as being badly affected by the poor road access to/from Cornwall. This sector relies on the A30 to get its produce to market. Quick and efficient routes to market are seen as being vitally important for food producers in Cornwall and in this respect the A30 was described as a lifeline. Investment in this stretch of road clearly underpins our smart specialisation focus on agri-tech.

As identified in the SIF strategy, C&IoS’s economy face a number of challenges which are reflected in low wages, low productivity and relatively low skills, attainment. Transport infrastructure is a part of the underlying framework facilitating economic growth through increasing access to external markets and enabling internal movement of goods (along supply chains) and people (labour mobility). Both internal and external connectivity for C&IoS underpins the EU SIF Strategy and links to all three key investment strands: Future Economy, Growth for Business and Conditions for Growth. Cornwall has benefited from support for transport infrastructure in the current Convergence programme. The following table illustrate the developments and benefits achieved through targeted transport improvements.

Cornwall and Isles of Scilly Current Situation and Proposals


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Transport Infrastructure Projects supported through the Convergence Programme

Project Description Economic Impacts

Truro Falmouth Rail Link

Rail Passing Loop facilitating a doubling of services between Truro, Penryn and Falmouth

Complete

Supports Cornwall university campus access, student accommodation, schools access, commuter service, relieving stress on road network

Newquay Airport ‘Aerohub’.

Capital and Revenue package, upgrading existing terminal and airside services, and development work for new employment initiatives.

Capital work completed. Development work ongoing

Supporting Aerospace strategic investment

in Newquay Cornwall Airport (NCA) - Designated an ‘Enterprise Zone’ (EZ). The EZ is the largest development site in the region; it has created 175 jobs to date and has the potential to create over 2,000 more. This is in an R&D intensive sector, with high productivity.

A large runway, clear airspace and a developing cluster make the ‘Aerohub’ a key part of the SIF investment plan.

East Hill Junction Capacity protection

Priority given to A30 traffic in preference to the town east-west traffic flows preventing queues back to A30

Completed

Improvement to junction capacity to enable Highways Agency to remove conditions preventing the development of Camborne Pool Redruth housing and employment space developments.

Trevenson Park South

New Access Road

Completed

Opening up access to new housing and employment space, Camborne and Pool

CPR Major Scheme

East West Link Road connecting Redruth Pool and Camborne across wide range of development areas.

Construction in progress

Critical requirement to support development initiatives for employment, education, high knowledge business development and housing.

Tolvaddon Access Spine Road

Access Road – Tolvaddon Business Park Development

Completed

Supporting access to new employment land. Critical requirement to accommodate modern high quality business park development

A30 junctions at CPR

Junction Improvements on the A30 Trunk Road, to allow Camborne Pool Redruth developments

Work completed

Junction capacity concerns were restricting further development. By improving junctions these sites are then unlocked and any Grampian Conditions can be removed

TEDC Truro East Park and Ride Service

Work in Progress

Service to support east – west access across Truro supporting town centre viability, and accessibility requirements for significant areas of housing and business development on the West side of Truro, and affordable access to town centre


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Coosebean Cycle and Pedestrian Link

Walking and Cycling Link between new developed areas west of Truro, residential areas and town centre

Completed

Supports the development plans and accessibility profiles for new private and public sector developments, safe/affordable access east – west of Truro without using congested main roads with limited road space. Sustainable off road route primarily for commuters walking or cycling to and from work at major Truro employers.

Carluddon A391 Road Improv’nt

Major scheme Carluddon A391 Road Improvement

Work in progress

Facilitates The ‘St Austell and China Clay Eco-communities’, a proposal to regenerate the clay country through new villages, job creation and improved infrastructure. Opens up land for the first stage of the eco-communities development that will bring 2000 jobs and same number of homes. With infrastructure in place, Cornwall Eco-communities will be delivered by Eco-Bos, a private sector joint venture company.

St Marys & Penzance Harbour

Harbour Improvements at Penzance Mainland and on Isles of Scilly

Work due to commence

Harbours improvement to create deeper water berths that will improve the likelihood of the private sector continuing to operate the ferry service. This work will create a self sustaining

Proposed Transport Proposals for SIF investment programme Transport infrastructure proposals for the SIF programme comprise:

• A30 Temple • Mainline Signalling • St. Erth West Cornwall Transport Interchange (WCTI)

A30 Temple The A30 is the main highway route linking Cornwall to the regional and national strategic road networks. The road connects Cornwall to the rest of the UK. The existing single carriageway section between Temple and Higher Carblake constrains the capacity of the A30 route resulting in severe congestion and delays which impact on the Cornish economy and limit opportunities for potential growth. The LEP proposes to improve the existing single carriageway section bringing it up to dual carriageway standard. The scheme will increase the capacity of this link, helping to improve road safety and help to make journeys more reliable, increased productivity and increased resilience. The proposal closely follows the existing 4.5km road alignment between Higher Carblake and Temple Tor. Mainline Signalling The Great Western Mainline Signalling scheme will deliver signalling infrastructure improvements on the mainline railway in Cornwall to reduce the current signal block lengths which limit the capacity of the railway in Cornwall to operate more frequent trains. The project will help reduce the journey time of rail services to London by reducing the number of station stops for long distance services.


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New signalling will be provided between Truro and Camborne in both the up and down directions. The project will support both enhanced local and intercity services. St. Erth West Cornwall Transport Interchange (WCTI) West Cornwall Transport Interchange (WCTI) will create a strategic transport hub around the existing St Erth, Cornwall railway station, served by rail and bus services and encouraging both commuters and visitors to park and ride for work, health, shopping and leisure purposes. The project will also open up adjacent land for employment space development. St. Erth Station is served by both mainline services operating between Penzance, Cornwall and Paddington, London and the branch line service to St Ives, Cornwall. It is an important transport location for communities in west Cornwall . West Cornwall Transport Interchange (WCTI) will create a strategic transport hub around the existing St Erth, Cornwall railway station, served by rail and bus services and encouraging both commuters and visitors to park and ride for work, health, shopping and leisure purposes. The project will open up adjacent land for employment space development and create enhanced car parking facilities to encourage greater use of train travel within West Cornwall and beyond (including Penzance, Hayle, Camborne, Redruth, Truro, St Austell and Bodmin) so removing cars from the road network. There will also be opportunities for bus operators to offer services that stop at the station to integrate with the trains. The following table identifies the economic benefits and outcomes, and are anticipated at the same scale of benefits as those achieved in the Convergence Programme.


A30 Temple 4.5km trunk road improvement

Removes a constraint on the main spine road regional link through Cornwall. Supports improved access to existing developments and local plan targets of 8,500 houses and employment space at Newquay Airport, Wadebridge, Bodmin, Newquay, St. Austell, and beyond to mid & West Cornwall. The scheme will support the marketing for 325 hectares of development land at Newquay Airport Aerohub, airside and business park development, working with Combined Universities in Cornwall (CUC) through a unique partnership model. The calculated Net Present Value of transport user benefits is £336m

Mainline Signalling

Great Western Mainline Signalling scheme

Supports: • Reduction in journey time of rail services to London by reducing the

number of station stops for long distance services. • Increased frequency of rail services throughout Cornwall, supporting

affordable accessibility and strengthening the viability of key towns in Cornwall, all located along the mainline.

Measured Economic Benefit:

• Unlocks 64 houses • 75 jobs • Benefit cost ration – 2.0 • GVA £2.73m p.a.


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St. Erth West Cornwall Transport Interchange (WCTI)

Station Improvements, access road, improved car parking, bus interchange facilities

Will create a strategic transport hub around the existing St Erth, Cornwall railway station, served by rail and bus services and encouraging both commuters and visitors to park and ride for work, health, shopping and leisure purposes. The project will also open up adjacent land for employment space development. The project will provide: • An Operational net present value (NPV) of £5.44 million • Wider Transport user benefits NPV of £3.4million • Net Employment - 210 FTE • Net GVA - £7.7m • The project will also support: • Additional business cases for further existing and allocated employment

space. This will be subject to private sector developers coming forward. • The economic development aims within the development plans for St.

Ives, Hayle and Penzance


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Funding Availability

To a greater extent, the funding for transport projects is obtained locally through developer contributions, bids for national funding programme support and Council prudential borrowing. These contributions are determined through investment strategies linked to individual Town Framework Development Plans. However, the projects highlighted for SIF support exceed the funding available locally and will not happen without ERDF funding support. However, it is intended that the schemes proposed for SIF support should provide the conditions and stimulus that will underpin the viability of further business case developments, securing longer term funding commitments from developers and local budgets. New employment space of the right scale, character, and strategic location, which supports growth sectors and complements town centre developments, generally depends on private developer investments. However, the financial returns for larger scale employment space are lower compared to residential or retail space. Employment space developments generally cannot carry the burden of significant infrastructure improvements whilst remaining commercially viable. Even less likely to be viable are investments in employment space which make significant contributions to public transport access or Trunk Road development as part of their business case. Seeking additional developer contributions for these projects would only deter investment, given the current economic context. In Cornwall generally, development levies are not imposed against employment space developments because of the relatively low financial returns (although Section 106 contributions are still required in specific circumstances). Beyond the funding already earmarked for the SIF projects, the current Council budget available for larger scale infrastructure projects is fully committed With regard to public transport proposals, current Rail Operating Companies, as part of the competitive rail franchise process, are unwilling to risk the capital funding necessary to develop large scale infrastructure improvements where this facility may be lost to competitors in the future. Whilst it can be shown that the rail projects should improve commercial operations and viability, capturing income from these benefits to support the capital investment is extremely difficult, if not impossible. For the proposed rail schemes, it is intended that the commercial viability of services will be developed to become more cost effective, operationally commercially self-sustaining and (through scale economies) lead to reduced travelling costs for the community, making a positive contribution to the SIF wider economic objectives.


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Underpinning the investment case for the ‘Sustainable Transport (TO7): Alternative Fuels Infrastructure Support Programme’ is the Cornwall and Isles of Scilly (C&IoS) Local Enterprise Partnership’s (LEP) ambition for the C&IoS to capitalise upon the upcoming period of the change in the way in which we power our motor vehicles. This emerging transition towards low carbon vehicles provides significant opportunities for C&IoS to grow our economy and improve our environment, whilst at the same time as enabling our citizens and visitors to benefit from the independence and affordable mobility they desire.

Although a phased transition towards a low carbon transport system across the UK is considered inevitable (OLEV, 2013), the LEP aims to position C&IoS’ economy to ensure that it can capitalise on the economic opportunities that the emerging low carbon transport revolution presents by securing early mover advantage. As such the proposed EU SIF allocation of £10m ERDF will be deployed in order to catalyse the provision of a world class alternative fuel refuelling infrastructure1 across C&IoS: showcasing the benefits that the decarbonisation of road transport can unlock within rural economies, both in terms of improved productivity, energy security and air-quality.

With road vehicles remaining the dominant transportation mode for both passengers and freight across C&IoS (CC, 2010) stimulating the rapid and wide spread adoption of lower carbon and more efficient motor vehicles is considered vital in enabling the realisation of the LEP’s vision for a more productive, resilient and better connected Cornish and Scillonian economy. At the same time this transition presents C&IoS with an opportunity to deliver substantial environmental and social returns on our EU SIF investments, including through the contribution this proposed intervention will make in supporting C&IoS’ contribution to the delivery of both UK and EU climate-energy policy objectives/targets, as well as in contributing our wider efforts to address the significant challenges we face in terms of rural isolation and transport poverty in many of our communities across C&IoS.

EU policies

The C&IoS LEP’s proposed £10m EU SIF Sustainable Transport (TO7) allocation to fund alternative fuel infrastructure represents a focused investment targeted at addressing a key barrier to the delivery of the following EU economic and environmental policies:

• Europe 2020: A European strategy for smart, sustainable and inclusive growth (EC, 2010a) which sets the three mutually reinforcing prioritises that underpin Europe’s vision for growth up to 2020 including a focus on ‘sustainable growth: promoting a more resource efficient, greener and more competitive economy’;

• EU Directive on the promotion of clean and energy efficient road transport vehicles (EC, 2009a) which aims to promote a broad market introduction of environmentally-friendly vehicles;

• EU Strategy on clean and efficient vehicles (EC, 2010b) that sets out the EU’s medium to long-term objectives, which are designed to promote a new industrial approach across Europe based on clean and energy-efficient

1 I.e. fast and rapid plug-in vehicle chargepoints and Compressed Natural Gas/Compressed Bio-Methane (CNG/CBM) refuelling stations.

Cornwall and Isles of Scilly EU Investment Case – Sustainable Transport Alternative Fuels Infrastructure Support Programme

Summary

Strategic Context

TO7

Investment Case – Sustainable Transport Alternative Fuels Infrastructure Support Programme

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vehicles. The strategy’s wider aim is to boost the competitiveness of the European industry, provide new jobs and support restructuring, whilst at the same time promoting the creation of a green economy;

• EU Clean Power for Transport, the European alternative fuel strategy (EC, 2013) which in discussion of the emerging EU Directive on the deployment of alternative fuel infrastructure highlights the important ‘chicken and egg’ problem where alternative fuel infrastructure is not built as there are insufficient vehicles to justify the investment, and vice versa in terms of a lack of infrastructure depressing demand for the vehicles - making the case for EU support for alternative fuel vehicle refuelling.

In terms of the biogas to vehicle infrastructure strand this proposed investment also promotes the delivery of the:

• EU Renewables Directive (EC, 2009b) in terms of the delivery of the 10% target for renewable energy in transportation;

• EU Strategy for Biofuels (EC, 2006) which highlights the opportunity presented to rural regions in receipt of EU structural funding to target investments in to biomass based industries and infrastructure in order to generate economic growth and employment.


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National policies In terms of UK policy alignment, the C&IoS SIF’s TO7 allocation supporting the provision of alternative fuel infrastructure represents a focused investment targeted at addressing this key barrier to the delivery of the following policies and priorities:

• Office for Low Emission Vehicles (OLEV) Strategy for ultra-low emission vehicles (ULEVs) in the UK (OLEV, 2013) which highlights UK energy security, our carbon targets, the role of vehicle regulation and air-quality, as well as the productivity gains that can be unlocked by ULEVs as key drivers for their adoption (see Box 1);

• OLEV’s priorities in terms of Investing in ultra-low emission vehicles in the UK 2015 to 2020 (OLEV, 2014); specifically in relation to providing refuelling infrastructure supporting early market adoption of ULEVs, including through removing barriers to the deployment of low emission buses as well as in terms of gas refuelling infrastructure for HGVs.

The plug-in vehicle charging infrastructure strands of this investment also promotes the delivery of:

• OLEV (2011) Plug-in vehicle infrastructure strategy which is specifically focused on addressing the market coordinate barriers and failures associated with recharging at work, recharging in public places and enabling longer journeys in plug-in vehicles.

In terms of the biogas to vehicle infrastructure strand this investment also promotes the delivery of:

• UK Bioenergy Strategy (DfT, DECC & Defra, 2012) which identifies some biofuels (including bio-methane) as offing a cost effective means of reducing carbon from road transportation, up to and beyond the 2020s. Particularly in respect to fuelling heavier vehicles where electrification is more challenging than for light vans, cars and motorbikes;

• Anaerobic Digestion (AD) Strategy and Action Plan (DECC & Defra, 2011) which commits the Government and its partners to facilitating the use of bio-methane as a transport fuel. The strategy also highlighting AD’s key role in facilitating the UK’s move to a low carbon and resource efficient economy, in conjunction with the opportunities AD offers in terms of the operation as well as the manufacture, construction and delivery of AD plants.

Evidence of need for this type of investment to support economic growth:

1. The wider case linking this ‘issue’ to economic growth C&IoS currently faces a moment of transition. The economic crisis and ensuing recession has undermined years of economic and social progress and exposed structural weaknesses in our economy. This situation calls for C&IoS to implement a:

• Growth strategy focused on delivering a smart, sustainable and inclusive economy, which is able to deliver high levels of employment, productivity and social cohesion;

• Suit of focused EU SIF investments that help catalyse C&IoS’ emergence from the economic crisis stronger, more competitive and resilient.

The EC has highlighted that Europe is on the cusp of an economic paradigm shift: a ‘third-industrial revolution’ (EC, 2012b) which will be underpinned by the deployment of a new generation of smart energy, communications and logistics infrastructure across the EU. This emerging revolution requires the integration of, and innovation within, our energy, communications and logistics ecosystems, in order to drive down margin costs, increase productivity and promote the emergence of a more sustainable and resilient economy across Europe.

Box 1. Electric Taxi Case Study (reproduced from OLEV, 2013, p. 44)


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To unlock the transformation economic benefits the third-industrial revolution (TIR) offers our economy, the LEP seeks to catalyse private sector investment in delivery the infrastructural foundations require to establish a 21st Century technology platform in order to support enhance business competiveness across C&IoS. This transformative change agenda will be facilitated a through removing barriers to the rapid deployment of renewable energy systems, buildings integrated low carbon energy solutions, smart grids, energy storage technologies and ULEVs. In terms of growth potential the:

• Avoided yearly saving on fuel across the EU from the adoption of low carbon vehicles are expected to have reached £48-65b in 2030 (CE, Element Energy & AEA, 2013) meaning that C&IoS economy could benefit from a reduction in our energy spend of £50-70m pa as a result of the deployment of ULEVs, allowing more money to be directed into other sectors;

• Low carbon vehicles transition is expected to deliver between 0.5-1.1m net direct jobs across the EU by 2030 (CE, Element Energy & AEA, 2013); a per capita extrapolation for C&IoS suggests the additional jobs creation by 2030 could be as high as 500 to 1,175 jobs2.

2 Whilst, due to the low employment base in the automotive supply chain across CIoS, it may be difficult for the area to realise high levels of job growth in this sector. Most of the new jobs created across the EU expected to be outside of the automotive value chain, in the service sector and construction which will benefit from the shift in spending away from the fossil fuel value chain and towards domestically-produced goods and services. Investment Case – Sustainable Transport Alternative Fuels Infrastructure Support Programme

22

4. Reference to any studies that demonstrate economic linkages / impact This proposed TO7 investment in alternative fuel/plug-in vehicle refuelling infrastructure is key to facilitating the delivery of Priority 4 within the LEP’s growth strategy (C&IoS LEP, 2012), with its focus on promoting:

• ULEVs: in order to deliver efficiency gains through the electrification of transport. Electric vehicles can realise in the order of a fourfold increase the distance travelled compared with standard petrol/diesel car (see Figure 1). Whilst the cost savings associated with alternative fuel vehicles, for businesses, individuals and C&IoS’ economy as an whole, are difficult quantify at this point it is clear that the reduced running costs of plug-in vehicles are likely to be very attractive in comparison with the alternatives (OLEV, 2013, p.74) and that further cost savings are likely to be achievable as the technology and supporting business ecosystems develops. Early adoption of these technologies hence represents a significant opportunity to improve the productivity of C&IoS’ businesses, as well as addressing the affordability of transportation for our residents and visitors;

• Locally sourced renewable transport fuels: C&IoS’ energy security and resilience can be improved through the promotion of compressed bio-methane (CBM) as an alternative fuel for buses and other heavy vehicles, coupled with the establishment of a local biogas supply chains and the associated Compressed Natural Gas (CNG)/CBM refuelling infrastructure. Cost savings attributable to CNG/CBM fuel as opposed to diesel can be in the order of 30-50% depending on how the gas was derived and delivered (see Figure 2).

In addition to the cost benefits associated with CBM fuelled vehicles the development of a CBM refuelling business ecosystem in C&IoS offers both opportunities for new revenue generation opportunities (i.e. inward investment, new start-ups, new to firm products/services).

1. Overview of the infrastructure situation to date: issues, problem

C&IoS has ready started to see reasonable levels of ULEV adoption (with c200 EVs on the road to date; Hawkins Motors having sold c20% of Peugeot iOn’s in UK) despite our lack of publically available refuelling infrastructure. In contrast the lack of biogas refuelling stations has meant that C&IoS is yet to see biogas powered vehicles being deployed even at pilot stage. With respect to plug in vehicle recharging facilities in C&IoS, whilst the National Charge Point registry does not record any publically accessible plug-in vehicle chargepoints in the area there are a handful (<20) of slow chargepoint (3kW) operated by private entities and a similar number used to support a small pilot fleet of public sector EVs. In addition the Cornwall Partnership NHS Foundation Trust has installed its own small network of fast (7kW) chargepoints to service its DH/OLEV funded fleet of 15 EVs: which are predicted to save the trust £300k per annum in fuel bills - the equivalent of funding 12 nurses (CFT, 2013).

Cornwall Council has also secured funding for 23 rapid (50kW) and 22 fast (7kW to 22kW) chargepoints from OLEV (CC, 2013) sites are currently begin scoped for these installs , whilst negotiations are ongoing with


Figure 1. Energy efficiency advantages from electric

vehicles (reproduced from OLEV, 2013, p. 36)

Figure 2. Cost of delivered fuel CNG/CBM (reproduced from AEA, in press, p.

11)


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commercial partners. It is the experience gained from delivering the Cornwall Council-OLEV network, alongside the gaps in provision it has highlighted3 that has informed the design of this proposed funding intervention.

2. Investment to date Combining the OLEV, NHS Cornwall and Cornwall Council investments directed towards facilitating e-mobility across C&IoS the total public/private investment to date (including projected 2014/15) has been £1.84m.

3. Evidence of need 2014-2020 There has been substantial lobbying from a range of stakeholders in order to encourage the LEP in invest in alternative fuel refuelling infrastructure, including interest from prospective ULEV users (i.e. NHS Cornwall, taxi firms, other private fleet operators and the general public) and a range of potential match funders (i.e. potential chargepoint hosts, chargepoint network operators, chargepoint manufactures/ distributors and CNG refuelling infrastructure providers).

Two plug-in vehicle summits have been held in C&IoS in 2013, during which a wide range of stakeholders were engaged and their input gathered in terms of future plans for ULEV deployments in C&IoS and any associated chargepoints requirements. These two seminars were followed by ongoing consultants with interest stakeholders, who have been actively involved in shaping the nature of this prospective TO7 alternative fuel infrastructure funding intervention. This consultation process has identified five investment areas4 where both the LEP and its stakeholders consider that interventions are necessary in order to promote the widespread uptake of ULEVs in C&IoS, over and above the limited initial rollout of 45 OLEV funded chargepoints by CC in 2014/15.

4. Evidence of market failure

As highlighted by the European alternative fuel strategy (EC, 2013a) and the UK’s plug-in vehicle infrastructure strategy (OLEV, 2011) there is a ‘chicken and egg’ problem in terms of alternative fuel infrastructure, where it is not being built out as there is an insufficient number of vehicles to justify the investment, whilst at the same time market uptake of ULEVs is constrained due to the lack of refuelling infrastructure necessary to enable their day-to-day use.

Core to implementing OLEV’s strategy for promoting the uptake of ULEVs across the UK is government support to remove market barriers and produce a conducive environment for private investment. This includes removing barriers to raising finance for infrastructure deployment and promoting targeted financial solutions through the Green Investment Bank (GIB)5.

5. Summary of the EU SIF strategy

The EU SIF TO7 Alternative Fuel Infrastructure Support Programme is target at providing alternative fuel refuelling stations/chargepoints where it will be most used to enable organisations and motorists adopting ULEVs to make the journeys they want, whilst at the same time fostering the emergence of a commercial market, business activity and employment associated with plug-in vehicle and CNG/CBM refuelling. It is proposed that the grant funding will be targeted at hosts and/or refuelling station site operators to ensure that the full benefit of this investment, in terms of stimulating economic activity associated with the provision of alternative fuel infrastructure, is retained in C&IoS.

Whilst a full strategy for this investment programme has yet to be developed and agreed, an initial investment of £3m ERDF has been provisionally proposed and consulted upon positively. This proposed intervention has five investment prioritises:

3 In terms of chargepoints in public/private car parks, to service private sector fleet users, as well as to provide in terms of rapid charge provision along rural routes (i.e. where there is limited grid capacity) and to cater for bus/taxi operators. 4 Discussed in Q. 11 below. 5 NB. Cornwall Council is currently in discussions with GIB in terms of co-funding alternative fuel infrastructure.



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• Pay as you Go (PAYG) plug-in vehicle fast chargepoints (7-22kW; Mode 2 or 3) for public/private car parks: grants directed at supporting provision of publically accessible fast chargepoints in car parks. This funding will be directed at owners of car parks, several have shown interest in match funding.

• PAYG plug-in vehicle rapid chargepoints (43-50kW>; Mode 3 or 4) to support rural e-mobility and long distance travel: building on the skeleton CC-OLEV funded network for 23 rapid chargepoints to support C&IoS and Plymouth. This strand will direct grants to enable both additional deployment of rapid chargepoints along our arterial routes, including provision for supporting rapid charging stations with facilities for charging multiple plug-in vehicles simultaneously. In additional this strand will make special provision for the costs of installing ‘remote rapids’, in areas across where potential rapid chargepoint hosts are faced by increased installation cost associated with the limited grid capacity available in rural C&IoS6. This funding will be directed towards rapid host, several chargepoint network operators and manufactures have shown an interest in providing hosts with match funding as part of either hardware supply or network deals.

• Private networks of plug-in vehicle fast (7-22kW; Mode 2 or 3) and rapid chargepoints (43-50kW>; Mode 3 or 4) for public/private fleet operators: public sector and private fleet operators represent key yet market for the early adoption of ULEVs. This strand will direct grants to organisations to provide charging infrastructure to support the integration of ULEVs in to their fleets.

• Private networks of plug-in vehicle rapid chargepoints (43-50kW>; Mode 3 or 4) to enable the electrification of business routes and deployment of e-taxis: bus operators and taxi firms also represent group of businesses who could benefit significantly from the integration of ULEVs into their fleets. This strand will direct funding towards the installation of rapid chargepoints, contactless charging and advanced higher capacity charging technologies suitable for charging buses7.

• Biogas-to-vehicle refuelling infrastructure and supply chain development: in order to stimulate the provision of CNG/CBM refuelling stations, storage and distribution systems. To both unlock the cost and carbon reductions that can be delivered by fuelling buses and HGVs with CBM, as well as through making a market for the biogas generated from C&IoS’ emerging AD industry. This funding will be directed towards potential operators of CNG/CBM refuelling stations, one business has already shown an interest in providing match funding.

6. Strategic fit – link to three strategic priorities – Future Economy, Growth for Business, Conditions for Growth

This proposed intervention primarily aligns with the LEP’s Future Economy activity area and EU Thematic Objective 7 (TO7). The LEP’s vision of C&IoS’ future economy aligns with the EC’s Mission Growth/Mission for Growth (EC, 2012a; 2012b) and the European Parliament’s vision for stimulating the emergence of a third industrial revolution (TIR) across Europe (EP, 2007). Critical to unlocking a key barrier to C&IoS benefiting from the economic productivity dividends created by the emerging TIR technology platform is the deployment of alternative fuel/plug-in vehicle chargepoints as a means of facilitating the early adoption of ULEVs.

However this investment priority also aligns well with the LEP’s two other investment prioritise as it will act to both accelerate increases in productivity and competitiveness in the region’s businesses (i.e. Growth for Business) and act to unblock barriers to growth through improving C&IoS’ transport infrastructure (i.e. Conditions for Growth). The proposed intervention is also a critical element in the LEP’s wider strategy in term of facilitating the delivery of the Low Carbon Economy (TO4).

7. Investment proposal(s) (general followed by specific projects if known)

Initial engagement has begun in order to scope the opinions of stakeholders, potential match funders, OLEV (re: alignment with their investments) and the Department of Business Innovation and Skills (BIS) (re: State Aid) in terms a initial EU SIF investment of £3m into the five strands detailed in Q 9 above. It is proposed that the ERDF grant monies be deployed at an 80% intervention rate in order to stimulate a further 0.75m of private/public

6 I.e. provision will be made for grid connection and/or reinforcement costs, as well as electricity storage solutions. 7 E.g. ‘flash charge’ type solutions. Investment Case – Sustainable Transport Alternative Fuels Infrastructure Support Programme

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investment in to alternative fuel infrastructure across C&IoS. The LEP’s focus on a host-led investment programme is key to our strategy to avoid distorting competition, whilst retaining the ownership of the refuelling/charging infrastructure in C&IoS.


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8. Contribution to Outputs and Results and any added benefits

This investment priority’s contribution to ERDF outputs delivered through the C&IoS EU SIF is detailed in Table 1 below.

No. of enterprises supported 179 No. of new enterprises supported 21 No. of jobs 34 No. of enterprises cooperating with research institutions 57 No. of new to firm products 12 No. of enterprises supported by business resource efficiency 110 Greenhouse Gas reduction (kTCO2e pa) 20.4

Table 1. TO7 Alternative Fuel Infrastructure Support Programme ERDF outputs.

As discussed in detail above the added benefits of this intervention include improvements to C&IoS’ energy security, resilience, air quality and economic productivity as well as helping to support efforts to address noise pollution, transport poverty and the cost of motoring for our organisations, residents and visitors.


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References

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Cornwall and Isles of Scilly Local Enterprise Partnership (2012). The natural place to grow great business Economic Growth Strategy for Cornwall & Isles of Scilly 2012 – 2020. C&IoS LEP, Truro. Visited 14/05/2014: http://www.cornwallandislesofscillylep.com/assets/file/LEP_Strategy_Document_2012-2020.pdf

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European Commission (2009b). Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC (Text with EEA relevance). EC, Brussels. Visited 14/05/2014: http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:32009L0028

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