It is widely acknowledged that the UK Government's targets for tackling climate change - including legally binding carbon budgets under the Climate Change Act 2008, aimed at cutting UK emissions by 34% by 2020 - are incredibly challenging. It is also universally accepted that local authorities will have a key role to play in efforts to tackle climate change.

More than 90% of councils have already adopted targets to reduce emissions in their own operation or across their local area, or targets to adapt to the effects of climate change.

And, in light of proposed changes to the Local Government (Miscellaneous Provisions) Act 1976[1] , currently being consulted on by the Department of Energy and Climate Change and the Welsh Assembly Government, they may soon have an opportunity to do more.

So, what are the changes being consulted on and how do they impact local authorities?

The Act (and its Scottish equivalent) currently provides specific powers for local authorities to generate electricity and heat and to purchase, sell and supply heat. However, unless it is produced in association with heat (or in Scotland from heat and waste), local authorities cannot sell electricity. While the current regime has allowed local authorities to participate in small scale electricity and heating schemes, it has prohibited them from developing electricity generation projects.

The Government is consulting on changes which would allow local authorities to sell electricity generated by them from renewable sources. This would include electricity generated from non fossil fuel sources including wind, solar, geothermal, aerothermal, hydrothermal and ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas and biogases.

Should the proposals proceed, from a legal perspective at least local authorities will be able to develop renewable energy projects themselves. They will have the power to sell the electricity produced and benefit from the variety of incentives aimed at encouraging renewable electricity generation in the UK.

Whether in practice local authorities will wish to do that is a more open question. The electricity supply industry is complex and heavily regulated. As the consultation notes to generate, distribute and/or supply electricity (and depending on the specifics of the project a local authority may be engaged in any or all of these activities) requires a licence or the benefit of an exemption (typically under the Class Exemption Order[2]); and of course the sale of electricity itself and the maximisation of renewable benefits attaching to that electricity requires specialist sector knowledge.

Any local authority wishing to take advantage of the opportunities afforded by the proposed changes will need to be well prepared and well advised.

The deadline for responses to the consultation closes on 2 June 2010.