London Green FundSupporting Green Infrastructure
Global Energy Basel:The Sustainable Infrastructure
Finance Summit
21-22 February 2012
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Scale
50 % of the worlds population lives in cities
80% of the world’s GHG are emitted by cities
75% of the worlds energy are consumed by cities
source: Clinton Climate Initiative
London’s Carbon Footprint
0
2006 carbon dioxide emissions from London
5%
34%
14%25%
22%
Source: London Energy and CO2 Emissions Inventory; DEFRA; TfL Policy Unit AnalysisNote: 2006 figures are based on latest available LECI data (for 2003) projected to 2006 based on projections for each sector
Domestic
Commercial
Industrial
Aviation
Ground BasedTransport
Including Aviation
67 mt CO2 (11% of UK emissions)
Excluding Aviation
7%
22%
38%
33%
Domestic
Commercial
Industrial
Ground BasedTransport
44 mt CO2 (8% of UK emissions)
8% of total UK CO2 emissions are from London
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London Mayor’s Climate Change
Target
Today 2020 2025 2050
•Reduction in greenhouse gas emissions by 60% below 1990 levels by 2025
UK Climate Change Act (2008)
• Reduction in greenhouse gas emissions by 80% below 1990 levels by 2050.
European 20-20-20 Target (2009)
• Reduction in greenhouse gas emissions by 20% below 1990 levels by 2020
• 20% increase in renewables
• 20% cut in energy consumption
The Mayor is committed to London becoming the greenest city in the world and a city that becomes a world leader in improving the environment.
London is committed to playing its role
Wide range of projects, including: REFIT, RENEW, Crystal Palace CHP, London Waste and Recycling Board, Green Enterprise District, East London green Grid
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Energy Efficiency Energy Supply Waste Adaptation
London Mayoral Strategies
London Waste Strategies(municipal &
business)
Energy Master Planning
London Plan (July 2011)
Economic Development
Strategy
Str
ate
gy
Climate change, mitigation and
energy strategy
Spatial and Public Realm
Strategy
Low Carbon Economy
London Green Fund
London Climate Change Programmes
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The London Green Fund established in late 2009 to invest in carbon reduction projects in line with the Climate Change component of the London Plan
Focused on energy efficiency, waste and decentralised energy: the “3 biggest carbon reduction opportunities for London”
Energy EfficiencyUrban Development
Fund
£35m
ERDF
London Green FundLondon Green Fund£100m*
Managed by EIB
London Waste &Recycling Board
London Development
Agency
£50m
Private finance
£50m £32m£18m
* The remaining £15m will be invested in one or both UDFs in due course
Urban Projects Urban Projects
London Green Fund
Private finance
Waste Urban Development Fund
Equity type investment
Loan type investment
Low riskHigh risk
Min £50mMin £35m
Aiming to deliver on job creation, tons of carbon saved, and financial return
London Green Fund: Place in Finance landscape
GrantLondon Green
FundCommercial
Increasing commercial viability
• High risk, with little market demand evidence or funding security
• Returns are ‘non-financial’
• Outputs essential to economic development policy
• Lack of alternative funders
• Fluid risk profile and little or no robust market demand evidence
• Requirement for long term debt and equity, or additional funding security or guarantees are required
• Returns are longer term or do not match commercial needs
• Clear and understandable risk profile
• Strong rationale for commercial funding to be made available
• Normal levels of commercial return that commensurate with risk of project
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....the waste UDF will primarily finance, via equity or equity-type investment, the construction or expansion of:• Waste to energy/fuel facilities (excluding incineration)• Value added re-use, recycling or reprocessing facilities
Waste UDF – Foresight Environmental Fund
Bank lending
Project sponsors
Venture capital trusts
Pension funds/private
investorsLondon Green FundLondon Green Fund
£35m£35m
UDF: £70m
Pari pasu: £118m
Investment programme £204m
In line with the Mayor’s municipal waste strategy, and in close collaboration with the London Waste and Recycling Board…
Model for the future?
Financial EngineeringInstrument
Recycle
Private Investors
Public Resources
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Case Study: Bottle to Bottle
Recycling
Why recycle plastic packaging?
Recycling 1 tonne of rigid plastic packaging saves up to 1.5 tonnes of carbon dioxide
Packaging buyers increasingly require carbon footprint reductions
Using 50% recycled content in an item of packaging reduces its carbon footprint by 25%
Closed Loop Recycling
Closed Loop at Dagenham
First facility in the World to produce food-grade rPET and rHDPE
Processes in excess of 90 tonnes of plastic waste per day
Technology capable of closing the packaging loop
Operating since December 2008
Closed Loop Recycling Model
The process in summary
Dry Cleaning
Optical Sorting
Manual sorting
Granulation
Washing
Purification
Quality Assurance
Operational know-how developed over 2 years (>17,000 hours)
Closed Loop Recycling
UK plastic bottle collection growth
Source: RECOUP - 2010 UK Household Plastics Packaging Collection Survey
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Other reprocessing drivers
Increased focus on domestic recycling - UK Bottle collection rates continue to increase
Proposed Defra target for UK bottle collection by 2020 is 75% (est. 545,000 tonnes)
Landfill tax
Strong and growing demand for food-grade recycled plastic:
- Coca Cola commitment to 25% rPET content
- UK Milk Roadmap targets 50% recycled content in all milk bottles by 2020 Closed Loop Recycling
Planned Expansion
Double processing capacity
Integrated specialist plastics MRF
Market leader in a growth sector
Contact Contact
Kenroy Quellennec-ReidSenior Financial Engineering Manager
Greater London Authority
Tel: +44 (0)207 983 4559
www.london.gov.uk – click on EU flag!twitter@LondonEUFunds