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

Kenroy.quellennec-reid@london.gov.uk

Tel: +44 (0)207 983 4559

www.london.gov.uk – click on EU flag!twitter@LondonEUFunds