London - London Greenfunds by Matthew Pencharz at GIB Summit


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Presented at the 4th Global Infrastructure Basel Summit 21 & 22 May 2014.
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London - London Greenfunds by Matthew Pencharz at GIB Summit

  1. 1. The Mayor of London’s Green Fund Matthew Pencharz Senior Mayoral Advisor – Energy and the Environment Greater London Authority
  2. 2. The Challenge •Work to meet and take advantage of London’s demographic pressure •Create the environment for an Age of Enterprise •Stimulate large infrastructure projects e.g. Northern line extension •Increase energy supply, not CO2 emissions •Achieve a 60% reduction in CO2 emissions by 2025 based of 1990 levels •25% decentralised energy by 2025 •Maintain our enviable quality of life and continue to make London the World’s Best Big City
  3. 3. London Infrastructure Investment Plan (LIIP) 3 Following from the Mayor’s 2020 Vision, LIIP will consider the costs, funding and financing of the critical infrastructure London needs to meet challenge of growing population: • Transport • Housing • Energy • Water (supply, sewerage, flood defence) • Waste • Green Infrastructure • Social
  4. 4. Place in Finance landscape Grant London Green Fund Commercial 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
  5. 5. LGF Structure and Sources of Finance Circa 86% of allocated funds are committed to projects as of December 2013
  6. 6. A waste recycling plant capable of re- processing 20,000 tonnes of plastic bags/films per year An organic-waste treatment facility to process 49,000 tonnes per annum of food and green waste, generating electricity for 2,000 homes and producing 14,000 tonnes of compost. Expansion of a specialist plastics Materials Recycling Facility . Retrofitting and installation of energy saving measures and low carbon infrastructure to support development at an iconic cultural institution. Projects Supported by LGF
  7. 7. Some Lessons Low carbon funding initiatives not only need funding, but also management- know-how and technical guidance (e.g. through RE:FIT; RENEW). Need to know what you want – but also what market can deliver. Formulate clearly defined investment strategy, but recognise market can change.
  8. 8. LGF Phase II - 2014-20 • Additional £50m ERDF earmarkedfor 2014-20. • Deloitte appointed to carryout ex ante assessment. • EIB initiate approval process for £500m finance facility to sit alongside £50m ERDF. • Returns from currentphase will bere-invested in similar activities.
  9. 9. Thank you