Tuesday 5 October 2010 Alex Conway European Programmes Director London Development Aegncy Implementation of the London Green Fund - synergising economic, environmental and European objectives

2 I am delighted to support this initiative that will help London to be the worlds leading big low carbon city. Martin Powell, London Mayoral Advisor, Environment

3 Strategy Economic Principles Align Resources Collaborative Approach Enable Sustainable Change Promote London: world capital for business (ERDF) Improve Londons competitiveness (ERDF) Transforming to a low-carbon economy (ERDF-JESSICA) Extending economic opportunity (ESF) Investing in Londons future (Transnational) Mayors Economic Development Strategy Strategy Objectives & linkages to EU Programmes Economic Development Strategy & London Plan

4 4 The London Plan

5 Thames Gateway & Green Enterprise District

6 Key Brownfield sites Land in public ownership Enterprise District Brownfield Sites and Publicly Owned Land

7 7 Climate change: London is committed to playing its part 7 London Mayors Climate Change Target Today 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 European Target (2009) Reduction in greenhouse gas emissions by 20% below 1990 levels by % 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.

8 Londons European Regional Development Fund (ERDF) Programme Mayor of London has Strategic Oversight and Chair of Programme Monitoring Committee (PMC) Small London-wide ERDF programme - 182m –Priority 1: SME innovation, research, promoting eco-efficiency 50m (revenue) –Priority 2: Access to new markets and finance for SMEs 52m (revenue) –Priority 3:Sustainable places for business 73m (capital) –Priority 4: Technical Assistance 7m

9 JESSICA in London London undertook to investigate the opportunity for using Joint European Support for Sustainable Investment in City Areas (JESSICA) in relation to delivering up to 70% of Priority 3. Deloitte undertook study – supported by EIB and EC - that: –concluded that strong case exists for using JESSICA initiative in London –indicated that there was sufficient deal-flow of projects in London to meet ERDF requirements –recommended that focus should be on decentralised energy systems and waste infrastructure projects –recommended use of the holding fund model

10 JESSICA= good idea = London Green Fund Entire region is urban area, geographic eligibility issues dont arise; Mayors London Plan and sub-plans meets requirement for an integrated plan for sustainable urban development; JESSICA meets Mayors objectives re tackling climate change, Funds can be recycled and returns generated reinvested in any urban regeneration project; Promotes closer working with European Investment Bank; Exciting opportunity to do something genuinely innovative with ERDF; Lets call it ….the London Green Fund!

11 London Green Funds place in finance landscape London Green Fund should be targeted at those projects that just fail to be commercial and provide necessary equity, loans or guarantees to encourage other investors to fund projects. 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

12 EIB 35m cash Match funding London Waste and Recycling Board Energy Efficiency UDF Waste UDF Investment Board Land 35m 54m ERDF 20m 109m 70m 39m PPP/Urban Projects Delivery Model Landcash LDA &

13 London Green Fund Influencing national policy / stakeholder management / communications Olympic Fringe Energy Efficiency Energy SupplyWasteAdaptation Homes Energy Efficiency Programme Better Buildings Partnership Building Energy Efficiency Programme Low Carbon Zones Green500 Green Enterprise District Retrofit Academy London Mayoral Strategies London Waste Strategies (municipal & business) LDA Owned Energy Supply Projects Crystal Palace CHP London Thames Gateway Heat Network Royal Albert Basin Energy Master Planning London Waste and Recycling Board Park Royal Partnership London Plan (Autumn 2009) Economic Development Strategy Green Jobs & Skills Low Carbon Economy Action Plan LDA Contribution to Energy Supply Projects LDA climate change programmes Strategy Delivery Climate change, mitigation and energy strategy 13 Spatial and Public Realm Strategy Trees and Parks Programme East London green Grid Low Carbon Economy Mayors Green Procurement Code

14 Building Energy Efficiency Programme: RE:FIT cost neutral means to reduce energy bills and carbon footprint of your buildings Energy service companies (ESCOs) guarantee a set level of energy savings - therefore financial saving - over a period of years This guarantees a future income stream to fund investment in improvements Insulation Building management technologies Cooling equipment Low carbon heating If all municipal buildings, schools, universities and hospitals were retrofitted, could save 1m tonnes CO 2 : 2% of Londons CO 2 emissions

15 London Thames Gateway Heat Network

16 London Waste and Recycling Board – waste objectives

17 Bridging the Gap Demonstration or Pilot Projects Aggregated Project Investment or Asset Value £m Time Commercially Viable Projects London Green Fund Public Green Bonds Socially Responsible Funds Senior Debt Phase I 109mill Phase II 2.4bn Phase III 24bn Phase IV £47bn Green Investment Bank Private Equity

18 Challenges Delivering large-scale carbon reductions requires huge upfront investment This investment has to payback in commercially-attractive timescales and be no more risky than investment in other asset classes Public sector seed funding does not catalyse the market Private sector investors not willing to invest in the Fund Private sector funding does not come in at sufficient pace Potential slow decision making in selecting projects for funding

19 Achieved so far 2009 –Holding fund management agreement signed with EIB –Investment Board set up to oversee investment 2010 –EIB issued calls for Expression of Interest to establish two Urban Development Funds (UDFs) –Fully-funded with cash

20 London Green Fund Timelines Aim : To make London one of the worlds leading low carbon capitals by 2025 and a global leader in carbon finance. (Mayors Economic Development Strategy for London)

Contacts Alex Conway European Programmes Director London Development Agency Tel: +44 (0) Martin Powell, Mayoral Advisor, Environment, Greater London Authority London Green Fund: Mayor of London website: Economic Development Strategy, London Plan Thank you