Boston developed an investment fund that pools and mitigates risks in order to obtain capital for energy efficiency and resilience upgrades of the city’s buildings.
The Boston Deep Green Loan Pool is an investment fund providing loans to retrofit the city’s buildings for greater energy efficiency and resiliency. The fund addresses the difficulty that public and private sector property owners have in obtaining financing for operational upgrades. By pooling risks, the Boston Deep Green Loan Pool offers loans with favorable terms such as default protection and credit enhancement that makes it easier for property owners to secure additional capital.
The fund mitigates credit risk by using an energy performance contract under which operational savings are tightly linked to repayment of the loan and risks are assessed through a standardized process. The fund’s implementation of energy performance contracts includes guaranteed reductions in building energy use or production of on-site renewable energy, which enables greenhouse gas reductions. Fundraising for the Boston Deep Green Loan Pool began in December 2014.
12.5% CO2 reductions from large buildings and institutions is Boston’s target for 2020
The challenge
Over the next 10 years, buildings in Boston will have an upgrade investment opportunity of $158 million annually, which is more than three times current levels of investment. The Boston Deep Green Loan Pool aims to help fill this funding gap for valuable and environmentally sustainable infrastructure projects.
Co-benefits
Economic Buildings in Boston have a $1.6 billion self-funding upgrade investment opportunity.
Health Building upgrades financed by the fund will improve indoor air quality and therefore the health of those suffering from respiratory and heart-related illnesses.
Social Expanding investment in property upgrades will make affordable, quality housing more widely available.
About Boston
Boston is the capital and most populous city of the Commonwealth of Massachusetts in the United States. The city is the economic and cultural anchor of a substantially larger metropolitan area known as Greater Boston and this wider commuting region is home to some 8.2 million people, making it the sixth-largest in the United States. The area’s many colleges and universities make Boston an international center of higher education, including law, medicine, engineering, and business, and the city is considered to be a world leader in innovation and entrepreneurship, with nearly 2,000 start-ups. The city has one of the highest costs of living in the United States as it has undergone gentrification, though it remains high on world livability rankings.
