London has created a fund consisting of public and private sector money to finance projects needed to realize the climate, energy, and waste reduction targets of the city.
London’s goal of reducing CO2 emissions by 60% by 2025 is estimated to cost $63 billion, which cannot be delivered by public sector investments alone. Therefore, the city established the London Green Fund, in which private funding, e.g. from pension funds and commercial banks, is combined with public money to finance sustainable infrastructure projects via equity finance and loans. By mid-2015, $165 million of public money, with support from the EU, had been invested in schemes valued at $1.1 billion – a leverage of seven times the public money invested. The fund is an efficient use of public resources as financial returns can be re-invested into similar projects.
The fund has made 16 investments in energy efficiency, decentralized energy, and waste infrastructure during the period 2012 to 2015. The first stage of projects resulted in 35% energy savings compared to conditions before investment and the production of more than 60 MW of electricity, while creating over 2,000 jobs. A further $780 million in EU funding has been earmarked for the second stage of the London Green Fund, and the intention is to combine this with $156 million from the European Investment Bank.
218,000 tonnes of CO2 reduced per year once all are the funded projects are realized
The Challenge
Due to uncertain demand, implementation of emerging technologies, and long payback periods, the inability to secure funding is a key barrier to establishing low-carbon infrastructure. The London Green Fund addresses the lack of investment in London’s waste and energy infrastructure by leveraging private sector funds to achieve the twin objectives of environmental goals and financial returns.
Co-benefits
Economic Nearly $7 million in savings are expected from the energy efficiency projects financed by the fund.
Environmental The waste management projects financed by the fund will divert 330,980 tonnes of waste from landfills per year.
Social Over 2,000 social housing properties will undergo energy retrofitting, which will provide financial and social benefits to low-income citizens.
About London
London is the capital and most populous city of England and the United Kingdom. Standing on the River Thames in the south east of the island of Great Britain, London has been a major settlement for two millennia. London is a leading global city and is crowned as the world’s largest financial centre and has the fifth- or sixth-largest metropolitan area GDP in the world. London is a world cultural capital and is the world’s most-visited city as measured by international arrivals. London has a diverse range of people and cultures, and more than 300 languages are spoken in the region. London contains four World Heritage Sites and The London Underground is the oldest underground railway network in the world.
