Climate Change blog - Green Finance Training update
ADEPT and CIPFA have continued their partnership to design and deliver green finance training for local authorities. In this month’s blog, ADEPT Chief Executive, Hannah Bartram, talks about the latest event.
Following the success of the first green finance training event last November, which was featured in the Environment Journal, and a follow-up session for the same group of delegates in January, a second event was held in April. The all-day, in-person event was fully booked and had a good mix of delegates from place and finance teams across a range of local authorities.
Green Finance Training - session two
We were delighted that some of the speakers from the first session came back to present again. Louise Marix Evans (Quantum Strategy & Technology) set the scene describing some of the challenges and opportunities in attracting private finance; Neil Witney (Department for Energy Security & Net Zero) talked about the local focus in the government’s updated Green Finance Strategy, support to help councils develop their capacity and skills, and innovative financing models; and David Forbes (UK Infrastructure Bank) talked about UKIB’s local authority lending offer and advisory service – although not quite ready to go public with named schemes, he gave examples of small (£10m) and large (£100m+) local heat network schemes that UKIB is supporting.
The April event also had some new speakers, studies and activities. Joseph Holmes, Executive Director (Resources) at West Berkshire Council explained that when PWLB (Public Works Loan Board) borrowing rates increased sharply in 2019 he started to look at other sources and identified Abundance Investment to help raise £1m for local green projects. This was achieved, with almost 25% coming from local residents with an average investment of almost £3,500 – more than double the amount of the average investment by external investors. His tips are to keep the bond scheme simple and use it to finance specific projects that are already in the capital programme – West Berkshire’s projects include rooftop solar installations, tree planting, Wildlife Trust schemes, active travel, and energy efficiency. A new venture is to raise finance for a large-scale solar farm and the Council is grappling with the complexities of grid connections and carbon offset calculations.
Citizen-sourced local climate bond finance for tackling the climate emergency
Abundance Investment is now working with seven other councils to raise citizen-sourced local climate bond finance for tackling the climate emergency. Karl Harder (joint Founder and Managing Director) described how for local authorities this is a simple and the cheapest form of borrowing (typically 0.25% below PWLB rates). It can be used for any green project in the capital programme, and engages local residents and councillors. For individual savers it’s easy to access and ISA-eligible, it is low risk as it is secured against the local authority as a whole rather than an individual project, and people can invest small amounts (25% of savers invest £100 or less). For the community it keeps money in the local economy and allows savers to donate their interest to fund further local projects.
Bristol City Council’s Leap project
The other new case study was Bristol City Council’s Leap project. Alex Minshull explained that following the issue of a prospectus and soft market testing exercise in 2018, the Council went through a complex procurement process. At the end of this it let a 20-year concession to a strategic partner, Ameresco, with its essential subcontractor Vattenfall, to fund and deliver low carbon energy projects across Bristol City’s estate. The Council and Ameresco have set up and co-own a 50:50 joint venture company, the Bristol City Leap.
This pre-procured partner will deliver low carbon projects across the Council’s estate – corporate, investment and housing – and can also deliver projects in the residential and commercial sectors. The partnership will invest up to £1bn over the 20-year period, making Bristol City’s own operations carbon neutral by 2025, decarbonising its social housing by 2030, substantially expanding the Council’s heat network, and making a significant reduction to overall carbon emissions in Bristol. The wider Bristol One City Climate Strategy includes a Net Zero Investment Co-Innovation Lab to develop and deliver funds for business and community schemes.
Ambition and a long term view
A number of themes emerged as delegates and speakers reflected on the presentations. The case studies are replicable elsewhere, although larger urban authorities tend to have more ‘incubating capacity’ as David Forbes described it. Strategic partnerships require councils to be ambitious and take a long-term view so that they can build supply chain confidence and develop training and apprenticeship programmes. They need to have good information about their assets and the condition of them. Councils have to be willing to engage with partners with a different organisational culture and to accept that partnerships entail some pooling of sovereignty.
Mark Williams (CIPFA) introduced a group exercise. Delegates had to play different roles in a multi-disciplinary team at a hypothetical local authority looking to develop delivery options in its highways service to meet net zero ambitions. With some base information on the network, fleet, depots and other assets, the teams identified potential projects and financing arrangements. Teams were encouraged to think about how these might be applied in their own places.
Towards the end of the day there was a ‘Dragons’ Den’ style session – the speakers were the Dragons, even though one or two of them claimed never to have seen the TV programme! The brief for delegates was to come prepared with a live issue on how to identify the funding / finance for a local green project. They were tasked with giving a short pitch to the panel about what they are aiming to achieve, how it fits with their local green strategies, potential partners and stakeholders, costs, and barriers.
The panel gave some immediate advice and signposting, challenged the delegates on what they have already done to unblock the barriers, and made some initial suggestions about where to go for further support to make their project investable and take it to market. Solutions weren’t just about finance, but also about wider issues of project delivery capacity, robust business cases, risk appetite, and political support.
It was another well-received training event that showed there is demand for further sessions on related themes in the future.
Further information
- For more information on ADEPT's climate change work, please take a look at the climate change hub.
- Information about training and development can be found on the events page.