Download - Adapting the city Investment & Finance. Overview Charlie Parker, Lead Chief Executive AGMA’s Environment Commission Absorb information Prepare for the

Adapting the cityInvestment & Finance

Overview Charlie Parker, Lead Chief Executive AGMA’s Environment Commission Absorb information Prepare for the future Seek opportunities Adapt the City Adapt our thinking

Overview - finance and investment workshopClimate change adaptation: opportunities and threats to Greater Manchester, Helen Seagrave/Becca Heron (Envirolink & New Economy) (10 minutes)

Overview of climate finance, Caroline McGill, Corporate Finance Director, Deloitte (20 minutes)

Setting the GM scene (10 minutes)

Greater Manchester Investment Sara Todd, Assistant Chief Executive Regeneration – Manchester City Council Low Carbon Investment Mark Atherton, Director of Environment for Greater Manchester (AGMA).

Discussion led by Caroline McGill.

Adapting the city

Climate Change Adaptation: Opportunities and Threats to Greater Manchester

Rebecca Heron, New EconomyHelen Seagrave, Envirolink

Purpose of research — Provide an overview of GM’s priority sectors and the impact

of climate change on those sectors

— Identify size and scope of GM’s climate change adaptation sector

— Provide an understanding of potential opportunities regarding job creation in that sector

Priority sectors

— Priority sectors— Financial & professional services— Health— Retail— Manufacturing

— Key sector concentrations (higher than national average)— Creative industries— ICT digital

— Key sector productivity— Bio-technology (£140,500)— Environmental technology (£65,900)

Risks — Increasing energy and fuel prices— Security of energy supply— Effects of climate change legislation

— Carbon pricing, trading and emissions reductions targets

— Falling demand for high carbon footprint goods and services— Damage to real estate and infrastructure

Potential impact

SECTOR

POTENTIAL EMPLOYMENT POTENTIAL GVA

IMPACT (000’s) IMPACT (£m)

1% negative impact 5% negative impact10% negative

impact 1% negative impact 5% negative impact10% negative

impact

Manufacturing -0.5 -2.5 -5 -12.5 -62.6 -125.3

Construction 0 -0.2 -0.4 -17.1 -85.4 -170.8

Logistics -0.1 -0.6 -1.2 -35.4 -176.8 -353.5

Tourism 0 0 0 -7.1 -35.3 -70.7

ICT -0.1 -0.4 -0.7 -25.7 -128.4 -256.8

Opportunities — Change can stimulate innovation and adaptation— Sectors and organisations that embrace the challenge

and adapt are most likely to survive and prosper

Climate change adaptation sector— Definition developed using LCEGS sector data

— Climate change and resilience— Building technologies— Relevant environmental consultancy services

— Low carbon and environmental goods and services sector data— Unique data set to developed to overcome lack of SIC code

definition— Used by central Government to develop to define and map sector— Envirolink pioneered methodology for mapping LCEGS sector

Size of GM climate change adaptation sector

GM Climate Change Adaptation

GM LCEGS UK Climate Change Adaptation

UK LCEGS

Sales £1.2bn £5.1bn £27.08bn £122.2bn

Companies 670 1918 15,000 52,000

Employment 11,000 37,000 230,000 940,000

Relative size of the climate change adaptation sector

Distribution of companies across definitions

— Big bullet

— Sub bullet

— Big bullet— Sub bullet

Construction

Finance, investment, insurance

Transport

Distribution by company activity — Big bullet

— Sub bullet


En

gin

eeri

ng

S

ervi

ces

Inst

alla

tio

n

Man

ufa

ctu

re Ser

vice

s

Su

pp

ly

R&

D

Company distribution across GM — Big bullet

— Sub bullet


Bol

ton

Bur

y

Man

ches

ter

Old

ham

Roc

hdal

e

Sal

ford

Sto

ckpo

rt

Tam

esid

e

Tra

fford

Wig

an

Skills requirements — Wide range of skills required, not necessarily adaptation specific

— Specialist and professional— Manufacturing and engineering— Business management (particularly for SMEs)

— Under-supply of young people entering high value engineering and skilled trades

— Apprenticeships— “Image problem” in relation to climate change sectors

— Encourage high level candidates to enter the sector— School leavers and graduates

— Role of the universities— Largest student population in Europe— Range of relevant courses offered

Conclusions

— Priority sectors at risk if a failure to adapt

— BUT opportunities through innovation and adaptation— Strength in construction retrofit, doors and windows should be

maximised through access to opportunities presented by GM’s large scale commercial and domestic retrofit programme

— Develop specific sector strategies for particularly vulnerable sectors— Draw on the universities reputation for excellence to turn Manchester’s

reputation for entrepreneurship to economic advantage— Increase efforts to attract high-calibre candidates to the climate change

adaptation sector

Adapting the city

© 2012 Deloitte LLP. All rights reserved.

Investment and financeFor climate change adaptation


Investment and financeAgenda

Investment & finance requirement Principles of “invest-ability” Climate change finance

• Manufacturing• Construction• Retrofit• Transport

• CertaintyoAssetso IncomeoSavingsoMeasurement

• Risko Policyo Technologyo Supplyo Demando Counterpartyo Climate change

• Risk Mitigation• Insurance• Familiarity

• Prevention vs mitigation• Challenges for the future

Finance for Greater Manchester


Investment and finance requirementKey sectors

Familiar sectors

• Construction

• Transport

Supply chain

• R&D

• Manufacture

• Installation / Engineering

• Services


Principles of “invest-ability”Certainty, risk and familiarity

CostsCertainty

Certainty will be sought over:• Assets• Income• Savings (PAYS)• “Green” impact• Measurement

Risk

Risks to be mitigated include:• Policy• Technology• Supply• Demand• Counterparty• Climate hazards

Investors and financiers seek to understand the level and nature of risk in order to decide:- whether to provide finance; - at what price; and- on what terms.


Climate change financePrevention vs mitigation

Public good Private value

Well understood

Not well understood

Waste management

Capturing the value of climate change mitigation is more difficult than climate change prevention as this tends to be thought of in terms of energy cost.

Solar PVSolar Thermal

Brown field remediation

Energy Service contracts

Flood defences

Biomass

Water management

Renewable HeatInsulation

Possible financier perceptions


Climate change financeChallenges for the future

•How can the level of familiarity with climate change finance be broadened among the wider financial community?

•Can the true value of works mitigating the effects of climate change be captured financially?

•What role should the insurance sector play?

•Can community finance initiatives be used more widely?

•What should be the role of national and local government?

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.Deloitte LLP is the United Kingdom member firm of DTTL.This publication has been written in general terms and therefore cannot be relied on to cover specific situations; application of the principles set out will depend upon the particular circumstances involved and we recommend that you obtain professional advice before acting or refraining from acting on any of the contents of this publication. Deloitte LLP would be pleased to advise readers on how to apply the principles set out in this publication to their specific circumstances. Deloitte LLP accepts no duty of care or liability for any loss occasioned to any person acting or refraining from action as a result of any material in this publication.© 2012 Deloitte LLP. All rights reserved.Deloitte LLP is a limited liability partnership registered in England and Wales with registered number OC303675 and its registered office at 2 New Street Square, London EC4A 3BZ, United Kingdom. Tel: +44 (0) 20 7936 3000 Fax: +44 (0) 20 7583 1198.Member of Deloitte Touche Tohmatsu Limited

Adapting the city

GM Investment Framework

GM Context

• Cities as engines of growth

• Combined Authority (CA) and LEP provide the platform for growth and reform

• Place - based approach to aligned priorities, funding and delivery

• Move away from a grant culture to a self sustaining investment approach

• Secure the benefits from local investment

GM Investment Framework

• MIER provides the evidence base to understand what we need to do

• Reduced access to public resources and difficult market conditions (especially in terms of market finance failure)

• A new approach to investment is required to:

- make the most of our evidence base and opportunities; and

- minimise the impact of the funding and market challenges we face

Investment Framework Work StreamsProjectPipeline

• Develop an approach to coordinating private and public sector funding

• Enabling Funds• Investment Advisor

Investment Strategy

• Recruiting a central GM Core Team to strengthen AGMA’s delivery capacity and capability • Developing skills and capacity in districts

Capacity

• Develop single AGMA pipeline• Indicative prioritisation• Short term and medium to longer term pipeline

Project Pipeline Development

• Around 80 projects now identified by Local Authorities and the Manchester Family

• Includes economic development, housing, low carbon, transport, broadband, business growth

• Many have multiple barriers to bringing them to market

• Local capacity and expertise varies to support pipeline development

• Considerable pressure to commit Enabling Funds asap

Investment Strategy – Initial Priorities

• Identify potential sources of enabling funds• Match suitable enabling funds to projects• Move quickly towards a single Feeder Fund to de-risk / enable

projects

Enabling Funds

• Investment Advisor in place • Develop panel of funders to work with AGMA• Move towards a future AGMA Investment Fund

Private Sector Funding

• Gateway process for projects • Independent Advisory Panel to oversee investment approach• Recommendations to CA and LEP

Governance

GM Enabling Funds

Those where we must commit resources quickly(start on site - next financial year): • Evergreen JESSICA Fund• Regional Growth Fund – Rounds 1, 2 and (hopefully!) 3• Growing Places Fund• European Regional Development Fund (ERDF)

Resources into fund in due course…• Tax revenues from EZ• Recycled Funds returned to the pot

GM Investment Advisor

• Investment Advisor recently appointed

• Maximise impact of available public sector funding

• Promote projects capable of attracting private sector funding (both equity and debt)

• Development of a panel of potential funders

• Development of a specific Feeder Fund, to access private sector funding

• Proposition that would enable AGMA to seek ‘blind’ investment from a range of potential public and private sector investors

GM Structure/Governance

GMCAGMCA GM LEPGM LEP

INDEPENDENT ADVISORY INDEPENDENT ADVISORY PANELPANEL

AGMA CEO INVESTMENT AGMA CEO INVESTMENT GROUPGROUP

GM CORE INVESTMENT TEAMGM CORE INVESTMENT TEAM

Adapting the city

GM Low Carbon Investment, Mark Atherton, Director of Environment for Greater Manchester (AGMA)

• Investment Framework

• Green Deal Retrofit

• Low Carbon Investment Pipeline

• Low Carbon Hub

Green Deal Producer/Provider Model

Installers

Install and manage

Contract

Producer Energy Companies

CS & AW ECO

Delivery Partner(s)

Finance vehicle

LA

Finance (Prudential borrowing or reserves)

Benefits

PV Meter/deemed

Green Deal Payments

Green Deal + FIT payments

Assessors

Marketing

Fee

Referral

After sales

AW referral

Installers

Install and manage

Contract

Producer Energy Companies

CS & AW ECO

Delivery Partner(s)

Finance vehicle

LA

Finance (Prudential borrowing or reserves)

Benefits

PV Meter/deemed

Green Deal PaymentsGreen Deal Payments

Green Deal + FIT payments

Assessors

Marketing

Fee

Referral

After sales

AW referral

To be agreed

Low Carbon Project Portfolio

• Deal for Cities

• Commissioned SKM Enviros Verco

– Evaluate and put in place the steps necessary to identify those projects with strongest investment potential and identify the steps and mechanisms needed to get them investment ready

• Provisionally circa 70 low carbon projects

• Mix of retrofit, energy and other projects

Market activationMarket

activationProcuremen

t SolutionProcuremen

t SolutionBankable Projects

Bankable Projects LegacyLegacy

MobilisationMobilisation

Prioritisation

Prioritisation

Phase I Phase II

Procurement

EvaluationTools

GovernanceMarketing

EvaluationTools

GovernanceMarketing

Design Philosophy & Process Overview

Discussion Points –So, what happens next?• The financial risks and opportunities of climate change for GM/cities • Looking forward to identifying specific opportunities for GM to fund• Resilience projects and support skills/products/services export prospects.

A view of the possible solution(s).

Where is the value in those solutions? How can that value be capitalised?How do we ensure climate-proofing of 'mainstream' investments (e.g.

Evergreen,Deal for Cities settlement etc) to de-risk returns in a changing climate?What tools are available?

Adapting the city

Download - Adapting the city Investment & Finance. Overview Charlie Parker, Lead Chief Executive AGMA’s Environment Commission Absorb information Prepare for the

Top Related