Institutions circle GLA's sustainable development business model

Paul Norman 15/07/2009 11:46

 

The Greater London Authority’s drive to cut carbon emissions across its real estate portfolio is sparking interest from financial institutions eyeing the creation of the UK’s first sustainable development investment vehicles.

 

Speaking at the BPF-sponsored Movers and Shakers breakfast – London’s Triple Challenge, Eco-City Retrofits - at the Dorchester this morning, Isabel Dedring, director of environment at the mayor’s office, said the key to unlocking energy efficient development remained the creation of a viable business model for private sector investors.

 

Dedring said the GLA’s Buildings Energy Efficiency Programme - which aims to use the public sector body’s estate to prove that improve energy efficiency leads to improved values – was already sparking interest from major finance houses.

 

One hundred GLA buildings have been committed to the BEEP model and a pilot has so far seen 42 buildings generate energy savings guarantees of 25% over an average six-year simple payback.

 

The pilot phase will result in annual savings of more than 6,000 tonnes of CO2 and more than £1m on energy bills.

 

Dedring said: “The problem now is that the business models for investors are fragmented.

 

"We have set out to tackle the problem on the ground and we are seeing great interest from leading finance houses.

 

"It is merely a question of time for an investment market to be created for sustainable development.”

 

Elsewhere Peter Head, director at Arup, said that the current focus was on creating places where the “entire portfolio of investments” could be delivered to create the model financing resource efficiency via the “recovery from savings created from improved energy performance”.

 

He said the key thinkers on the subject were focusing on places where there had been improvements in the existing infrastructure.

 

“We are looking at land around Crossrail stations and the Gateway, the fast services from Ebbsfleet and along the east London line. We will focus on retrofitting here first.”

 

Head said there was clear interest from pension funds and sovereign wealth funds but that the public sector needed to “get us to financial close”.

 

Quintain chief executive Adrian Wyatt said the planning system needed to be “torn to bits” because of its “lack of pioneering spirit”.

 

Steve Smith, global head of asset management at AXA REIM, said a major problem remained politicians “limiting the scope for environmental improvements”.

 

paul.norman@egi.co.uk