Sharing TAF’s financing techniques with C40 Cities

C40 Cic40 citiesties – Toronto being one – are big cities from around the world that are actively reducing climate pollution and risks.  C40 offers these motivated cities a forum for collaboration, knowledge-sharing, and problem-solving.  I was recently invited to present to the C40 Finance & Economic Development Network to let them know about the finance innovation work being undertaken at TAF. This was one in a series of webinars focused on municipal funds including funds in Amsterdam, Melbourne, London, and Chicago.  Toronto Atmospheric Fund, established in 1991, is probably the oldest municipal climate funds; we were endowed before climate change made daily headlines. And, unlike most others, TAF undertakes practical programs, advances policies, and develops innovative financing tools as well as making investments. Check out what they’re saying about TAF’s approaches to financing low-carbon solutions on the recent C40 City Solutions blog featured on the National Geographic website.

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TAF invests in … The Big Move

eglinton crosstownAs an acknowledged leader in the field of impact investing, it comes as no surprise to us that Ontario’s first $500 million green bond, offered in September, was almost five times over-subscribed. The capital raised will be dedicated to infrastructure projects like the Eglinton Crosstown LRT, now under construction. Funding of large transit projects in the region is a priority for TAF, because getting people out of personal vehicles and onto public transit addresses a major local source of greenhouse gas and air pollution.

TAF has always spent the interest earned from its endowment to advance low-carbon and air quality solutions.  We are also committed to deploying the endowment capital in a manner that supports our mandate and I’m proud to say that almost 80% of TAF’s $25M endowment is currently invested for impact.  That includes our equities portfolio and direct investments in local projects like high-rise residential energy efficiency retrofits. It now also includes $271,000 of Ontario’s green bond, purchased through our fixed income manager.

We have seen strong interest in opportunities for low-carbon investments for several years, and Ontario’s bond issue along with billions of other green bond offerings confirms that investors around the world really DO want their money to be deployed in an environmentally-responsible manner. And with current market conditions wreaking havoc with conventional energy values, the financial picture only becomes stronger for investments low-carbon alternatives.

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Resilient buildings – not just about adaptation

By Jonathan Morier, TAF’s Indoor Environmental Quality Researcher

district energyEarlier this month I attended the Green Building Festival put on by Sustainable Buildings Canada. It was a day packed with interesting presentations and discussions on the topic of urban resilience. While the day started with a reminder from Ontario Environment Commissioner Gordon Miller  of the “doom and gloom” that awaits us if we don’t act soon on climate change, few of the subsequent presentations provided a focus on greenhouse gas reduction, or the fact that there is a lot of crossover between greenhouse gas reduction and resilience.

For example, Robert Thornton, President & CEO of the International District Energy Association gave a passionate presentation about district energy and how it can increase energy efficiency and resilience, noting that Princeton University was minimally affected by Hurricane Sandy while millions of people around the university lost power for days. The university campus was able to maintain power thanks to its microgrid and cogeneration plant, and even became a hub for police, firefighters, and other emergency workers of the area to regroup, warm up, and recharge their equipment.

District energy networks such as Princeton’s not only increase resilience in times of crisis, but also reduce emissions due to their high energy efficiency capabilities. Robert explained that in a typical fossil fuelled power plant, two-thirds of the energy is wasted due to heat loss (see diagram, above). On the other hand, district energy power plants generally achieve 70-80% burning efficiency by capturing waste heat to warm streets and buildings. One Copenhagen district power plant was even able to achieve close to 90% burning efficiency.

In the afternoon session, Paul Dowsett, Principal Architect, SUSTAINABLE.TO, presented his award-winning designs for resilient houses that can withstand severe hurricanes such as Katrina or Sandy. The designs are elevated to adjust for floodplain but they also embrace passive design principles. They are highly insulated, oriented for optimal sunlight exposure, and have passive shading elements to reduce heat during summer months, making them a great choice both for resilience and energy efficiency.

At TAF, we work on making buildings more energy efficient and you can learn more about our program by visiting out TowerWise website.  We are also very interested in your ideas about integrating strategies to reducing greenhouse gas emissions and build up our resilience to climate change.

 

 

 

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Working together – harder than it looks …

John Kania speaks to delegates at the Collective Impact Summit

John Kania speaks to delegates at the Collective Impact Summit

Recently I joined in the Collective Impact Summit hosted in Toronto by  Tamarack. Collective impact is all about different types of groups working together to advance a common goal, and while the practice is really nothing new, the work of Tamarack acknowledges that this type of work is:

a)  essential to addressing the complex problems we face in the world today and

b) very difficult to do well.

The sold-out Summit had 300 delegates from all across Canada, who put in a full five days in workshops and training sessions. I joined as a panellist with people from Calgary, Saint John, and Halton Region, to talk about how we can support our collaboration initiatives as they inevitably morph and change over time.

One observation I had about the conference delegates is that most are working to address poverty and education issues in their communities. The collaboration I was showcasing – Move the GTHA,  an initiative among a group of civic organizations, including TAF, supporting regional transit improvements – was one of the rare collaborations focused on an issue of sustainability. That being said, even Move the GTHA – with all its air pollution and greenhouse gas reduction benefits, is really driven by a much broader set of public concerns, including economic, social, and public health issues.

After the Summit, Evergreen CityWorks’ Robert Plitt and I shared some lessons we have been learning about working in collaboration – 16 insights that are now available for review on Tamarack’s website.

What is at the core of these insights is that there is both power and peril in choosing to align with other organizations – across sectors and areas of interest – to advance a cause or solve a problem. It shouldn’t be entered into lightly, and it takes some professional skill and attention – so thank goodness we have groups like Tamarack doing such a good job on the training front.

Done well, I believe collective impact work is an essential ingredient for addressing many of the complex changes that will continue to confront us, including the challenges of climate change.

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TAF’s flexible financing helps build a company and earns a bonus

Ontario’s Green Energy Act (2009) and Feed-In-Tariff (FIT) got many people excited about installing solar panels on their homes and earning revenues from the electricity generated. But reality set in and many homeowners were daunted by the complicated and time-consuming application process, securing financing, and finding reliable installers. Enter Pure Energies, a new Toronto-based company with a 21st century approach to accelerating uptake of zero-carbon solar generation while minimizing the fuss and muss for their customers.

TAF made a $645,000 investment structured as a seed revolving loan fund.  As the first funder of both construction and long-term financing, TAF used the revenue from the micro-FIT contracts as security. Pure was able to draw on the loan to install 34 rooftop systems, which allowed their revenues, reputation and capacity to grow.  TAF’s 2011 funding model was leveraged to build the business which has now installed over 1,000 residential solar systems in Ontario and now operates throughout the USA.

TAF’s Investment Committee and staff worked closely with Pure to work out the deal which yields a market rate of return that funds TAF’s community climate action work. In addition to interest on the original loan, TAF is now exercising our purchase option on warrants provided to early-stage investors triggered by the purchase of Pure Energies by NRG, a US Fortune 250 company and a leading energy service provider.

This win-win deal underscores how important innovative and flexible financing is to those working hard to create a new green economy, and demonstrates that impact investments can bring significant environmental benefits without sacrificing financial return on investment.

TAF congratulates Pure Energies, and in particular Bernie Li and Zbigniew Barwicz, for their collegiality and dedicated efforts to advance low-carbon solutions.

Contact me to find out more about TAF’s impact investing work or if your company is looking for a way to get a local emissions reduction product or service off the ground.

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