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London waste fund ahead on green targets

An investment fund putting public money into waste projects in London has met one of its key environmental targets with just a third of the cash spent.

City Hall

The £70m Foresight Environmental Fund (FEF), built around £35m of the mayor’s London Green Fund (LGF), revealed it has met its carbon reduction targets with just two projects funded and one committed.

Andrew Page, partner at Foresight Group which manages the investments, told the London Assembly the fund had also met around 50% of its landfill diversion target.

Members of the Assembly’s environment committee were quizzing officials and fund managers about how they are spending the LGF. The fund, which includes £50m of European public money, £32m from the Greater London Authority, and £18m from the Defra-funded London Waste and Recycling Board (LWaRB), aims to back around a dozen new recycling and advanced EfW facilities for the capital.

The FEF has already invested £9m in London’s first Anaerobic Digestion (AD) plant being built by TEG in Dagenham, and in Closed Loop plastic recycling.

Page said the investments made were consistent with the Mayor’s waste strategy. He said around one third of funds had been committed in line with expectations and that there was a good pipeline and he expected that progress to continue.

Wayne Hubbard

Wayne Hubbard, chief operating officer at LWaRB said the advantage for the waste sector of this type of equity fund was that it enabled investment in the smaller, high-tech facilities with higher environmental returns than the long-term PFI municipal waste facilities that banks would typically invest in.

“We’re seeing MBT and incineration investments in the municipal market. But the kinds of things ourselves and Foresight are investing in are gasification, anaerobic digestion, plastics reprocessing facilities.”

“So, we have a different perception of the market risks based upon our expertise and our risk appetite.”

The programme runs until the end of 2015 when the funds must all have been invested. GLA official Kenroy Quellenec-Reid explained that from 2015 to 2021 the fund would hope see returns on its investments, be able to sell its stakes and possibly reinvest the money.  

GLA official Alex Conway told Assembly Members the London Green Fund was a “pioneering” scheme. “We’ve reached the point where we can take some pride”, he added.

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