MD3133 Enabling and Accelerating London’s Net Zero Carbon Programme

Net zero carbon and green finance
1.1.    The Mayor has declared a climate emergency and set a target for London to be net zero carbon by 2030. The approximate infrastructure cost to 2030 is £75bn. To support this ambition and his wider environmental goals, the Mayor will make finance available, through a Green Finance Fund (GFF), to accelerate investment into green projects for the GLA Group and strategic partners across London. This forms part of his Green Finance Facility (which includes the current Mayor’s Energy Efficiency Fund). 
1.2.    The recent MD3128 Treasury Management Strategy Statement and GLA investment subsidiary matters for 2023-24 includes a draft London Green Financing Framework and approved the establishment of a Credit Committee for the Green Finance Fund, to which authority has been delegated to approve financing and subsidy for green projects. 
1.3.    To kickstart the investment needed for net zero carbon projects in London, the Mayor has committed to establishing a £500m Green Finance Fund, supported by £75m of GLA funding from the Climate Emergency Funding Reserve. For this Green Finance Fund to be successful it will need a strong pipeline of decarbonisation projects that have been sufficiently developed into being ‘investment ready’.
Existing Low Carbon Accelerators and Extension
1.4.    The Mayor’s current Low Carbon Accelerators (‘the Accelerators’) are the GLA’s main technical support mechanism to facilitate the development of net zero carbon projects in London into investable propositions. The Accelerators stimulate increasing rates of building retrofit, district energy networks and clean energy supply, as follows: 
•    The Retrofit Accelerator-Workplaces (RA-W, most recently approved through MD2494) has helped to retrofit over 700 buildings since 2016 through leveraging over £180m in investment, saving public sector bodies over 32,000 tCO2 per year and millions of pounds on energy bills. It does this by providing support in the form of technical assistance directly to organisations to help these clients develop projects and enables the production of feasibility studies and a streamlined route to delivery of capital works funded by the clients.
•    The Local Energy Accelerator (LEA, most recently approved through MD2521) has funded projects which are currently forecast to deliver over 100,000 tCO2 savings per annum and over 90MW renewable energy capacity at full build out by 2030. LEA has helped to leverage in about £26m in capital grant investment for decarbonisation projects, including heat networks, in London to date. It primarily does this by providing grant funding to help recipients undertake detailed feasibility work for complex, higher risk (in terms of suitability for investment) and often large-scale renewable projects or communal heat systems.
•    The Retrofit Accelerator – Homes (RA-H, most recently approved through MD3003) is helping to build a technically and financially viable approach to whole house retrofit in the social housing sector. Through work with the supply chain and housing providers it has a pipeline of homes going into contract, with the first small phase of installs currently underway. It does this by providing support directly to organisations (including through a collaboration hub), helping them to develop and deliver programmes for which they provide the capital funding.
1.5.    The Accelerators provide the technical assistance (resources and specialist support) needed to fill capacity and/or capability gaps within public sector bodies including local authorities, GLA functional bodies, as well as members of the London Anchor Institutions Network (many of London’s most powerful organisations who are working collaboratively to tackle inequalities, boost local economies and move towards net zero), social housing and community/cultural institutions. This support enables projects to move through the project life cycle from the ‘project identification’ stage to the ‘Ready for Finance and Implementation’ stage, at which point investment may come from grant funding and/or public and private sector finance. This development activity and project progression is crucial for ensuring that a pipeline of projects is in place, suitable for the GLA’s Green Finance Fund or alternative sources of funding and finance. The Accelerators can also help to stimulate action by providing proof of concept and developing the experience and knowledge within stakeholder organisations needed to develop projects without future accelerator support. This is co-ordinated and managed by staff in the GLA’s Environment and Energy Unit. 
1.6.    The delivery of the current RA-H programme will finish in June 2023 and activity on LEA and RA-W will finish in July 2023 as their respective ERDF funding expires. Grant funding for LEA is already fully allocated from April 2023, and there is a waiting list of projects that require support.
1.7.    Approval for additional revenue expenditure is requested to enable RA-W, RA-H and LEA to continue to provide ongoing technical assistance/project development support on the same basis as before, until a new zero carbon project development facility is established and operational between late 2023 and early 2024. 
1.8.    The GLA therefore proposes to extend the current accelerator support until March 2024 to ensure that there is ongoing project development support available in London, ensuring projects continue to progress through to the ‘Ready for Finance and Implementation’ stage. In order to achieve this, revenue funding of up to £5m will be allocated from the GLA’s Environment and Energy programme budget to cover GLA staffing costs, to extend the Programme Delivery Units (PDUs) for RA-W, RA-H and LEA (exercising the GLA’s options to extend the current PDU contracts), and to provide grant funding to enable organisations to secure the specialist support needed to develop their projects through to where they are at the ‘Ready for Finance and Implementation’ stage. 
1.9.    For the LEA extension the GLA seeks approval for expenditure of up to £3.0m starting from June 2023 to end March 2024 which is estimated to comprise:
•    £185,000 for GLA staff costs and other expenditure (including maintenance of the London heat map and marketing costs e.g. events).
•    £635,000 for PDU services (including PDU marketing staff), exercising the GLA’s option to extend the current PDU contract (GLA 80814 / Task 17 – LEA Programme Delivery Unit Services) which was procured competitively and currently ends on 31 July 2023 (with the option to extend).
•    £2,180,000 for grant funding directly to beneficiaries to support project development (for about 17 projects). Unlike LEA currently, recipients will have to be from the public sector or a housing association, and the GLA will make direct grants to these beneficiaries for them to procure consultancy support to continue developing their projects through to ‘Ready for Finance and Implementation’. These changes will simplify the programme administration for both recipients and GLA. 
1.10.    For the RA-W extension the GLA seeks approval for an estimated:
•    Expenditure of up to £0.7m for exercising the GLA’s option to extend the GLA’s current RA-W Programme Delivery Unit (PDU) contract GLA 81353 from 30th September 2023 until up to 31st March 2024 to provide continuity of delivery during the procurement of the zero carbon project development facility. RA-W PDU services were originally procured in 2020 under GLA 81353 with an option in the contract to extend from the original end date of September 2022 by an additional 18 months (with an interim extension agreed from September 2022 to September 2023)
•    Expenditure of up to £100,000 for GLA staff costs to enable the management and delivery of the extension
•    Expenditure of up to £100,000 for grant funding directly to public sector beneficiaries to support feasibility studies.
1.11.    An extension to the support offered by RA-H will enable the continued development of the pipeline of domestic retrofits, enabling the supply chain to continue to build up technically viable solutions. This would be delivered through a Programme Delivery Unit (PDU), which would be separately procured in accordance with the relevant procurement law requirements. This element therefore seeks approval for an estimated:
•    £550,000 for PDU services from Summer 2023 to 31st March 2024
•    £50,000 for delivery support (including marketing, Legal and final ERDF evaluation costs).
New zero carbon project development facility 
1.12.    The GLA has begun work on scoping a new integrated zero carbon project development facility which will be more ambitious and broader in scope and scale than its predecessors. The new facility will be the GLA’s main programme designed to create the pipeline of net zero projects needed to meet the Mayor’s net zero target by 2030. The key groups in London the new programme will support are:
•    local authorities
•    functional bodies (GLA Group)
•    wider public sector including anchor institutions (e.g. NHS, education)
•    social housing providers
•    community groups and cultural institutions.
1.13.    It will support energy efficiency retrofit in homes and non-domestic buildings and the decarbonisation of our energy system, through projects, such as district heating networks, energy storage and renewable energy capacity, and it will draw upon experience from the existing Accelerators to promote and mainstream the innovation needed to achieve net zero. Consultation on and development of the new scheme is already underway and includes specialist procurement advice to ensure that the zero carbon project development facility will be able to flex to meet the growing demand for project development support. 
1.14.    Funding for the zero carbon project development facility in 2023-24 will be used for staffing and development costs and potentially expenditure on procured support services. Funding may also be used to provide grants to eligible organisations. The GLA’s target is for the zero carbon project development facility to be operational by the end of 2023, however in order to allow some flexibility within this timetable, the extensions to the current Low Carbon Accelerators will run until March 2024. We expect zero carbon project development support to still be necessary for organisations in London beyond 2025-26. Subject to budget availability and further approvals, any future GLA funded support would aim to evolve into a sustainable support mechanism with funding from external partners.
1.15.    The current accelerators use supplier frameworks that have been procured by the GLA. As part of the delivery of the zero carbon project development facility the GLA may need to procure new or replacement frameworks. For example, the current RE:FIT procurement framework expires in April 2024. Works procured through this framework in London have helped retrofit over 700 buildings and save over 32,000 tCO2 since 2016.
1.16.    It is proposed that this mayoral decision delegates authority to the Executive Director of Good Growth to approve detailed expenditure plans within the requested budget including detailed design and implementation of the zero carbon project development facility, along with any additional procurements required (including potential new framework of service providers, external programme evaluation etc), via a Director’s Decision.
 

2.1.    Objectives and outcomes will include:
•    continued growth and development of the current project pipeline
•    projects developed to ‘Ready for Finance and Implementation’ stage to enable them to seek funding and/or finance and move into delivery and realise substantial carbon savings and heat decarbonisation by 2030
•    the safeguarding and creation of green jobs.
2.2.    The extension in respect of Local Energy Accelerator will allow Local Energy projects in the current pipeline to be supported to a stage where they are closer to being funded and then constructed.  This should add to the installed energy capacity and GHG savings already expected from LEA (see paragraph 1.4 above). Key performance indicators will include:
•    annual energy savings in kWh/MWh 
•    annual GHG emissions reduced/avoided in tonnes of CO2 e/annum
•    installed renewable energy capacity (kW/MW).
2.3.    The extension in respect of Retrofit Accelerator-Workplaces from September 2023 to March 2024 will allow an additional tranche of projects to be developed to be investment-ready for an Autumn phase of the Government’s Public Sector Decarbonisation Scheme (PSDS) or other sources of finance such as the Green Finance Fund. Estimated carbon savings will be dependent on the type and scale of projects identified during this period, however, based on programme performance to date it is anticipated that a portfolio of projects could be supported able to save at least 3,500 tCO2. This would be in addition to meeting the ERDF target of 34,046 tCO2 by July 2023. 
2.4.    The extension in respect of Retrofit Accelerator-Homes will develop KPIs as part of procurement of services for the PDU. These will include estimated savings and/or decarbonisation measures as well as tools for key stakeholders in the domestic retrofit sector to further support delivery.
2.5.    Quantified KPIs for the zero carbon project development facility, including around funding secured for investable projects, will be developed as required as part of detailed implementation. Organisations supported will include local authorities, GLA functional bodies, Anchor Institutions such as NHS London, social housing and community/cultural institutions, and potentially commercial organisations. The types of projects supported will include energy efficiency, heating system decarbonisation and local and clean energy sources, for a range of buildings including schools, hospitals, offices and housing.
 

3.1.    Under section 149 of the Equality Act 2010, as a public authority, the GLA is subject to the public sector equality duty and must have due regard to the need to: 
•    eliminate unlawful discrimination, harassment and victimisation 
•    advance equality of opportunity between people who share a relevant protected characteristic and those who do not 
•    foster good relations between people who share a relevant protected characteristic and those who do not.  
3.2.    Protected characteristics under section 4 of the Equality Act are age, disability, gender reassignment, pregnancy and maternity, race, religion or belief, sex, sex orientation, and marriage or civil partnership status (all except the last being “relevant” protected characteristics).
3.3.    The GLA will take appropriate steps to ensure that there are no potential negative impacts for those with protected characteristics from this programme. Those with protected characteristics will gain from the positive benefits of the current accelerators as well as the successor programme in equal measure should their organisations be selected for support, and there will be equality of access to participate in the delivery and benefit from the programme, without discrimination. The scheme will benefit Londoners by reducing carbon emissions, particularly from the public sector, and potentially increasing resilience of some of the groups most vulnerable to the impacts of climate change.
3.4.    The GLA will undertake an Equalities Impact Assessment as part of the development of the new support programme. Initial consideration based on experience of the current Low Carbon Accelerators suggests the programme will not have a significantly bigger impact on some groups than others. It is not anticipated that certain groups face barriers or unequal outcomes relevant to this programme since it will not contract with individuals directly. 
3.5.    Appointed contractors will have a duty to ensure they comply with the GLA’s Equalities, Diversity and Inclusion Strategy and enables the GLA’s fulfilment of its duties under section 149 of the Equality Act 2010. The procurement process for contractors (and potentially service providers on a new framework) will include relevant EDI requirements and submission of policies. This will include an assessment of how they will target different ethnic groups and those with other protected characteristics as beneficiaries or as part of the supply chain. This process will be undertaken as part of the programme mobilisation phase and will include establishing the monitoring and reporting processes and metrics.
 

Key risks and issues
4.1.    Key risks and issues are outlined in the table below:

Links to mayoral strategies and priorities
4.2.    The programme directly supports the priorities of the London Partnership Board, and specifically its Green New Deal mission, which aims to tackle the climate and ecological emergencies and improve air quality, while doubling the size of London’s green economy.
4.3.    The development of a strong pipeline of projects for the Mayor’s London Green Finance Facility, and potentially for other funding and financing mechanisms, will play an important role in setting London on track to meet his ambition to become net zero carbon by 2030. As such, the programme will contribute towards a broad range of objectives, policy and proposals in the London Environment Strategy and the Mayor’s Pathways to Net Zero by 2030, as set out below:
•    Objective 6.1 – reduce emissions of London’s homes and workplaces while protecting the most vulnerable by tackling fuel poverty
•    Proposal 6.1.1a – contribute to helping Londoners improve the energy-efficiency of their homes, where appropriate, by providing technical assistance, support and funding  
•    Proposal 6.1.1b – pilot innovative methods to implement the stronger energy-efficiency retrofitting needed 
•    Policy 6.1.3 – improve the energy efficiency of London’s workplaces and support the transition to low carbon heating and power
•    Proposal 6.1.3.a – provide direct technical support and assistance to help reduce CO2 emissions and energy within the public sector, including leading by example in the GLA Group estate objective
•    Proposal 6.1.3.b – support the reduction of emissions and energy use within the commercial sector, including through improved building management, energy efficiency and reporting
•    Policy 6.2.1 – delivering more decentralised energy in London
•    Proposal 6.2.1b – increase the amount of solar generation in London including through community energy projects and on GLA Group buildings
•    Objective 10.1: enable the transition to a low-carbon circular economy, including:
o    Policy 10.1.1 – to build on London’s strengths and grow the low-carbon and environmental goods and services sector
o    Policy 10.1.2 – to build on London’s strengths and enable London’s businesses, academia and citizens to actively compete in and contribute to the low-carbon circular economy.
4.4.    The programme also assists the delivery of the Mayor’s Solar Action Plan to “…encourage public sector organisations and providers of social housing to retrofit solar energy technologies on buildings by promoting the use of technical assistance programmes….”
4.5.    In addition, relevant Economic Development Strategy policies are as follows:
•    Policy 4.3 – Infrastructure: London’s economy relies on a whole range of infrastructure, in addition to transport, to function effectively. This includes energy and water networks, sewerage and drainage systems, waste facilities and digital infrastructure. This programme will support: more localised and renewable energy; transition to a low-carbon circular economy; and protecting and enhancing London’s environment and green infrastructure.
•    Policy 5.5 – low-carbon and environmental goods and services: the Mayor wants London’s economy to continue to grow, but he also wants to shape the direction of that growth and what it delivers for London and Londoners. He wants growth that is more inclusive, with less inequality, as well as being lower in carbon emissions and more circular in nature to make London a greener, cleaner and more sustainable city.
Governance 
4.6.    The delivery of the extension to the current low carbon accelerators will be led by the GLA’s Environment and Energy Unit, with staff resource allocated to deliver this. The successor programme will also be procured and managed by the Environment and Energy Unit.  
4.7.    The contractors for the low carbon accelerators report on performance against KPIs on a weekly basis, as well as current and forecast activities for each work stream and programme-wide and project-specific risks and issues. The new zero carbon project development facility is expected to have a similar arrangement, with new governance in the form of a dedicated project board and overarching programme board, which will also include related projects within the Environment and Energy Unit. 
Impact assessments and consultations
4.8.    The current low carbon accelerator programmes undertake regular evaluations as a requirement of the match funding provided by ERDF. These evaluations have included interviews with stakeholders and the final summative assessments will take place by October 2023. Feedback from these evaluations and regular engagement with users of the low carbon accelerators has helped to shape their design and also inform the design of the zero carbon project development facility. 
4.9.    Consultations on the zero carbon project development facility are currently underway with potential users across the key groups identified in paragraph 1.12, with the facilitation of Bloomberg Associates. The main part of stakeholder engagement to inform design of the zero carbon project development facility will conclude in June. 
Conflicts of interest
4.10.    There are no conflicts of interest to note for any of the officers involved in the drafting or clearance of this decision form.  
 

5.1.    Approval is being sought for the following:
•    revenue expenditure of up to £5m in 2023-24 financial year to extend the existing accelerator provision to March 2024 and to design and procure a new zero carbon project development facility to be operational by March 2024
•    expenditure of up to £13.7m on delivery of a new zero carbon project development facility in the 2024-25 and 2025-26 financial years.
5.2.    This expenditure will be funded from the Environment and Energy Unit’s budget as approved within the Mayor’s budget for 2023-24 with funding for 2024-25 and 2025-26 included as an indicative plan. Funding for 2024-25 and 2025-26 will need to be reviewed and approved as part of the Mayor’s formal budget setting process in those years.  
5.3.    The budget for this planned expenditure has been identified across the below programme budgets within the Environment Unit. 

*Only part of these budgets will be used for the zero carbon project development facility programme.

5.4.    To mitigate any risk of the programme not being sufficiently resourced in future years to cover costs following the budget-setting process, any contractual agreements will include the usual break clauses that could potentially be exercised if required. 
5.5.    The phasing of the expenditure is planned as shown below:

5.6.    All relevant budget adjustments will be made. 

6.1    The foregoing sections of this report indicate that:
(a)     the decisions sought concern the exercise of the GLA’s general powers, falling within the GLA’s statutory powers to do such things considered to further or which are facilitative of, conducive or incidental to the promotion of the improvement of the environment in Greater London
(b)     in formulating the proposals in respect of which a decision is sought, officers have complied with the GLA’s related statutory duties to: 
•    pay due regard to the principle that there should be equality of opportunity for all people
•    consider how the proposals will promote the improvement of health of persons, health inequalities between persons and to contribute towards the achievement of sustainable development in the United Kingdom
•    consult with appropriate bodies.
6.2.    In taking any decisions sought, the Mayor must have due regard to the Public Sector Equality Duty - namely the need to eliminate discrimination, harassment, victimisation and any other conduct prohibited by the Equality Act 2010 and to advance equality of opportunity and foster good relations between persons who share a relevant protected characteristic (race, disability, gender, age, sexual orientation, religion) and persons who do not (section 149 of the Equality Act 2010). To this end, the Mayor should have particular regard to section 5 (above) of this report.
6.3.    The Mayor may delegate the exercise of the GLA’s functions to the Executive Director of Good Growth as proposed should he wish.    
6.4    If the Mayor makes the decisions sought, officers must ensure that:
(a)    the contracts that it is proposed be extended are extended fully in accordance with (and this is documented appropriately) the provisions concerning such extension         
(b)    any other services, supplies or works required are procured in liaison with TfL Procurement and in accordance with the GLA’s Contracts and Funding Code and contracts are put in place between and executed by the GLA and contractors before commencement of such services
(c)    the proposed award of grant funding is made fairly, transparently, in accordance with the GLA’s equalities and with the requirements of GLA’s Contracts and Funding Code and funding agreements and are put in place between and executed by the GLA and recipients before any commitment to fund is made
(d)     to the extent that the activity approved concerns the creation of new posts, all applicable GLA HR protocols and procedures are followed.  
6.5    In addition, to the extent that the proposals in respect of which decisions are sought involve the making of commitments which extend beyond the current Mayoral term, officers must ensure that the terms of all agreements entered into in respect of the expenditure do not have the effect of fettering the discretion of any successor administration, considering in particular the London elections taking place in May 2024. Accordingly, officers must ensure that all agreements which involve making such commitments include a GLA right to terminate at any point for convenience (at no cost to the GLA) and all such agreements are managed in such a manner, and any deliverables, milestones and/or output requirements are structured so as to mitigate risks of the GLA incurring abortive expenditure (which might be reasonably be taken to fetter, practically, the exercise of such discretion).