C40 Voices: James Alexander, Head of Finance & Economic Development Initiative, on Toronto’s Innovative Investment in Urban Climate Solutions

Sharing good practice in city green funds is one areas of focus for C40’s Sustainable Infrastructure Finance Network.  Following webinars featuring the cities of Amsterdam, London and New York, the Network recently hosted Julia Langer, Chief Executive of Toronto Atmospheric Fund (TAF). Julia presented the Fund’s fascinating work of using a small endowment to create, demonstrate and de-risk new financial products and financing strategies in order to mobilize private capital for sustainable infrastructure, and help Toronto achieve its ambitious emission reduction targets.

TAF has come a long way since the sale of surplus city-owned property in the late 1980’s, of which $23m was placed into a fund with the mission of advancing local solutions to climate change and air pollution. The revolving nature of the Fund has enabled investment of over $60m in over 30 projects since inception; $60m in energy savings for the city has been achieved with just three of those investments.

In recent years, the Fund has deepened its commitment to and leadership in impact investing. TAF’s theory of change (see diagram) developed by Julia and her team involves: identifying the sources of GHG emissions in Toronto (mostly in buildings); focusing on under-developed opportunities and markets where TAF’s involvement can be viable and strategic; and advancing solutions that employ a variety of tools including policy, technology, finance and information. In addition to developing new, innovative financing approaches to unlock low carbon opportunities, TAF uses its own funds to demonstrate their value proposition to potential investors. As a public agency, TAF shares all its knowledge and lessons-learned.

Julia profiled several of TAF’s successful innovative financing strategies during the webinar.  Their Green Condo Loan© has helped major developers build much more efficient high-rises and ultimately led to the City of Toronto entrenching much stronger building codes in their Toronto Green Standard.  TAF financed a start-up solar PV installation firm through a mini-revolving loan and innovative use of the Feed-In Tariff contracts as security.  Most recently TAF has developed a specialized new, non-debt financing product for efficiency retrofits – their Energy Savings Performance Agreement (ESPA) won the Financial Times/International Finance Corp Special Commendation for Leadership in Transformative Finance this year – and has incubated and invested in a boutique bank to move this to market scale.

TAF is dedicated to innovation & development, testing, demonstrating & de-risking, and scaling-up financial tools and products that can mobilise capital for low-carbon solutions. Here at C40, we look forward to continuing to share their great work with other C40 cities, through the Sustainable Infrastructure Finance Network.

For more information on TAF, visit www.toronto.ca/taf and subscribe to TAF’s 80x50 Blog at http://www.toatmosphericfund.ca

For more information on the C40 Sustainable Infrastructure Finance Network, contact James Alexander on jalexander@c40.org

Officials in C40 cities can access a recording of the TAF webinar on the C40 Exchange at https://www.c40exchange.org/display/COLL/SIF+Webinar%3A+The+Toronto+Atmospheric+Fund