Almada Climate (R)Evolved Fund Capturing Savings and Contributing for the Financial Sustainability of the Climate Fund and Investment in Mitigation and Adaptation

Almada Climate (r)Evolved Fund Capturing savings and contributing for the financial sustainability of the climate fund and investment in mitigation and adaptation

Catarina Freitas Head of Department for Environment, Climate, Energy and Mobility City Council of Almada, Portugal

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Outline … … context for local climate action … Almada Less Carbon Climate Fund

… refurbishment of Almada Less Carbon Climate Fund, (r)Evolved

… way forward, combining financing mechanisms, citizen power and private investment

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 2 Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Lisbon

Almada Tagus River Located in Lisbon Metropolitan Area Area ~ 70 km2 Almada Medium size city

175 000 inhab. Atlantic Several climate Ocean hazardous and Covenant Mayor's Investment Forum vulnerabilitiesBrussels, Belgium | 21st February(...) 2018 Lisbon  Coastal erosion Tagus Estuary  Coastal areas vulnerable to sea level rise  Mediterranean ecosystems endangered  Soil erosion Almada  Watercourses and streams Atlantic Ocean partially artificialized  Soil sealing in high permeability Reach CovenantareasMayor's Investment Forum wet system Brussels, Belgium | 21st February 2018 Lisbon Tagus  Abusive Estuary occupation of agricultural areas  External dependency on energy and food supply  Lack of Almada connections: Water-Energy- Atlantic Food nexus Ocean  Social inequities Diversify economic basis and create new Agricultural map job opportunities Active areas

Covenant Mayor's Investment Forum Abandoned areas Brussels, Belgium | 21st February 2018 Lisbon  Urban Heat Tagus Estuary Island Effect

Almada

Atlantic Ocean

2081 - 2100 Duration Heat waves

Covenant Mayor's Investment Forum in Almada (nº of days) Brussels, Belgium | 21st February 2018  Urban Heat Island Effect days/yr days/yr 6 40

1986-2005 0 2081-2100 10 days/yr days/yr

CovenantDurationMayor's InvestmentHeat waves Forum in Almada (nº of days) Brussels, Belgium | 21st February 2018 CO2 eq

GWh

TWh

Almada Portugal World

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 CO eq 2 2016 ~135.000 tep

TransportTransports 28%

Residential Residential 23% c Services ServicesComércio/Serviços 21% Industry 25% Other sectors – 4%

Almada

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 32%

22%

6% 20%

20% 420.000 tCO2

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Mitigation and Adapation Almada’s Strategy for Climate Change

CovenantConferênciaMayor's “RoteiroInvestment Local para Forum as Alterações Climáticas: Mobilizar, Planear e Agir” Brussels,Almada, PortugalBelgium | 28| 21- 29st FebruaryMaio 2009 2018 Mitigation and Adapation Almada’s Strategy for Climate Change

Almada Less Carbon Climate Fund − Instrument created in 2009 to support municipal investment in EE and RES to implement SEAP’s measures − Objectives:  accelerate public investments;  generate co-befenefits between different investments, efficient investments;  reinforce the involvement on all the municipal staff on the low carbon agenda and get them on board;  driving Almada towards a low carbon city.

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 … Financial Mechanisms

Almada Less Carbon Climate Fund − Supported by a budget line which internalizes the

compensation of the previous’ year municipal CO2 emissions

− Value CO2/ton adjusted annually, based on the market evolution but also the price defined as optimum for carbon reduction technologies deployment − External support by Local Energy Management Agency, AGENEAL (technical screening verification the pool of projects and measures and develops a set of selection criteria that must be met) − Cross sectoral/department alignment with RES and RUE investment… Motivation, motivation, motivation!

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 … Financial Mechanisms

Almada Less Carbon Climate Fund How does it work?

Year N - 1 Year N + 1

City Council CO2eq Almada Less Activities Emissions Carbon Fund Project Pool

Municipal Fleet A External Buildings and CO eq (ton) Budget for evaluation of Equipments 2 RES and RUE CO2 emission B reductions Public Lighting C

CO2 cost per ton …

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Av. 23 de Julho

100

0:40 1:30 4:00 4:50 5:40 2:20 3:10 6:30 7:20

18:00 20:30 21:20 18:50 19:40 22:10 23:00 23:50

Proposta

Antes das Intervenções RELÓGIO

RELÓGIO Escurecer

Actual Claro Dia

Noite Fechada Noite NASCIMENTO

Raiar da Aurora da Raiar

LIGA DESLIGA

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Av. 23 de Julho

100

0:40 1:30 4:00 4:50 5:40 2:20 3:10 6:30 7:20

18:00 20:30 21:20 18:50 19:40 22:10 23:00 23:50

Proposta

Antes das Intervenções RELÓGIO

RELÓGIO Escurecer

Actual Claro Dia

Noite Fechada Noite NASCIMENTO

Raiar da Aurora da Raiar

LIGA DESLIGA

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Municipal sports building with solar heating

Covenant Mayor's Investment Forum  - 472 MWh  - 100t CO2  - 35.000,00€/year Brussels, Belgium | 21st February 2018 Public Lighting Telemanagement Systems + 100% LED Traffic Lights

Covenant Mayor's Investment Forum  - 575 MWh  - 200t CO2  - 60.000,00€/year Brussels, Belgium | 21st February 2018 Social Housing: Energy Eficiency + Hybrid solar system

 - 30 MWh  - 1t CO2 ++ comfort, life quality, inclusion, Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 empowerment Outline … … context for local climate action … Almada Less Carbon Climate Fund

… refurbishment of Almada Less Carbon Climate Fund, (r)Evolved

… way forward, combining financing mechanisms, citizen power and private investment

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 22 … (r)Evolved

Challenge ! Refurbish the Almada Less Carbon Climate Fund to a revolving fund

Why ? Who uses the energy, does not pay for the energy No analytical accounting and concentration on financial office

Idea ! Hybrid solution, using existing mechanism but mimicking inflow to fund of energy savings and outflow to “clients”

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 … (r)Evolved

Almada Less Carbon “Revolving fund”

− Benefits of energy bill savings go to the fund and to the beneficiary department − Applying concepts/principles of energy performance contracts, withouth the need for external entities (ESCO’s) − Agreement (“contract”) between beneficiary departments and manager of the fund − Keep initial structure to ensure continuity of existing mechanism and financial flow

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Beneficiary Dep. 1 Almada Less Carbon Fund Beneficiary Dep. 2 (r)Evolved Fund Manager (Energy Dep.) Beneficiary + ↓ CO2 Dep. 3 Financial Dep., Energy Agency ↓ kWh Beneficiary (tech support) Dep. …. Evaluating and prioritizing measures ↓ € (Cost_Benefit Analysis) DECAM IDEA/PROJECT IDEA/PROJECT APPROVED! Financial Dep Estudo Custo – Benefício

Others… € Financing Agreement between Energy Dep. (Fund Manager), Financial Dep. and Beneficiary Dep. € … Measure Description … Savings or income foressen (indicators CO2, Anual Savings kWh and € / year) Shared between the fund and the Implementing … Investment Cost beneficiary department measure … Payback … Energy Savings Index … Saving Reversion Rate to Fund and Beneficiary Department … Defining operational an maintenace procedures Covenant Mayor's Investment Forum (if applicable) Brussels, Belgium | 21st February 2018 … Non Compliance Procedure … (r)Evolved

Almada Less Carbon “Revolving fund” Governance Framework

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Almada Less Carbon “Revolving fund” Internal Procedure − Step 0: Measure/project idea from/for beneficiary department, contacts Fund Manager and define preliminary description of action − Step 1: Measure definition with energy bill analysis and/or audit to

evaluate cost-benefit of the action: CO2, kWh, € (Energy Dep. and AGENEAL)  Checking total of partial funding of the measure and identifying budget line from beneficiary department where savings will be allocated (Financial Dep.) − Step 2: Agreement signature (Energy Dep. - Beneficiary Dep. - Financial Dep.)  Payback time, Energy Savings Index, Operational and Management Requirements, Non-compliance procedure − Step 3: Fund Manager makes investment Covenant Mayor's Investment Forum Brussels,− Step Belgium 4| 21: stMonitoringFebruary 2018 and application of benefits in budget lines for forthcoming years (Energy Dep., Financial Dep., AGENEAL) … (r)Evolved

Almada Less Carbon “Revolving fund” Ageement “contract” contents − Measure definition: general description

− Energy saving or income foressen (PT): indicators CO2, kWh and € / year − Investment Cost (I): including information on total/ partial funding (€) − Payback time (PRS): [PRS = I/PT] (year) − Energy Savings Index: [FEE = lifetime (v.u.)/PRS] (≥1) No projects with FEE <1 shall be included in the fund. Exceptions to be evaluated for pilot, demonstration, opportunities − Savings reversion rate for the fund: [TRF = 1/FEE] The smaller the FEE, the bigger the reversion rate for the fund with a maximum of 95% (priority is the fund reimbursement – minimum share to the fund is 50% for high return projects). Covenant Mayor's Investment Forum Brussels,− Savings Belgium | 21streversionFebruary 2018 rate for the Beneficiary: [TRB = 1 - TRF] − Non-compliance procedure … (r)Evolved

Almada Less Carbon “Revolving fund” Definition of financial flows in the annual budget With the information on the savings (to be calculated from Sptember year n) budgets (from year n+1), will have the following movements  Financial department: - PT (current spending) PT overal savings/income in €

 Beneficiary Dep.: + PB (in budget line to be agreed with preference for investment) In which PB is the savings that goes to the beneficiary and equals PT x TRB  Environment/Energy Department (Budget Line – Climate Fund): + PF Covenant Mayor's Investment Forum Brussels, BelgiumIn which| PF21st Februaryis the savings 2018 that goes to the fund and equals PT x TRF … (r)Evolved

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 31 … (r)Evolved Pilot measures Example. Makes: savings visible . Ensures available financing for EE and RES . Prioritizes measures with the best cost-benefit performance . Ensures operational and monitoring procedures of the measures implemented . Promotes the interest in EE, usually outside the “core business” of some departments

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 32 … (r)Evolved

Almada Less Carbon “Revolving fund” Adaptation on bord! − Long term financial benefits − More difficult to “follow” this procedure − Testing in “pure” adaptation projects and win-win projects (mitigation and adaptation)

Mitigation + Adaptation Projects

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Almada Less Carbon “Revolving fund” Adaptation on bord! Develop a multi-functional and integrated approach, to adapt to climate multi-risks Use flexible and low cost natured based solutions (blue and green infrastructure) 1 single Multi-Adapt addresses multi-climate hazards and vulnerabilties 1 single Multi-adapt has a high transformative potential and multi-benefits

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Almada Less Carbon “Revolving fund” MultiAdapt 4 Different sites (soil erosion; GI+BI bottlenecks; streams partially artificialized; abandoned agriculture areas; Heat Island Effect;…), Total area = 100.000 m2 Multi-adaPT approach = ecological restoration of streams + Retention basins + Vegetable gardens + leisure areas Focus Area: Adaptation action, with secondary focus on mitigation

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Urban Vegetable Gardens Network

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 4 low budget interventions ► 4 different sites

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Almada Less Carbon “Revolving fund” MultiAdapt Results  Area = 100.000 m2 ► 75.000 m2 new productive land 4 streams ecological restoration 3 retention basins (10.000 m3 storm water retention capacity) New recreational and leisure areas 360 families as new local producers 300 t / year of fresh vegetables produced

Less 400 t CO2 eq / year

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Site 1

Fruit orchard Fruit orchard Meadow Riparian vegetation Vegetable allotments

Covenant Mayor'sHydraulicInvestment surface Forum Picnic Park - Leisure area Stream Brussels, Belgium | 21st February 2018 discharger Stream Site 1

Water Retention Level 2 Level 3 Level 4

Flooding area

Volume Water 75,00 m3 1.152,55 m3 3.460,55 m3 capacity Bacia de retenção Bacia de retenção Área inundável Nível 1 Nível 2 Nível 3 Nível 4

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Retention basin Retention basin Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Almada Less Carbon “Revolving fund” MultiAdapt Finance Finance: 440.000€ (National Fund 85.000€; Climate Fund; …) Anticipated annual revenue during operation: 75.000,00€, urban farmers will pay a annual fee (1.5 €/m2 allotments); Annual cost: 35.000,00 € in water and general maintenance; Payback time: ~ 5 to 6 years. Implementation phase: site 1 implemented; site 2 contract works; sites 3 and 4 final feasibility studies;

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Outline … … context for local climate action … Almada Less Carbon Climate Fund

… refurbishment of Almada Less Carbon Climate Fund, (r)Evolved

… way forward, combining financing mechanisms, citizen power and private investment

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 45 32%

22%

6% 20%

20% 420.000 tCO2

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 The municipality has been a frontrunner. But this is not enough! 32%

22%

6% 20%

420.000 tCO 20%  2

Covenant Mayor's Investment Forum < 5% municipality Brussels, Belgium | 21st February 2018 The municipality has been a frontrunner. But this is not enough Community’s involvement is crucial

Contribution needed from all sectors to reach CO2 reduction targets Municipality

Community

Public Transport Service Sector Residential Industry Public Buildings Municipal Fleet Total and soft modes and Public Covenant Mayor's Investment Forum Ligthing Brussels, Belgium | 21st February 2018 Way forward Limitations of current approach: − Totally internal procedures − Limited connection to the community besides social housing: projects are within the municipality infrastructure (they can impact directly a small fraction of private use of buildings) − Own Investment limits size of projects (sometimes small projects are difficult to finance, due to their low return on investment) − Projects are evaluated individually, little room for synergies between projects − Limited external investments (except for national/european funding)

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Current conceptual approach Project pool evaluation Size of square represents size of project Number represents cost-benefit evaluation

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 50 Current conceptual approach Project pool evaluation Size of square represents size of project Number represents cost-benefit evaluation X X X X

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 51 Current conceptual approach Bundle Projects

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 52 Current conceptual approach Bundle Projects, make it bankable

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 53 Way forward Bundle Projects − Allows financing for “non-elegible” projects from a strictly economic evaluation (specially relevant for combined projects on mitigation and adaptation) − Increases direct participation of the community (enables participation on community projects and awareness which can also boost own private investment) − Increase investment size limits − Generate new ideas, community projects, add visibilty and accountability of the projects – everyone will want to check where their money is!

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 … challenge

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018 Thank you for your attention [email protected]

Covenant Mayor's Investment Forum Brussels, Belgium | 21st February 2018