The Green Finance Institute will deliver financial solutions to unlock funding for owner-occupied and privately-rented homes in the area. This announcement follows the publication of ‘Retrofit GM’, a new strategy to tackle the climate crisis led by Mayor of Greater Manchester Andy Burnham.
London and Manchester, Wednesday 3 August, 2022 – Greater Manchester Combined Authority (GMCA) and the Green Finance Institute (GFI) today announce a pioneering partnership to provide practical and innovative financial solutions to support energy-efficiency improvements for thousands of homes across the city region.
With the UK experiencing its hottest-ever recorded temperature, 40.3 degrees Celsius last month, the case for climate action has never been more urgent. The UK’s buildings are its second largest source of carbon emissions and lowering their energy demand is therefore critical. This will require a collaborative approach to identify capital, deploy financial solutions and engage local communities to encourage and accelerate uptake of energy-efficiency products.
For the GMCA, this partnership marks an important milestone in the delivery of its ‘Retrofit GM’ strategy, a three-year vision to tackle the building retrofit challenge through innovative finance solutions. The strategy aims to work towards upgrading the energy efficiency of around 60,000 homes every year across Greater Manchester, supporting residents as they face increasingly high energy costs.
Consumer demand to retrofit energy inefficient homes is growing. Research conducted by the GFI, to be released later this month, found that almost 9 in 10 people surveyed said energy efficiency was ‘important’ or ‘very important’, up from 83% in the same period last year1.
However, one of the major stumbling blocks for property owners wanting to undertake energy-efficiency upgrades is the lack of finance available to fund improvements such as insulation, low-carbon heating and climate resiliency measures. The partnership between the GFI and GMCA aims to address this challenge by enabling homeowners and landlords to access new, attractive sources of private and blended finance to fund energy efficiency upgrades to their properties. This will help to reduce energy use, lower utility bills and support Greater Manchester’s drive to reach carbon neutrality by 2038.
Councillor Martyn Cox, Lead for Green City Region and Waste, said: “It’s clear that the need for action to address the climate emergency is urgent and in Greater Manchester we’re committed to doing everything possible to play our part. A key part of this is lessening how reliant our homes are on high carbon fuel and making them more energy efficient. However, it’s crucial that as we become greener, we become fairer, so people are not left behind. That means making sure people are less reliant on carbon intensive energy at home, whilst reducing their energy bills. This partnership will look at doing just that, and will find the funds and support people need to help them make the changes we need to see.”
A new poll commissioned by UK100 (published 14 July) found that a majority of the UK public are in favour of giving more powers and financial support to local authorities to reduce greenhouse gas emissions. Through this partnership, the GFI will now work with financial institutions, retrofit specialists and local organisations to pilot a series of financial solutions that are designed to provide a blueprint for other local authorities across the UK to follow in the years ahead.
These include:
- The UK’s first Property Linked Finance scheme, replicating the successful PACE model from the US into the UK market.
- Issuing Local Climate Bonds to allow residents to invest in the net-zero agenda, providing funding for council decarbonisation projects in Greater Manchester.
- A campaign to boost the development of Green Mortgages, in collaboration with local and national lenders, mortgage intermediaries and local influencers.
- Demand Aggregation Financing that embeds access to finance into retrofit demand aggregators, which can bring down the upfront costs of energy efficiency measures for consumer.
- Green Rental Agreements, where the GFI will collaborate with institutional landlords to promote a new type of tenancy agreement incorporating energy efficiency.
Emma Harvey, programme director for the Green Finance Institute’s built environment programme, states that “Local Authorities have a deep understanding of their residents’ needs and increasingly recognise the opportunities to work with the private finance sector to deliver access to finance for their citizens. We are excited to collaborate with GMCA and the market to pilot a portfolio of innovative financial solutions the GFI has been developing since its inception in 2019, demonstrating a new model for local authorities across the UK.”
This partnership builds on the GFI’s work with the Greater London Authority (GLA). The GFI worked with the GLA to help identify an opportunity to invest in climate action by issuing green bonds to support projects such as upgrading ageing social housing for energy efficiency, helping to cut energy bills and support jobs. The GLA has committed a record £90 million of GLA funds to unlock over £500 million for zero-carbon projects.
1 The Green Finance Institute commissioned Globescan to carry out research in summer 2021 and spring 2022 to explore UK consumer attitudes towards energy efficiency and the different funding options available to upgrade homes.