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Climate Change Capital
Investing in Low Carbon Property
Green Alpha?
Climate Change Capital
Climate Change Capital (CCC) is an investment manager and advisor specialising in the
opportunities created by the transition towards the low carbon economy. Our activities
aim to make the world’s environment cleaner while delivering attractive financial
returns.
Headquartered in London with an office in Beijing, CCC focuses on the regions of the EU,
North America and Asia.
ADVISORY
 M&A
 Corp./Project
Finance
 Strategy & policy
INVESTMENT MANAGEMENT
Develops, structures and supports a range of funds investing in
assets, companies and instruments for the low carbon economy
Carbon
Finance
Private
Equity
Real
Estate
Energy
Infrastructure
RESEARCH
Research in-house policy
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Annual global flow of energy - 88% conversion loss
Source: J.M. Alwood and J.M. Cullen, University of Cambridge
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Climate Change Property Fund
UK Urban non car dependant city centres – no flood risk
1st Investment: Birmingham
2nd Investment: Edinburgh
3rd Investment: London
4th Investment: Manchester
Location, Economics, Sustainability
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UK carbon emissions – The built environment
Agricultural
1%
Industry
20%
Commercial
19%
Buildings
47%
Residential
28%
Transportation
32%
Source: BRE, GVA Grimley
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Regulatory change
 “20-20-20” goals set down by the European Union
 20% of consumed energy to be renewable
By 2020
 20% increase in energy efficiency
(compared to 1990)
 20% reduction in emissions
 Energy Performance of Buildings Directive adopted in 2002
 Certification of buildings based on its relative energy performance (EPCs)
 Required in UK for all large buildings occupied by public authority or relevant
institution by October 2008 (DECs)
 UK Buildings regulations Zero Carbon by 2019
 Climate Change Bill introduced by UK Government in November 2008
 Reduction in emissions levels by 26-32% by 2020 and 60% by 2050
 5 year carbon budgets
 UK Carbon Reduction Commitment (CRC) = Carbon cap/trade on Property
portfolios that consumed > 6,000 kw/h per annum in 2008
 Trend in Regulation and Legislation
 Increasingly onerous and weighted toward fiscal penalty rather than incentive
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Carbon Reduction Commitment Energy Efficiency
Scheme (CRC)
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CRC is a ‘cap and trade’ scheme ~ financial
incentives/penalties for large occupiers + investors to improve
energy efficiency
Organisations with total electricity consumption over 6,000MW
hrs/yr (typically £500,000 pa)
A league table of performance will be published each year
CRC brings carbon penalties to existing buildings in the UK
Canary Wharf – lights at night
Canary Wharf – thermal image
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Potenziale in bestehenden Objekten
Economization of Heat Energy: 67 %
- Change heating system from gas to district heating
- Installation of heat recovering systems
- New Facade
- Solar plant on the roof
Economization of Electricity: 55 %
Economization of Water: 43 %
- Innovative climatisation concept
- New Façade
- Intelligent lighting control system
- Innovative elavator technique
- Rain water use
- Techniques for water conservation
- Use of grey water for toilet flush
Need for ventilation energy: 60%
CO2- Emissions: 55%
- Change of climatisation concept
- Heat/cooling transfer via water system
- Natural ventilation
- Installation of energy saving systems
- Use of district heating
- Use of “green” power
Recycling Material: 30%
Heat Island Effect: 50 %
- Reuse raised floor
- Recycling window glazing
- Recycling Facade
- Green roofs
- Photovoltaik plant on the roof
- Solar plant on the roof
Green Buildings Referenzen (Auszug)
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Empire State Building –
Integrated sustainability refurbishment programme
The plan is projected to:
 Cost $13.2 million (on top of a planned $500 refurbishment) with
payback in 3 years - through energy & operational savings
 Reduce energy use by up to 38%
 Achieve annual savings of $4.4 million
 Reduce carbon emissions by 105,000 metric tons over the next 15 years
 Be complete within two years
 Serve as a global model for owners of existing buildings
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5 St Philip’s Place, Birmingham, UK
Prime offices let to
UK Government for
10 years
£750,000 (< 5 year
payback) spent on
Energy Efficiency
Improvements by
Landlord + Tenant
 Electricity costs reduced by 45% (60% Gross)
 Carbon emissions reduced by 43% (63% Gross)
 Green Lease – Landlord and tenant share data
(Energy/Water/Waste/Carbon)
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Sustainable asset management – The journey
5 St Philip’s Place Offices: Annual CO2 emissions, DEC Grades and benchmarks
from Energy Consumption Guide 19 for a “Type 3” air-conditioned office
Kg/m² Treated Floor Area at Defra 2008 CO2 factors of 0.185 for gas and 0.537 for
electricity
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Why “Green” buildings will outperform
If…
Investment Implications
Underlying Effects on ‘Green’
Assets
Tenants prefer to occupy
‘green’ buildings
Green assets let more quickly
Rental growth higher and lower
depreciation
Shorter cash flow risk
Green buildings = lower
operating costs
More tenant money is available
for rent
Rental growth higher and lower
depreciation
Government regulation
and legislation
‘Greener’ assets de-risked as
more attractive to and retain
tenants better
Lower risk premium than ‘brown’
buildings
Investors have fiduciary
duty to invest in ‘green’
buildings
‘Green’ properties = more liquid
‘Green’ properties are more liquid
+ should attract a lower risk
premium = higher value =
“Green Alpha”
Original Source: IIGCC
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Low carbon property investment – the new mainstream
 “Prime investment” now encompasses sustainability
 Investment downside risk protection + value upside
 Low growth, banking crisis > Cash flow fundamentals
 Rents + 6-8% ,Capital Values + 16% (Maastricht/Berkeley)
more UK + pan European research in hand
 Low carbon property is mispriced
 No need to trade return for “Green”
 > Green Alpha
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Contact Climate Change Capital
Tim Mockett
Tim Mockett is co-founder of CCPF (Climate Change
Property Fund), the first low carbon property fund
investing in mainstream UK commercial assets. Having
raised c. £70m equity, the fund is now 100% invested in
core assets in London, Edinburgh, Birmingham and
Manchester with a GAV of approximately £150m.
Prior to CCC, Tim was Property Director of Stow
CCC Head Office
Climate Change Capital
3 More London Riverside
London
SE1 2AQ
United Kingdom
Securities plc where he was responsible for the
implementation of Stow's UK and European investment
strategy. In his seven years at Stow, Tim created an
investment/development portfolio consisting of assets with
a gross value of £200m, including mixed use, office and
retail properties principally within Greater London.
Tel: +44 (0)20 7939 5000
Fax: +44 (0)20 7939 5030
Tim has over 25 years of experience in commercial
www.climatechangecapital.com
representing a range of investors, and has invested in and
property investment and development advising and
traded over £1bn of commercial property during this
period, generating a typical portfolio IRR of over 15% pa.
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