/ClimateFund%20Appendices by Northwest Regional Development Agency

Northwest Climate Fund Launch Plan Appendices Appendix one: Scoping of energy-related projects, Quantum Strategy and Technology Appendix two: Scoping of sequestration projects, Lancashire Wildlife Trust Appendix three: Carbon management and the restoration of peat bogs, Sustainability Northwest Appendix four: Restoration of moorland in the Peak District National Park, Moors for the Future Appendix five: Outline of validation and verification process, Arup Appendix six: Operational and organisational plan, Groundwork Northwest Appendix seven: Report on the proposed structure of the Northwest Climate Fund, Pannone LLP Appendix eight: Draft memorandum and articles, Pannone LLP Appendix nine: Financial business planning and review, BDO Stoy Hayward LLP Appendix ten: Results of Northwest Climate Fund market testing, Vision 21 Appendix eleven: Marketing strategy, Creative Concern Appendix twelve: Initial proof check, Arup Appendix thirteen: National policy context, Arup Appendix fourteen: Original NWCF Concept Paper, Creative Concern

The Northwest Climate Fund. Launch Plan Appendices

Energy Projects Technical energy projects fall into the following categories; • Insulation – reducing the need for energy • Controls and metering equipment – managing the use of energy effectively • Replacement boilers – increasing the efficiency of heat production • Renewable energy – reducing the carbon emissions from energy generation. In general, the higher up the above the above list, the better the CO2 payback (£/tonne CO2). In addition it is clear that there is an important role for measures to support greater installation of emissions-reducing equipment, such as the provision of tailored advice and support through the process, especially for larger investments such as renewable energy installations.

Additionality One of the key issues for the NW Climate Fund is that of ensuring additionality. As a rule, projects should not be deemed to be additional where; • There is a statutory requirement on the organisation to achieve the emissions reductions; • The project has a simple payback which can be reasonablly be deemed to be economic for that organisation, and the organisation could be expected to be able to access capital funding; • The organisation is already funding the measures as part of its normal activities, even if these are beyond its statutory requirements. Existing Programmes The NW Climate Fund may wish to match funding from other programmes, or avoid supporting activities already catered for by other funding streams, so it is worth summarising the current programmes that support energy efficiency and renewable energy projects; • • • • • • •

Warm Front - insulation and efficient boiler installation in qualiying households – covers mainly the over-70s and households receiving certain qualifying benefits. CERT – insulation, energy efficient appliance and some micro-generation. Partfunding, predominantly for “vulnerable households”. Low Carbon Buildings Programme – part-funding of micro-generation technologies, currently available for individual households, public sector buildings (inc schools) and charitable bodies Energy Saving Trust Advice Centres (and EEACS) – provision of advice on energy efficiency, renewable energy and transport to householders, mainly by telephone, email and providing documentation Partnership for Renewables – Full investment cost of large-scale renewable energy installations on local authority land Carbon Trust – provision of advice, some grants and loans to larger organisations including busineses and local authorities ENWORKs – provision of advice to smaller businesses.

From this list we feel that businesses generally have sufficient provision through the Carbon Trust and ENWORKS. Gaps in Existing Provision Four main areas have been identified as gaps in the existing support programmes which could be supported by the NW Climate Fund; • Insulation, boiler replacement and heating controls in homes of the “not-quite-able-topay” - those not eligible for Warm Front or as “vulnerable households” but unable to afford their contribution to the cost of insulation under CERT; • Installation of renewable energy, where the organisation involved is unable to fund the remaining contribution – especially schools and community buildings; • Contributions towards the cost of measures in “able-to-pay” households where there is insufficient motivation to invest, and where there is “demonstration” value;

•

Provision of support services to help get individuals and community groups to the stage at which they are ready to invest in either energy efficiency or renewable energy – including provision of specific advice, help with obtaining necessary permissions, finding contractors, finding grant funding etc.

Statutory Requirements There are a range of financial and fiscal icentives for businesses to achieve emissions reductions but no statutory requirements. Local Authorities have a role in reducing fuel poverty in their boroughs, and under the Decent Homes standard, have responsibility for ensuring that social housing is energy efficient. Most authorities spend their the majority of their housing energy budget addressing these key sector. A few have been able to voluntarily expand their programmes to cover other households, but these programmes are frequently subject to budget constraints and rely on accessing match funding from other sources. A number of local authorities have part-funded renewable energy installations on selected schools, to take advantage of the Low Carbon Buildings Programme, but also accessing grants from other organisations, but these are by no means widespread, and payback times even with the LCBP are very long (>10 years). The provision of tailored advice at the local level is limited. The EEACs and ESTACs have a role in providing general advice, but are unable to provide the hand-holding needed to get community organisations and individuals to the stage at which they understand exactly how they can reduce their emissions and have the confidence to be able to make the necessary investment. CAS Performance Indicators There are two relevant indicators against which many LAs in the NW will be measured from April 2008; • NI 185 CO2 emissions in the authorities’ own activiites • NI 186 Per capita CO2 emissions across the authority area The former may be deemed to be directly within the authority’s control, and projects to contribute towards this target should not generally be funded by the NWCF where the payback of the project is within a reasonable economic limit. The recommended payback periods for Salix Finance (which supports LA initiatives) are < 5years for energy efficiency projects and <7.5 years for renewable energy projects. The latter indicator is a result of actions by individuals and organisations within that area as well as visitors to the area, and are outside the direct control of the authority. It would be unreasonable for the NWCF to avoid supporting projects in an area that has to achieve this latter target.

Carbon Savings and Accounting Carbon Savings It is possible to idenify the potential carbon savings for technical projects such as installation of equipment, although the actual savings will depend on a variety of factors which may not be foreseen at the start of the project. These include; • The weather, for renewable energy and insulation projects • Characteristics of different buildings • Building occupants’ behaviour. The Energy Saving Trust and EEC/CERT1 have standard figures for the CO2 savings associated with different energy efficiency measures in households – see Appendix. For EEC these were previously dependent on the age and type of house, but under CERT a standard 3-bedroom house is assumed, with differentiation only between the occupant type (the Priority Group i.e. vulnerable households, are assumed to use less energy and hence save less). Note that for all measures except cavity wall insulation, CERT assumes a higher lifetime CO2 saving than EST. The Low Carbon Buildings Programme (and its predecessor Clear Skies) does not collect information on CO2 savings resulting from its support 2. The savings from renewable energy installations depend on the technology type, the fuel replaced and the location. CERT, which will support renewables for the first time from 2008, has included indicative carbon savings for the main microgeneration technologies. At the project application stage, applicants will be asked to provide information on the expected CO2 savings from the project. For validation purpose we recommend that the savings are checked against the following average data and expected ranges for measures in households, taken from the EST and CERT data. Efficiency Measure

Lifetime CO2 Savings tonnes CO2 Average Max (+25%) Min (-25%) Cavity Wall Insulation 25 31.3 18.8 Loft Insulation 11 13.8 8.3 Heating controls upgrade with boiler 0.4 0.5 0.3 Heating controls (new) 3 3.8 2.3 Tank insulation 1.6 2.0 1.2 Draughtproofing 2 2.5 1.5 Solid wall insulation (+/- 50%) 50 75.0 25.0 Renewable Energy Measure Wood burning stove (secondary) Biomass boiler (primary) PV panel (2.5 kWp) Solar water heater (4m2) Micro-wind (1kWp, 10%LF) Micro-hydro (0.7 kWp, 50%LF) Heat pump

Lifetime CO2 Savings tCO2 Average Max (+25%) Min (-25%) 12.0 14.9 9.0 145.9 182.4 109.4 22.8 28.5 17.1 8.1 10.2 6.1 3.8 4.7 2.8 26.4 33.0 19.8 To be confirmed

Lifetime 40 35 11 12 10 15 30

Lifetime 20 20 25 25 10 20

Defra Consultation document on CERT http://www.defra.gov.uk/corporate/consult/ cert2008-11/consultation.pdf 1

Telephone conversation with Alex Stuart, EST.

Non-housing measures will need to be assessed individually. Applicants will need to be asked to provide evidence of current emissions where relevant and projected savings or energy generation potential based on suppliers estimates. Carbon Accounting and Match Funding Where projects are supported by more than one funding stream it may be necessary to divide the CO2 savings of the project among these providers. Some of these potential match funds are discussed below. CERT Under the CERT Programme, the utility companies are obliged to achieve specified CO2 savings with the requirement to achieve 40% from interventions in priority households, and an expectation on the mix of measures to be provided. The cost of achieving these savings is the responsibility of the utility company, and it is in the companyâ&#x20AC;&#x2122;s interest to achieve maximum savings for minimum investment. For insulation measures where the householder is expected to provide a contribution, the utility company will claim the entire CO2 savings. For renewable energy measures, there is an understanding that a proportion of the funding may come from other organisations which may wish to claim the CO2 savings, and a requirement to split the savings accordingly. It is unlikely that the NWCF will be able to claim CO2 savings from efficiency measures matched by CERT, unless such agreements are put in place by the delivery organisation. For renewable energy projects, NWCF could claim CO2 savings. However, it is not in the utility companiesâ&#x20AC;&#x2122; interests to share the savings for the same investment, so they are unlikely to part-fund installations where the householder is dependent on match-funding from NWCF. LCBP The LCBP does not appear to account for the CO2 savings generated by its support, so it may be that projects matched by this could claim the entire savings for the NWCF (less any contribution to other part-funders).

Delivery Organisations For the initial set of projects, we have concentrated on organisations that have experience in delivering the types of schemes shown above, have the financial management and auditing processes in place to manage large programmes, and have the ability to deliver quickly. These are either local authorities or quasi-public sector organisations delivering energy services such as the ESTACs. The projects proposed are all beyond their normally-funded activities.

Potential Projects Cumbria Renewable Energy in Schools Delivery organisation: Cumbria Action For Sustainability Auditing schools in Cumbria to identify the most appropriate renewable energy technology for each school, provision of energy efficiency advice and on-going support to all schools and installation of renewable energy in the most suitable. Match funding for the renewable energy will be accessed from the LCBP. Number of schools: 40 NWCF contribution: £655,000 CO2 saving: 200 tonnes/year, lifetime savings 3,200 tonnes, assuming efficiency measures last 15 years and renewable energy measures last 20 years. Equivalent cost to NWCF = £202/tonne CO2. Fuel Poverty Measures in Low Income, Rural Households Delivery organisation: Cumbria Action For Sustainability in partnership with Housing Associations, EST & Cumbria Rural Housing Trust Installing a range of basic energy efficiency measures and some wood fired heating in hard to heat homes, often hidden in idyllic settings within Cumbria, where some residents are spending up to 23% of their income on fuel bills and many are dependent on solid fuel.. Identified areas of need include: Glenridding, Coniston, Lorton and Rosthwaite, Saltercoats and Cleator Moor. 50% match funding will be available from partner organisations. Number of homes: 50-150 depending on funding available NWCF contribution: £125,000 - £375,000 CO2 savings: 150 - 450 tonnes/year, 4,500 – 13,500 tonnes lifetime CO2 over 30 years. Equivalent cost to NWCF = £28/tonne CO2. Community Energy Services Company (ESCO) Delivery organisation: Cumbria Action For Sustainability in partnership with Impact Housing and Cumbria Rural Housing Trust Set up an ESCO in a community of 20 households through the provision of a series of renewable energy schemes and / or a single district heating scheme in a targeted area of low income housing. This will provide the model and the platform for the social enterprise to develop its service in other areas. 50% match funding will be sought from LCBP. Number of homes: 20 NWCF contribution: £100,000 CO2 savings: TBC Energy Efficiency Measures in Community Buildings Delivery organisation: Cumbria Action For Sustainability Auditing of 10-20 community buildings and installation of appropriate energy efficiency measures. Match funding will be sought from Cumbria Sustainable Energy Partnership. Number of buildings: 10-20 depending on funding available NWCF contribution: £47,500 - £72,500 CO2 savings: 30 - 60 tonnes/year, 600 – 1,200 tonnes lifetime CO2 over 20 years. Equivalent cost to NWCF = £80/tonne CO2. Infrared Energy Mapping Service for Community Buildings and Homes Delivery organisation: Cumbria Action For Sustainability

By making the invisible visible, the service will provide a striking assessment of where homes / schools / community centres are losing heat, poorly insulated, damp or suffering severe cold bridging problems. The service will be dovetail with the projects above. Total Capital Costs: £3,500 Heron Mill Micro-Hydro Scheme Delivery Organisation: Heron Mill Trust Heron Mill is a restored corn mill used as a community arts and educational facility in South Lakeland. The Mill Trust intends to install a 100kW micro-hydro scheme using the existing weir, with the income used to provide long-term financial stability for the operation. The scheme has the necessary permissions and could be installed this year if the remaining funding were available. £325,000 has already been raised from a range of sources. NWCF contribution: £150,000 CO2 savings: 165 tonnes/year, 3,300 tonnes lifetime CO2 assuming a 20 year life. Equivalent cost to NWCF = £45/tonne CO2, unless other funders need to claim CO2 savings (to be confirmed). Lancashire Community Projects Delivery organisation: Lancashire County Council Match funding to support community-based projects applying to the Lancashire Locals Climate Change Fund, which has been vastly over-subscribed by good quality projects. The Lancashire Locals Fund of £250,000/year for 3 years has been provided by Lancashire County Council and is allocated across the Districts. NWCF contribution: £200,000 over 2 years CO2 savings – dependent on projects funded. Connect to Your Carbon – Lancaster Delivery Organisation: Lancaster City Council via LESS The Connect To Your Carbon project will engage with local people in the Lancaster District to raise awareness of climate change through workshops held in communities around the district, supported by a tailored home energy assessment programme for participants and monitoring of carbon reductions in these households. Number of workshops: 24 Number of Energy Assessments: 170 NWCF contribution: £48,000 CO2 savings: Behavioural measures 170 tonnes CO2 per year plus any additional insulation/ renewable energy installations recommended. Fylde Schools Wind Farm Delivery Organisation: Blackpool, Fylde & Wyre Councils Assessing the schools across the Fylde Coast for renewable energy potential and installing the most appropriate technology in 30 schools. Match funding for the renewable energy will be accessed from the LCBP. NWCF contribution: £450,000 CO2 saving: 148 tonnes/year, lifetime savings 2,220 tCO2 over a range of lifetimes. Equivalent cost to NWCF = £200/tonne CO2. Fylde Coast Energy Credit Union Delivery Organisation: Blackpool Council in partnership with Fylde and Wyre Borough Councils Establish a credit union to enable those who cannot afford energy efficiency measures but are earning enough to not be eligible for other funding sources. Energy efficiency measures (loft and cavity wall insulation) can be obtained from Home Insulation Services for about £200 per measure then agreements can be made for interest free loans of ten to twenty months paying back £10 to £20 per month. The scheme will require initial funding to get it started and to cover some of the management costs. Number of homes: 360 over 3 years NWCF contribution: £115,000 (£45k Y1, £45k Y2, £25kY3) CO2 saving: 520 tCO2 over 3 years, lifetime savings 14,350 tCO2 assuming an average lifetime of 30 years. Equivalent cost to NWCF = £8/tonne CO2.

Fylde Coast Heat Save Scheme Delivery Organisation: Blackpool Council in partnership with Wyre and Fylde Borough Councils Installation of energy efficiency measures (predominantly loft and cavity wall insulation) at older fuel poor households on the Fylde Coast. Project will establish multi-agency referral systems and will coordinate the targeting and marketing of a range of energy efficiency grants and ‘Able to Pay’ schemes at a sub regional level using market segmentation techniques. The project will utilise Regional Housing Pot private sector housing renewal allocations and maximise Fylde Coast investment from Warm Front and CERT funding. The scheme will require funding for extensive marketing and publicity and the employment of a Heat Save Partnership Officer to unlock the value of the match funding. Number of Homes: 750 NWCF contribution: £150,000 CO2 saving: 1160 tCO2/year, lifetime savings 34,800 t CO2 assuming an average lifetime of 30 years. Equivalent cost to NWCF = £ 4/tonne of CO2 Fylde Green Neighbourhoods Delivery Organisation: Blackpool Council in partnership with Fylde and Wyre Borough Councils This project would target a small number of streets in Fylde, Blackpool and Wyre with the aim of significantly raising the energy efficiency standards of all the houses and installing microgeneration in a selection. The project would compare results across different areas (urban poor, suburban affluent and rural town/village) and from DIY installations and professional installers. The project will be monitored by the householders and independently, and results widely publicised along with assessments from the householders on how easy/ hard it was to implement. Number of homes: 60 NWCF contribution: £185,000 CO2 saving: 110 tCO2/year, lifetime savings 3,500 tCO2 assuming a range of lifetimes for different measures. Equivalent cost to NWCF = £53/tonne CO2. Blackpool Hybrid Buses Delivery Organisation: Blackpool Council in partnership with Blackpool Transport Replacing 10 buses on line 11 with hybrid versions, and upgrading certain points on the route to improve the service provided to customers, in partnership with the appropriate highways agencies. Total costs will be in the region of £2 million, with Blackpool Transport contributing the normal cost of replacing the buses (£1.35m). Number of buses: 10 NWCF contribution: £650,000 CO2 savings: TBC Energy Efficiency Measures in Housing – Pendle Delivery Organisation: Pendle Borough Council Provision of funding on a sliding-scale for the installation of a range of insulation measures, boiler replacement and low-energy lightbulbs, for households unable to meet the contribution required under CERT. Match funding will come from CERT, Baxi-Potterton and Scottish & Southern Energy. Pendle Borough council will part-fund the programme management. Number of homes - 30 NWCF contribution - £100,000 CO2 saving – 75 tonnes/year over a range of periods. Lifetime savings 1,125 tCO2, assuming an average lifetime of 15 years. Note: CO2 savings would be claimed by CERT. Greater Manchester Wood-fuelled Stoves – Trafford Delivery Organisation: Trafford Council Installation of wood-fuelled stoves that meet air-quality requirements for households in fuel poverty. This builds on a pilot project run in partnership between Trafford Council and Action

for Sustainable Living, which installed 5 such stoves in 2007, winning an Energy Innovation Award. The pilot showed a reduction in gas use of approximately 65% per year. Trafford council and ASL would contribute the programme management time. Number of homes - 40 NWCF contribution - £60,000 CO2 saving: 17 tonnes/year, lifetime savings 340 tCO2, assuming a 20 year lifetime. Equivalent cost to NWCF = £176/tonne CO2. Green Concierge Service Delivery Organisation: Manchester ESTAC A ‘premium’ service providing enhanced levels of support to householders to allow easy ‘greening’ of lifestyles. The service would be carefully targeted at householders with a high potential CO2 yield and who are likely to be receptive to support but have minimal free time available to engage with the various activities required to help making their lifestyles greener. The service would be based around the provision of an Energy Performance Certificate and a Carbon Foot-printing activity to draw up a bespoke Action Plan. The Concierge service would then act to broker and facilitate practical improvements (with householder’s agreement) such as installation of insulation measures. The householders would pay a contribution towards the costs of this service (c. £200), which would last over a period of a year and build an established customer relationship with ongoing opportunities to stimulate CO2 saving activity. The service would be used to provide excellent media and case study opportunities and develop engagement with further households. Number of Homes: 50 NWCF contribution: £20,000 CO2 saving: 75t CO2/yr, lifetime savings 3,000t CO2 (based on typical measures mix) Equivalent cost to NWCF = £6.70/tonne CO2 Renewables Advocacy Service Delivery Organisation: Manchester ESTAC This service will address some of the barriers facing individuals or groups aspiring to install micro-generation technologies in properties, typically technical complexity, lack of confidence in installers and grant and planning administration procedures. The service would provide a hand-holding service to community groups, schools and householders, leading them through all the necessary stages from initial advice through to commissioning. The service would facilitate feasibility reviews of the various technologies for specific properties, securing of appropriate contractor quotes and support with any planning permission and grant applications. There is an option to enhance the service through provision of an incentive grant to be used with the service, providing an excellent package for prospective customers. The grant offer would be designed according to the relevant technology, however a c£1000 grant per property is proposed. Number of Homes: 50 NWCF contribution: £70,000 CO2 saving: 100t CO2/yr, lifetime savings 4000t CO2/yr (based on typical measures mix including some stimulated Energy Efficiency measures). Equivalent cost to NWCF = £17.50/tonne CO2 Saddleworth Micro-Hydro Scheme Delivery Organisation: Oldham MBC Development of a 15kW micro-hydro scheme on the River Tame in Saddleworth. The funding would contribute towards the initial feasibility stage, gaining the necessary permissions and developing a community ownership scheme to finance the remaining cost of the project. NWCF contribution - £80,000 CO2 saving – 31 tonnes/year. Lifetime savings 620 tCO2, assuming a 20 year lifetime Equivalent cost to NWCF = £130/tonne CO2. Note: Some of the CO2 savings may be claimed by other funders. Merseyside Boiler Replacement – Knowsley

Delivery Organisation: Knowsley MB Council Installation of replacement boilers and heating controls in fuel-poor households not qualifying for the Warm Front scheme. 50% of the cost would come from NWCF, with 25% contribution from KMBC and the remaining 25% from the householders. The programme would initially address households identified under the council’s insulation programme as in need of this measure. KMBC would manage the programme and would also aim to set up an arms-length installation service using local trades-people which could later be exanded to cover the whole of Merseyside. Number of homes: 300 NWCF contribution: £225,000 CO2 saving: 110 tonnes/year, lifetime savings 1,320 tonnes assuming a 12 year lifetime. Equivalent cost to NWCF = £170/tonne CO2. Remote Energy Monitoring and Controls in Schools – Knowsley Delivery Organisation: Knowsley MB Council Installation of improved energy controls in 75% of the schools in the borough. KMBC would provide 50% of the funding, and the programme management. Number of schools: 60 NWCF contribution: £110,000 CO2 saving: 900 tonnes, lifetime savings 4,500 tonnes, assuming measures last 5 years. Equivalent cost to NWCF = £24/tonne CO2. Insulation in vulnerable households – Wirral Delivery Organisation: Wirral MB Council Installation of loft and cavity wall insulation in homes of the fuel-poor over-60s, matching the funding available from CERT to householder’s contribution. 50% of the cost would come from NWCF, with 50% from E.On under the CERT programme. Number of homes: 400 NWCF contribution: £100,000 CO2 saving: 342 tonnes/year, lifetime savings 13,680, assuming measures last 40 years. Equivalent cost to NWCF = £7/tonne CO2 Note CERT will claim all this CO2 credit Solar Hot Water in vulnerable households - Wirral Delivery Organisation: Wirral MB Council Installation of solar panels in homes identified as vulnerable and hard-to-reach, supported by Wirral’s Decency through Thermal Comfort (DTC) scheme which provides insulation in those homes. Match-funded by Wirral Council’s HMRI scheme Number of homes: 16 NWCF contribution: £48,000 CO2 saving: 6 tonnes/year, lifetime savings 150 tonnes, assuming measures last 25 years. Equivalent cost to NWCF = £320/tonne CO2. Merseyside & Cheshire Health Referral and Improvement Project Delivery Organisation: Energy Projects Plus in partnership with Local Authorities and Health Sector This 2 year project will target vulnerable people in partner local authority areas whose health is adversely affected by inadequate temperatures in the home caused by poor insulation and/ or heating, through referrals received from health sector service providers and community based support organisations. Where appropriate, grants for improvements to insulation/ heating will be funded by mainstream providers with NWCF supporting clients not eligible for mainstream grants. The project will address issues such as fuel poverty, carbon reduction, and health improvement. Number of households: 600 (projected measures profile = 450 heating, 150 insulation) NWCF contribution: £300,000 CO2 saving: 330 tCO2/year, lifetime savings 7,470 tonnes assuming heating measures last 12 years and insulation measures last 30 years. Equivalent cost to NWCF = £40/tCO2 Schools Energy Programme

Delivery Organisation: Energy Projects Plus in partnership with Local Education Authorities This two year project will extend the existing Wattwatchers project being delivered in 2 local authority areas to a further four where no current funding exists. The project works with primary schools to deliver a series of 3 lessons linking climate change and energy issues to current curriculum. It is important to extend the project over more than one year since schools’ curriculum delivery programmes vary and with the short academic year some schools may miss out. Number of schools receiving support: 180 NWCF contribution: £50,000 Eco-audits for communities and buildings Delivery Organisation: Energy Projects Plus in partnership with Local Authorities This project will work with community organisations wanting to reduce their environmental / carbon footprints by undertaking eco-audits on community buildings (which could also link to Schools Energy Programme activities). In addition, capital funds would be made available to support improvements to some buildings as example to community members and encourage actions by individuals. Number of eco-audits: 100 NWCF contribution: £125,000 (£25,000 delivery, £100,000 measures) CO2 saving: 300 tCO2/year, lifetime savings 6000 tCO2, assuming measures last 20 years. Equivalent cost to NWCF = £21/tCO2 Wind Turbine for Blacon Adventure Playground – Chester Delivery Organisation: Chester City Council Installation of a 2.5kW wind turbine in a fully-staffed open access play facility, located in Chester's largest social housing estate area. The turbine will provide power to two community buildings reducing their electrical consumption This project would provide the first phase of an eco-friendly community centre in Chester district, and annual cost savings will be invested in further carbon reduction projects. Match funding will be sought form LCBP. NWCF contribution: £7,500 CO2 saving: 2.4 tonnes/year, lifetime savings 36 tonnes, assuming 15 year lifetime. Equivalent cost to NWCF = £208/tonne CO2. All Areas Interest-free Loan Scheme for Micro-generation and Efficiency Investments This has been suggested by respondents across the region. Based on the Kirklees Recharge scheme and Leicester Loan scheme, interest free loans could be provided to householders for investment in energy efficiency measures (with fixed repayment period) and micro-generation (repayment either fixed or on sale of the property). The scheme would need to managed by an existing loan provider e.g. Co-op or Triodos Bank.

Appendix CERT CO2 Savings Average 3 bed semi

Measure Cavity Wall Insulation Loft Insulation (professional) Loft Insulation (DIY) Glazing E to C rated A/B rated boilers Heating controls upgrade with boiler Heating controls extra CFLs Tank Insulation - top-up Draughtproofing Solid wall insulation Wood burning stove (secondary) Biomass boiler (primary) PV panel (2.5 kWp) Solar water heater (4m2) Micro-wind (1kWp, 10%LF) Micro-hydro (0.7 kWp, 50%LF) Heat pump

Average Priority Average nonGroup Priority Group

Annual Lifetime Annual Lifetime Annual Lifetime CO2 CO2 CO2 CO2 CO2 CO2 savings Savings savings Savings savings Savings Lifetim tCO2/yr tCO2 tCO2/yr tCO2 tCO2/yr tCO2 e 0.634 25.4 0.587 23.5 0.656 26.3 40 0.312 12.5 0.268 10.8 0.334 13.4 40 0.268 10.7 0.227 9.1 0.286 11.5 40 0.081 1.7 0.073 1.5 0.084 1.7 20 0.356 4.3 0.323 3.9 0.370 4.5 12 0.037 0.282 0.008 0.198 0.132 2.112

0.4 3.4 0.1 2.0 2.6 63.3

0.033 0.253 0.008 0.198 0.114 1.947

0.4 3.0 0.1 2.0 2.3 58.4

0.037 0.297 0.008 0.198 0.143 2.182

0.4 3.5 0.1 2.0 2.9 65.4

11 12 18 10 20 30

0.598 7.293 0.913 0.326 0.378 1.324 3.648

12.0 145.9 22.8 8.1 3.8 26.4 73.0

0.543 6.615 0.913 0.326 0.378 1.324 3.311

10.9 132.3 22.8 8.1 3.8 26.4 66.2

0.623 7.597 0.913 0.326 0.378 1.324 3.799

12.5 152.0 22.8 8.1 3.8 26.4 76.0

20 20 25 25 10 20 20

EST CO2 Savings

INSULATION MEASURES Loft Insulation 0-270mm (virgin) Loft Insulation 50-270mm (top up) Cavity Wall Insulation (Average) External Wall Insulation (U=0.35) Internal Wall Insulation (U=0.45) Draught Proofing Double Glazing - Energy Saving Recommended installation only Floor Insulation Hot water tank insulation Primary pipe insulation Radiator panels - installed professionally only Condensing Boiler only B to A Upgrades Heating Controls upgrade only Partial heating controls package Room Thermostat Thermotstatic radiator valves Hot water tank thermostat Fuel Switching ...to Gas ... to Biomass Renewable Technologies Solar Water Heating (Average) Ground Source Heat Pumps Air Source Heat Pumps PV (2kWp) Behavioural Change. Turning Heating Down 1DegC Switching off un-needed lights Use washing machine only with full load Only put in as much water as you need when boiling the kettle Appliances & Lighting Refrigerator/fridge Fridge Freezer Freezer Washing Machine Dishwasher CFLs (per CFL)

Average Annual Saving (Net) kWh/yr tCO2/yr 6211 1.381 1685 0.375 3335 0.742 5545 1.233 5252 1.168 467 0.104

Average lifetime saving (Net) Lifetime kWh tCO2 186328 41.43 30 50562 11.24 30 133410 29.66 40 166339 36.98 30 157548 35.03 30 7006 1.56 15

206 1240 474 217

0.046 0.276 0.105 0.043

4124 37188 4741 2167

0.92 8.27 1.05 0.43

20 30 10 10

0.004

195

0.04

0.162

12568

0.173 0.258 0.026 0.113

13445 19996 1980 8748

2.280 4.520

32205 -62404

0.379 1.593 1.121 0.645

34096 219647 197679 37500

0.273 0.031 0.015

1388 72 34

0.015

838

896 1333 132 583

2147 -4160

2220 5268 3774 960 1956 536

15 15

7.58 31.85 22.43 16.13

20 20 20 25

0.27 0.03 0.01

1 1 1

0.02

0.080 0.189 0.135 0.034 0.070 0.014

15 15 15 15

34.21 67.79

185 439 315 80 163 34

1388 72 34

2.60 3.86 0.38 1.69

1705 10982 9884 1500

2.43

0.95 2.27 1.62 0.41 0.84 0.23

12 12 12 12 12 16

NORTHWEST CLIMATE FUND PROPOSED PROJECTS – CARBON SEQUESTRATION All these projects can be broken down into smaller projects, to an approximate minimum of £100,000 Red Moss, Greater Manchester Description Red Moss is a designated Site of Special Scientific Interest and represents one of the best example of lowland raised mire in Greater Manchester. The Government funded Lowland Peatland Programme has identified Red Moss, as a viable site for restoration and a restoration plan has already been prepared. The site is also important for its collection of breeding dragonflies and birds. Red Moss possesses the greatest abundance of and diversity of Sphagnum Mosses in Greater Manchester, with 11 species having been recorded. Successful restoration works have already been undertaken on the site to restore and re-wet the mossland habitat. Red Moss is now used as a template for the restoration of other mossland sites. Urgent Work Required Restoration works still need to be undertaken outside of Bolton MBC ownership. Even within the restoration scheme area, there is a requirement for more ditch blocking works to be undertaken. Internal Bunding works are still required to raise the water levels to the required height over the whole of the site. Land purchases and some degree of land management will be required on adjacent lands. Fen/marsh and wet woodland habitat surrounding the mossland will need appropriate management to protect the hydrological integrity of the core mossland interest. Area: NWCF Contribution: CO2 Saving: Equivalent Cost of CO2 to NWCF:

53 ha £143,434 4,692 tCO2e £30.00

Astley Moss (Chat Moss), Greater Manchester Description This site is already within Trust ownership and some restoration works have been undertaken. The site is a SSSI/SAC and represents one of the best examples of the habitat within the once extensive Chat Moss complex. Once restored the site can be used as a template for restoration of remnant mossland habitat within the Chat Moss complex. The SSSI represents the largest fragment of mossland habitat and is therefore of extreme value. The mossland resource is currently fragmented and isolated. Within Chat moss there are currently islands of mossland resource, with Astley and Bedford Moss being the largest island. It is important to link all the remaining fragments together with the SSSI being the king pin in the mosaic of habitat envisaged. Urgent Work Required Of priority is land purchases surrounding the SSSI. The mossland sits higher than the surrounding land and there is therefore a huge hydrological gradient taking water out of the moss. Purchase and management of surrounding land to provide complementary wetland habitat will reduce this gradient. Field drains in surrounding land can be dammed and the loss of water reduced.

Within the mossland ditch blocking and bunding works will be required to bring water levels up to the required height. Scrub/tree clearance works will also be required.

Area: NWCF Contribution: CO2 Saving: Equivalent Cost of CO2 to NWCF:

67ha £513,660 17,000 tCO2e over 40 yrs £30.00

Kings Moss, Merseyside Description Large remnant mossland site (approximately 16 ha) that is currently up for sale. This could be a very quick win. The site has a good range of mossland species, including bog myrtle (not found on the other sites in the area). The site is considered to be restorable. Urgent Work Required Purchase of site. Removal of scrub is a priority. Internal ditches will need to be blocked and the area may require bunding to retain rainfall, as the site lies above the surrounding land. Purchase and management of adjacent farmland will help to create additional wetland habitat and act as a buffer zone, reducing the effects of land drains on adjacent properties. Area: NWCF Contribution: CO2 Saving: Equivalent Cost of CO2 to NWCF:

28 ha £400,000 13,083 t CO2e over 40 yrs £30.57 per t CO2e

Simonswood Moss, West Lancashire Description Fragmented mossland areas that are situated within a large-scale peat extraction site. These areas can still be saved, but urgent action is required to make this possible. Without immediate purchase/action these sites will be lost. Urgent Work Required The aims of the management of this site are to improve the existing mossland habitat and try to make it wetter and to keep water on the site to prevent further degradation of the peat. In areas cut for peat, efforts are needed to re-establish a mossland community. Bunds can be constructed to retain water, and provide a range of hydrological conditions. However, the type of wetland habitat to be established is dependent on the pH and type of peat; this needs to be assessed. The site has the following management needs: • Tree removal in the areas still retaining mossland plants • Creation of scrapes • Ditch blocking within the site • Bracken control • Restoration of peat working to wetland Area: 231 ha (including extraction site) NWCF Contribution: £2.8 million CO2 Saving: 95,000 t CO2e over 40 yrs Equivalent Cost of CO2 to NWCF: £30.57 per t CO2e Winmarleigh Moss, Lancashire Description

This site is the largest area of surviving mossland in the Trust’s region, covering 90 ha. The area of surviving acid mossland is designated as a SSSI for its habitats. The site supports one of the best ranges of characteristic mossland species within the region, including bog myrtle, bog rosemary and round-leaved sundew. These species have been lost from many of the other mossland sites. The site has received limited management and a concentrated input is now required in order to successfully re-wet and save the site. Part of the site was recently converted to farmland and there is therefore an opportunity to reclaim mossland habitat, as the peat mass in the converted land is still restorable. Urgent Work Required The site has the following management needs: • Ditch blocking within the site • Creation of scrapes • Tree removal in the areas still retaining mossland species • Bracken control Area: 90 ha NWCF Contribution: £1,210,000 CO2 Saving: 39,600 t CO2e over 40 yrs Equivalent Cost of CO2 to NWCF: £30.57 per t CO2e Foulshaw Moss, Cumbria Description This is a 350 Hectare SSSI and part of the Witherslack Mosses SAC. It is one of the largest raised bogs in the UK that has not been subject to commercial peat cutting. The site is owned by Cumbria Wildlife Trust. In spite of being damaged by drainage and forestry, the site supports characteristic raised bog species such as bog bush cricket, large heath butterfly, white beaked sedge and bog rosemary. Breeding birds include tree pipit, reed bunting, snipe and barn owl. Hen harriers and short eared owl visit the moss in winter. Bog restoration works have been carried out in the period 2001-2008 and have resulted in a significant rise in the water table and Sphagnum growth. Urgent Work Required Restoration works are required around the site edge. These include the removal of approximately 100 Hectares of conifer plantation and the blocking of ditches, re-profiling of the bog edge to reduce water loss and the creation of bunded areas to re-start the peat forming process. In 2008 Cumbria Wildlife Trust created a 17 Hectare wetland on poor quality agricultural land adjacent to the bog. A further 160 Hectares of land could be acquired and restored to fen. Area: 100 ha NWCF Contribution: £1,345,080 CO2 Saving: 44,000 t CO2e over 40 yrs Equivalent Cost of CO2 to NWCF: £30.57 per t CO2e Meathop Moss, Cumbria Description This is a 70 Hectare SSSI and part of the Witherslack Mosses SAC. It is owned by Cumbria Wildlife Trust and has been a nature reserve since 1919. The central area of the site is relatively intact and supports characteristic specialist species of raised bogs such as sundews, bog rosemary, cranberry and cross leaved heath. Over 200 species of butterfly and moth have been recorded and the populations of green hairstreak and large heath butterflies are large.

Urgent Work Required Whilst the middle of the bog is relatively intact, it has been much damaged at the edges. Work is required to remove about 40 hectares of conifers and birch scrub. The bog edges need re-profiling and bunding to reduce water loss and re-start the process of peat formation. Roughly 100 hectares of poor quality agricultural land surrounding the moss is on deep peat and could be acquired and re-wetted. Area: 67 ha NWCF Contribution: £901,203 CO2 Saving: 29,480 t CO2e over 40 yrs Equivalent Cost of CO2 to NWCF: £30.57 per t CO2e Nicholls Moss, Cumbria Description This is a 70 Hectare SSSI, part of the Witherslack Mosses SAC. Cumbria wildlife Trust owns 7 Hectares of the site. The centre of the moss is largely intact, but has suffered from drainage and damage resulting from peat cutting at the bog edge. The bog still supports characteristic species such as bog rosemary, cranberry and cottongrasses. Urgent Work Required The site suffers from tree and scrub encroachment and still has an extensive network of unblocked drains. Work is required to remove trees from the site and block the drains. The bog edge needs re-profiling to prevent water loss and bunds are required to control water levels and re-start the process of peat formation. Approximately 30 Hectares of poor quality agricultural land around the bog could be acquired to create new wetland. Area: 70 ha NWCF Contribution: £941,556 CO2 Saving: 30,800 t CO2e over 40 yrs Equivalent Cost of CO2 to NWCF: £30.57 per t CO2e Solway Moss, Cumbria Description This site, covering approximately 450 Hectares, is being actively used for peat extraction. Areas of bog that remain on the site still support characteristic vegetation, including Cranberry, bog rosemary and white beaked sedge. Urgent Work Required The priority here is land purchase and restoration of the site to prevent further loss of peat. Area: 450 ha NWCF Contribution: £6m CO2 Saving: 198,000 t CO2e over 40 yrs Equivalent Cost of CO2 to NWCF: £30.57 per t CO2e Bolton Fell, Cumbria Description This site, covering 253 hectares, is being actively used for peat extraction. The site has recently been notified as an SSSI. Some areas retain good quality bog vegetation. Urgent Work Required The priority here is land purchase and restoration of the site to prevent further loss of peat. (Note: NE may already be in negotiation to achieve this).

There is a further area of roughly 100 Hectares of poor quality agricultural land that could be restored to wetland. Area: NWCF Contribution: CO2 Saving: Equivalent Cost of CO2 to NWCF:

253 ha £3.4m 111,320 t CO2e over 40 yrs £30.57 per t CO2e

Drumburgh Moss Description This is a 190 Hectare SSSI, which forms part of the Solway Mosses SAC. Together the Solway Mosses form the largest and best-preserved area of lowland raised bog in England. The central area of the bog is relatively intact and supports all 3 British species of sundew, a family of insectivorous plants. Red grouse, curlew redshank and grasshopper warbler breed on the site. Urgent Work Required Whilst the centre of the bog is relatively undamaged, past peat cutting has severely damaged the edges. Work is required to block internal drains, to re-profile the bog edge in places and to bund areas to reduce water loss and re-start the process of bog formation. Approximately 200 Hectares of poor quality agricultural land surrounding the bog could be acquired to create new wetland. Area: NWCF Contribution: CO2 Saving: Equivalent Cost of CO2 to NWCF:

200 ha £2.7m 88,000 t CO2e over 40 yrs £30.57 per t CO2e

Danes Moss, Cheshire Urgent Work Required Danes Moss has a further 30 hectares adjacent to the Cheshire Wildlife Trust site, currently owned by Cheshire County Council. The council is about to split and there is a danger that this land could be sold to an unsuitable buyer. It would need extensive restoration work including scrub clearance and sluice insertion. Area: NWCF Contribution: CO2 Saving: Equivalent Cost of CO2 to NWCF:

30 ha £403,524 13,200 t CO2e over 40 yrs £30.57 per t CO2e

Moors for the Future - The Sphagnum Propagation Project This is an investigation of mechanisms for re-introducing Sphagnum mosses to recovering moorland, particularly on blanket peat. It covers the species and situations for effective establishment, together with the effects of other moorland restoration techniques on this important group of species. To date there has been very little work carried out on the regeneration of Sphagnum mosses on blanket peat and this project seeks to address this issue. Expertise developed within the proposed project will be applicable to other upland areas within the UK and Europe. This is a research and development, with a pilot large scale implementation project. It has major implications for the restoration of Blanket Bogs across the UK and Europe. It is designed to investigate the potential for carrying out the regeneration of Sphagnum on any degraded moorland site. However, this project does include a large scale pilot, applying Sphagnum on Shelf Moss.

This project has a range of important secondary impacts as well as carbon sequestration and protection. The key points are Carbon protection  Blanket bog loss is a significant contributor to the UK’s carbon release. Active blanket bog has the capacity to sequester much carbon, turning a source of carbon into a sink. Water management  From moors in good condition, with a diverse moss flora, there is a slow release of filtered water, reducing the need for water treatment and reducing the risk of flooding Economic  Tourism revenue, sheep farming, grouse shooting and forestry all contribute significantly to the well being of the region’s rural and urban communities. Recreation and health  Sixteen million people live within sixty minutes drive of the South Pennines and the Peak National Park and each year over twenty two million day visits are made. The area continues to provide a recreational resource of great value for all. Conservation  The moors are internationally recognised for their breeding birds and they provide habitat for nationally rare and significant plant communities.

Carbon saving Calculations For Mossland Restoration Projects Case Study 1 – Kings Moss King’s Moss consists of a core area of damaged, previously cut-over, raised mire with some bare peat and poor bog vegetation (Area A), plus a surrounding area of arable farmland on shallower peat soils (AreaB) Size of Carbon Bank. Each m³ of peat contains approximately 100kg of carbon. This equates to approximately 400kg (0.4 tonne) of atmospherically active CO2. Area A covers 8ha and has an average depth of peat of 7m. Therefore, contains 560 000 m³ of peat which equates to 224 000 tonnes of CO2 equivalent. Area B covers 20ha and has an average peat depth of 2m. This equates to 400 000 m³ of peat and 160 000 tonnes of CO2 equivalent “Avoidable Loss” - Present CO2 emissions from Kings Moss CO2 emission figures are based on the report compiled by Dr. Fred Worrall Dept. of Earth Sciences, University of Durham “The Potential for Carbon Storage at Chat Moss”. For area A an average emission rate of 5 tonne CO2/ha/yr has been applied. No figures currently exist for CO2 emissions from arable land on peat soils such as in Area B. Due to the continuous disturbance of the peat on arable land from cropping and ploughing there will be a significantly increased rate of oxidation and particulate carbon loss. In this case a figure of 10 tonne CO2/ha/yr has been applied. CO2 losses from the site have been modelled over a 40 year period. By rewetting the site the following losses could quickly be avoided.

Current Avoidable Losses From Area A: 8ha @5 tonne/ha/yr x 40 = 1600 tonne CO2 equivalent Current Avoidable Losses From Area B: 20ha @10 tonne/ha/yr x 40 = 8000 tonne CO2 equivalent. Potential gains from Initial rewetting and management of King’s Moss Again based on figures from Fred Worral’s report for carbon gains for transitionary sink peatlands (taking into account negative impacts from methane flux) . A lower figure of 2.51 tonnes/ha/yr is applied to AreaB, once rewetted, and the higher figure of 4.61 tonnes/ha/yr is applied to the higher quality deep peat within Area A. CO2 gains from Area A over 30 years: 8ha @ 4.61 tonne/ha/yr x40 = 1475 tonne CO2 equivalent. CO2 gains from Area B over 30 years: 20ha @ 2.51 tonne/ha/yr x40 = 2008 tonne CO2 equivalent. Total Carbon Gains Over 40 Years This Project would protect the total carbon bank at King’s Moss of 384 000 tonnes CO2 equivalent from any future threats and development which may endanger it. Over 40 years the combined totals of “Avoidable Losses” and “Potential Gains” from undertaking rewetting and management works would total 13083 tonnes CO2 equivalent. From this point on the site would perpetually sequester CO2 from the atmosphere at a net rate of approximately 145 tonnes/yr CO2 equivalent. Cost Of Restoration Much depends on the costs of land purchase to give an accurate budget for complete restoration of Kings Moss. However based on current land values we estimate a total cost of approximately £400 000. This would give a direct cost of £30.57 per tonne of CO2. However, this cost only takes into account the carbon gain during the 40 year site restoration phase. It does not take into account the permanent protection of the 384 000 tonnes CO2 within the peat mass, or the perpetual gain from the site of approximately 145 tonnes/yr CO2 after the 40 year initial period.

NORTHWEST CLIMATE FUND SUPPLEMENTARY INFORMATION •

Estimate how much lowland and upland peat is available for restoration in the North West.

The North West Regional Target for habitat restoration is to improve the condition of 1,000 hectares of lowland raised bog that is degraded but readily restored by 2010. (NW Biodiversity Action Plan). There are probably another 2,000 hectares of associated peat based soils that could be rewetted to form a hydrological buffer zone. There are at least a further 5,000 ha of upland blanket bog that can be restored in the North West.

•

Calculate figures for how much carbon the North West Peatlands are emitting in total.

If we take the figure of 3,000 ha of degraded lowland raised bog, with an average rate of emission of 7.5 t CO2/ ha/ yr, then there are 22,500 t CO2 emitted per year. Over 40 years, this is 900,000 t CO2. If we take the figure of 5,000 ha of upland blanket bog, with an average rate of emission of 4.0t CO2/ ha/ yr, then there are 20,000 t CO2 emitted per year. Over 40 years, this is 800,000 t CO2. This makes a total of 42,500 t CO2e emitted per year in the North West. (1.7 million tCO2 emitted by peat over 40 yrs.) Restoring these peatbogs would immediately lead to an equivalent value of Avoided Loss (42,500 t CO2e). •

Calculate figures for how much carbon the North West Peatlands could sequester per year in recovering condition.

If we take the figure of 3,000 ha of degraded lowland raised bog, with an potential average rate of sequestration of 3.5 t CO2/ ha/ yr, then there are 10,500 t CO2 sequestered per year. Over 40 years, this is 420,000 t CO2. If we take the figure of 5,000 ha of upland blanket bog, with an average rate of sequestration of 1.6t CO2/ ha/ yr, then there are 8,000 t CO2 sequestered per year. Over 40 years, this is 320,000 t CO2. This makes a total of 18,500 t CO2e sequestered per year in the North West. (740,000 tCO2 sequestered by peat over 40 yrs.) If all peatbogs were restored, the total potential carbon gain for the North West would be 42,500 t + 18,500 = 61,000 CO2e per year. This would be a perpetual sink (every year). In addition, there is a Carbon Bank of approximately 4,000 t CO2 per hectare per metre depth. Many peat soils will have a depth of 5 metres. This phenomenal carbon bank has not been included in the calculation. To do so would make the cost per t CO2 unrealistically low. There is also some debate whether this would be ‘additional’. However, it could be a factor where peat is being extracted in vast quantities, or the land is being continually drained and ploughed. •

Determine standard calculations for peatland carbon sequestration (and costs per tonne of CO2) under various conditions.

The standard calculations are being tested with the project information (see attached). There are many different parameters and scenarios to work through. However, the average calculation confirms that the cost of £30.57 is accurate. Dr Fred Worrall (Durham University), the leading authority on this subject, is checking this calculation. •

Calculate the areas of peat extraction in the North West and the cost of purchasing licences to prevent further destruction of carbon stores – to be completed.

Area of peat extraction licences in the North West is 1,500 ha. The cost of purchasing licences is estimated to be around £5m. A more accurate figure should result from work to be carried out by the Wildlife Trusts

• •

Investigate carbon benefits of other landscape scale projects – further work required Scope out further potential projects – further work required.

Note: We fully support the concept of a pre-approved list of projects, ready to be funded very quickly out of a ‘fighting fund’. This will allow a rapid response to any offers of land for sale. The Wildlife Trusts have failed in our bids to buy land in the past because we have been unable to access grants quickly enough to make a successful bid. Restoration of Peat Bogs will truly be ‘funding the unfundable’. It will secure this distinctively north-western habitat and create a living landscape for wildlife and people.

Carbon management and the protection of peat bogs

A report for Lancashire Wildlife Trust

30 May 2007

At Sustainability Northwest we are committed to sustainable development and to minimising our own social and environmental impacts, through implementation of our values, our sustainable development policy and associated activities. These pledges are being delivered within our organisation through objectives, targets and action plans led by volunteer 'sustainability champions' within the organisation.

Prepared by: Email address: SNW Ref: Date:

Dr Steven Glynn s.glynn@snw.org.uk 8151 May 2007

CONTENTS INTRODUCTION........................................................................................................................................ 5 BACKGROUND........................................................................................................................................... 5 SOURCE OR SINK?.................................................................................................................................... 5 ASSESSING CARBON FLUXES............................................................................................................... 7 KEY MANAGEMENT ISSUES ..................................................................................................................7 IMPACTS OF CLIMATE CHANGE ........................................................................................................ 8 CARBON OFFSETTING AS A SOURCE OF INCOME ...................................................................... 10 NEXT STEPS.............................................................................................................................................. 11 REFERENCES ........................................................................................................................................... 11

Introduction

Sustainability Northwest was commissioned by the Lancashire Wildlife Trust to provide a review of current evidence concerning the role that peat bogs currently play, and could potentially play, in relation to climate change. This report discusses whether peat bogs act as sinks for or sources of carbon; the nature of the carbon sources; management issues that are raised; the potential impacts of climate change; and the possibilities of engaging in carbon offsetting activities as a way of financing work on peatlands.

Background

While peat covers only 3% of global land surface, it stores enormous quantities of carbon – equivalent to twice that of all the world’s forests combined and two-thirds of all the carbon in the atmosphere. The UK has approximately 15% of the world’s peatlands, storing more carbon than in the forests of Britain and France combined. In Lancashire, the Bowland Fells, and southern Pennines have proved particularly suitable for the development of peat. The role that peatlands play with respect to carbon emissions has gained in prominence, reflected in the comment made by Fiona Reynolds, Director-General of the National Trust that “the simple message is that we need to give greater priority to conserving our peatlands or risk losing the nation’s largest carbon store”1

Source or sink?

The level of carbon in peat bogs is the result of the balance of fluxes between carbon being sequestered into the peat bog and that being emitted (see Figure 1). A key question is therefore whether the uptake of carbon is greater than the release – whether the peatland acts as a sink or source for carbon, and how the condition of the peat bog influences this?

From http://www.nationaltrust.org.uk/main/w-global/w-news/w-news_peat_crisis.htm#peat.

Figure 1: Carbon uptake and release pathways for uplands peat (Worrall et al 2003) Gaseous CH4 Rainfall Net gaseous CO2 Exchange

Carbon stored in peatland

Dissolved CO2

Dissolved Organic Carbon (DOC) Dissolved Inorganic Carbon (DIC) Particulate Organic Carbon (POC)

Carbon from weathering of underlying strata

Sources of Carbon emissions from Peat bogs Carbon is emitted from the peat bogs directly as CO2 (and methane), as particulates and as dissolved gas. In considering climate change and carbon emissions, the first process is the simplest as these gases are emitted directly to the atmosphere, contributing to overall emissions. Although less direct water that contains dissolved CO2 will ‘degas’ over time with that CO2 being emitted into the atmosphere. In terms of particulates it is not clear how much of this carbon is atmospherically active. It has been estimated that about 40% of the carbon will get into the atmosphere with the rest remaining in sediment. However, there is uncertainty over this figure and some suggestions that it could be closer to 100% (Worrall, in conversation). This uncertainty means that it is important to consider two issues: loss of carbon (which is important if you are managing the peat bog); and loss to the atmosphere (which is important if you are interested in climate change).

It is suggested that British peatlands taken as a whole are likely to be a net sink for carbon. The levels of carbon stored were initially estimated to be in the region of 0.7MtC/ yr, however this did not consider fluvial emissions (Dissolved CO2, DOC, DIC, POC). Taking account of these additional fluxes of carbon led Worrall et al (2003) to revise the estimate downwards to a figure of 0.32MtC/yr. While this country-wide analysis suggests that peat bogs act as an overall sink, this is not to say that individual peat bogs are themselves sinks for carbon. Peat bogs can act as a source or sink for carbon and it is dependent of the state of that peat bog. Essentially, if peat bogs are damaged they are likely to be a source of carbon and if they are pristine they are likely to act as a sink. Upland peat can become a net source of carbon for 2 main reasons: lowering of the water table; and erosion. Both can be directly related to the management of the peat, or more indirectly influenced through other processes. In terms of direct management there are three main factors that can lead to damaged peat: •

Draining – The UK is one of the most drained lands in Europe and this process has played a key role in British agriculture. Most moorland drainage took place in the 1960s and 1970s with the aim of improving the quality of land for grazing (Holden et al, 2007). The effect of this drainage is to lower the water table which results in increased loss of carbon by soil respiration of CO2, dissolved organic carbon and dissolved CO2.

• •

Grazing – If moorland is overstocked with sheep then the result is likely to be loss of vegetation. Once the peat is exposed then erosion is likely to occur with subsequent loss of carbon. Burning – Moorland have traditionally been burnt to manage heather for deer, sheep and red grouse. While the Heather and Grass Burning Code has regulated burning there is evidence that in some areas the amount of land being burnt is increasing and that this has encroached onto blanket bog. Research has suggested that burning reduces peat accumulation in comparison with no burning and that stopping burning would represent one way of reducing carbon emissions and increasing carbon sequestration (Holden et al, 2007)

This is not to say that these processes will automatically lead to damaged peat that would be a source of carbon. Well managed peat, which could include the above processes, can still be seen as pristine. Peat can be damaged more indirectly, for example, vegetative cover can be lost as a result of air pollution (as is most likely the case in the Bleaklow area of the Peak District). As with the processes above, once the peat is exposed then erosion can quickly affect the peat. Wild fires can also result in vegetation loss and exposure to erosive forces.

Assessing carbon fluxes

Much of the work to assess carbon fluxes from peat bogs is done through modeling. In order to calibrate the models, measurements are taken (from what are referred to as patches) of variables such as water table level, gas emissions, runoff, weather, soil water samples etc. Where variables are difficult to measure directly, such as is the case with methane, then drivers such as water table and temperature are used to help estimate levels. To date, a complete carbon budget for a pristine peatland has only been calculated for one catchment; the Trout Beck catchment within the Moor House national nature reserve. The same is true for a severely damaged peatland. Worrall (unpublished), suggests that there is a need to measure the carbon budget for a range of managed and damaged sites taking account of: • Drained vs. drain blocked catchments; • Grazed vs. ungrazed sites; • Burnt vs. unburnt sites; • Pristine; • Replanted/restored; • Bare peat; and • Damaged by wildfire.

Key management issues

The key management issues for ensuring that peatlands can act as a sink rather than source of carbon will depend on the individual circumstances and conditions of a particular peatland. For example, in an area like Bleaklow where erosion is a significant problem and carbon is being lost at a massive rate, the first thing that needs to happen is to slow and hopefully stop the erosion by increasing the vegetation cover. Where there is such active

erosion gullies are likely to have developed and, while increasing vegetation can stop the erosion, if the peat bog is to be restored then these gullies will need to be blocked. Where erosion is less of an issue then the key management action is likely to be to raise the water table. In areas where man-made drains have been installed to improve the land for grazing, then blocking the drains is generally the most effective way of raising the water table. The costs of this type of activity are considerable, with, for example, the National Trust estimating that blocking 3,500 gullies has cost in the region of ÂŁ230,000. Once remedial work has occurred there is then a need for continuing good management, addressing issues outlined above (e.g. grazing, burning), if the action is to be effective in the long term.

Impacts of climate change

Climate change is already happening and will increase over the coming decades. This will have important implications for peat bogs. Average temperatures across the region could increase by up to 5oC over this century, while figures 2 and 3 show how rainfall across the Northwest could change. Figure 2 shows average summer rainfall for the region under a scenario that sees high global greenhouse emissions and one with low global emissions. The similarity between the two for the first period reflects the fact that this change is inevitable as it results from emissions that have already occurred. After this, changes under the high scenario are more significant across the region. It should be noted that current global emission rates are above those used in the high scenario. On average we could expect to see summer rainfall drop by ~60%. Figure 3 shows average winter rainfall and it is expected that this could increase by ~30%.

Figure 2: Average summer rainfall in the Northwest as a result of climate change (Source: Centre for Urban Regional Ecology)

Figure 3: Average winter rainfall in the Northwest as a result of climate change (Source: Centre for Urban Regional Ecology)

In addition to these changes in averages, it is also predicted that we will see more extreme weather, and in particular very hot spells, more droughts and more intense rainfall. Climate change means that managing peat bogs is the equivalent of trying to hit a target that is moving away from you. If a pristine peatland was left, then climate change would mean that over time it would degrade and move from being a sink to a source of carbon. Drier summers are likely to impact on the water table levels of peatlands and paradoxically, wetter winters will not alleviate but exacerbate the problem as more intense rainfall increases runoff. This makes the development, and implementation of good management practices and efforts to restore damaged peatland and even greater imperative.

Carbon offsetting as a source of income

For the one case of a severely damaged peatland where the carbon budget has been analyzed, figures suggest that annual loss of carbon is approximately 100 tonnes C/km2/yr. This compares with figures for the Trout Beck catchment which shows the peatland acting as a sink for around 11 tonnes C/km2/yr. This suggests that if the damaged peatland could be restored to a pristine state then the avoided losses and the sink created would be equivalent to 111 tonnes C/km2/yr. Taking all the peat bogs in England and Wales it is estimated that efforts to restore damaged areas could result in equivalent carbon savings to 2% of road traffic emissions. Providing restored peat bogs were then carefully managed the carbon stored should in effect be locked up in perpetuity 2. All this raises the prospect that funding for work on restoring and managing peatlands could be generated through carbon offsetting activities. The essential idea behind carbon off-setting is that individuals or organisations can buy â&#x20AC;&#x2DC;carbon creditsâ&#x20AC;&#x2122;, which have been generated through projects that reduce carbon emissions. These credits represent an amount of carbon saved that equates with the carbon produced through the activity (e.g. a flight) that the individual or organisation wishes to offset. Carbon offsets can be generated through regulated markets (which relate to the Kyoto Protocol or European Emissions Trading Scheme for example) or nonregulated markets. Much of current offsetting comes through this non-regulated market and is what are referred to as Voluntary Emission Reductions (VERs). However, the Government is currently consulting on developing a code of practice for offsetting and the initial proposal was that a quality mark be developed and this would be linked to regulated markets only. The impacts that this would have on the offsetting market are not clear at present. Key to the success of offsetting is that the emissions reductions associated with the project being used to generate the offsets need to be verifiable and it needs to be additional, i.e. those emission reduction would not have happened without the particular project. Although the potential carbon savings from managing and restoring peatland would appear to raise the prospect that funding for this work could be generated through carbon offsetting activities, there are currently no such schemes in place. The possibility of taking this approach is one that has gained greater exposure recently and could provide a novel way of generating funding. If this were to succeed it is most likely to be through VERs, with companies being able to associate themselves with the restoration/management process. There are additional benefits to the carbon savings itself as the work would help sustain the uplands, improve the habitat for many species, and help to improve water quality. Before any such scheme could be instigated a number of important questions would need to addressed: 1. What is the current state of the peatlands that were being considered for such a scheme? Taking the Lancashire example, if most of the peatlands in Lancashire were already in a pristine state then the opportunities for offsetting are more limited. However, there are management costs to preserve the current state, and if this did not happen then the carbon stored would decline, so there are still possibilities. 2. What is possible with regards to the amount of sequestration? At present there are limited examples of actual carbon budgets for peatlands and it is not clear how these might change under different management options. This kind of information 2

Unlike, for example, forestry where the trees will at some point die/be cut down.

is needed to understand what difference could be made between a peatland in its current state and some identified optimal condition. 3. Is it possible to accurately verify emissions reductions? As mentioned above, without accurate verification, the validity of offsetting can be questioned. This is a real issue for offsetting in general and not just for the idea of using peatlands for this purpose. However, if a local scheme were to be started then it would be necessary to robustly demonstrate the difference being made.

Next steps

This report represents only a brief review of the issues. It is clear that there are significant issues around carbon emission related to the management of peatlands. Without efforts to ensure that they remain, or are restored to as near a pristine state as possible, then peatlands could make a significant contribution to UK emissions. The danger of this will be exacerbated as climate change brings conditions less conducive for peat bogs. If Lancashire Wildlife Trust were to consider the possibility of pursuing a carbon offsetting scheme to fund work on managing peatlands then the questions outlined above would need to be tackled. Other issues would include: • Whether there are possibilities of working with others across the country to highlight the issues of carbon management and peatlands? Organisations such as Moors for the Future in the Peak District have been considering this issue and the National Trust (in partnership with Moors for the Future) have been working to address carbon loss in the High Peak area. The National Trust have called for Government action in 3 areas: o Rewarding carbon stewardship by land managers and farmers by targeting extra resources at peatland management; o Using the Climate Change Bill to create a UK market for land based carbon that works in a similar way to the current Emissions Trading Scheme; o Investing in research. • Whether formal offsetting is the most appropriate path to take? Offsetting is a controversial area with a number of commentators suggesting that in practice it has little effect other than to help clear the conscience of those buying the offsets. In terms of peatlands, the carbon management argument is powerful but perhaps it could be utilized in ways other than formal offsetting, and closely linked to other benefits. • Whether work being undertaken through the regional climate change Action Plan, could help to facilitate the use of carbon off setting in this case? Action 10 of the Action Plan is to “implement a regional carbon offsetting scheme to mitigate for unavoidable carbon emissions” and is being led by the NWDA. If such a scheme were to be established then there would be a need for a variety of regional carbon saving projects and carbon sequestration in peatlands could be one of these.

References

Holden J et al (2007) “Environmental change in moorland landscapes”, Earth Science Reviews, 82: 75-100, downloaded from http://homepages.see.leeds.ac.uk/~lecmsr/ EarthScienceReviews2007.pdf Pearce F (2004) “Peat bogs harbour carbon time bomb”, New Scientist, from http:// environment.newscientist.com/channel/earth/climate-change/dn6124 Rising to the Challenge: A climate change action plan for England’s Northwest 2007-09 The National Trust (2007) Vital carbon sources at risk, from http:// www.nationaltrust.org.uk/main/w-global/w-news/w-news_peat_crisis.htm#peat Worrall F et al (2003) “Carbon budget for a British upland peat catchment”, The Science of the Total Environment, 312: 133-146 Worrall F (unpublished), “Potential for carbon offsetting from the restoration of peatlands” The author talked in detail with Dr Fred Worrall from Durham University one of the foremost experts in the UK in this field.

Moors for the Future Partnership

The Moorland Centre, Edale, Hope Valley, Derbyshire S33 7ZA T: 01629 816581 ! F: 01433 670046 ! E: moors@peakdistrict.gov.uk www.moorsforthefuture.org.uk

Restoration of moorland in the Peak District National Park by Moors for the Future: 1. The recreational importance of the Peak District moorlands to residents of the Northwest 2. Carbon loss, sequestration potential and cost of restoring degraded moorlands in the Peak District

Programme Manager:

Chris Dean (chris.dean@peakdistrict.gov.uk)

Document prepared by: Jonathan Walker, Research Manager (jonathan.walker@peakdistrict.gov.uk) The Moors for the Future Partnership The Moorland Centre Edale Hope Valley Derbyshire S33 7ZA T: 016 29 816 579 M: 079 204 952 65 W: www.moorsforthefuture.org.uk

1. The recreational importance of the Peak District moorlands to residents of the Northwest Nearly a quarter of visitors to the Peak District moorlands are residents of the Northwest, mostly from Manchester and Cheshire. Annual visitor numbers to the Peak District National Park are estimated at between 11 and 22 million, with an estimated 25% of these visiting the moorlands. We can therefore estimate that 0.7 - 1.25 million people from the Northwest visit the PD moorlands every year. Table 1. Visitors to Peak District moorlands from the Northwest. Figures are based on a survey of 3623 visitors to 14 moorland gateway sites during 2004 and 2005 (Moors for the Future, 2006). County Greater Manchester Cheshire Lancashire Merseyside Cumbria

% of visitors to the Peak District moorlands 12.0 10.9 0.6 0.5 0.3

Estimated numbers of annual visitors* 330,000 - 600,000 299,750 - 545,000 16,500 - 30,000 13,750 - 25,000 8,250 - 15,000

Total from Northwest 24.2 665,500 - 1,250,000 * Figures based on an estimate of 25% of the 11-22 million annual visitors to the PDNP visiting the moorlands.

Figure 1. Spatial use of PD moorlands by resident of Greater Manchester (left) and Cheshire (right) based on point of entry. Green line represents the boundary of the PDNP; coloured area represents the extent of moorland for which red indicates high-use areas, dark blue indicates low-use areas (Moors for the Future, unpublished information).

3. Carbon loss, sequestration potential and cost of restoring degraded moorlands in the Peak District Peatlands are the single largest carbon reserve in the UK. With around 3 billion tonnes of carbon, more carbon is stored in UK peat than in the forests of Britain and France combined. UK peat bogs have the potential to actively sequester carbon. 80% of UK soil carbon losses are derived from upland peat soils, however, if they are damaged by wildfires or practices such as over-grazing, excessive burning or drainage, peatlands could emit up to 381,000 tonnes of carbon a year. In the Peak District, are some of the most badly degraded heather and blanket bog moorlands in the UK - a result of historic, but also contemporaneous, pollution deposition, wildfires, and inappropriate land management. In 2000, it was estimated that there were 9 km² of bare peat and 22 km² damaged moorlands. Carbon is lost by three main pathways: gaseous, from the oxidization of bare peat (set to increase with global warming); dissolved and particulate carbon (through erosion of bare peat and degraded moorlands). This has lead to extensive peat erosion in the Peak District, in the worse areas ~100 tonnes of carbon/ km2 are lost annually (see Table 2).

Peat = ‘Old’ Carbon

Bare peat on Bleaklow, Peak District

The degraded moorlands of the Peak District instead of functioning as carbon sinks and sequestrating, actually act as a carbon source. This is a particular concern as the carbon they are release is ‘old’ carbon – carbon, like oil and coal that was previously locked-up and therefore not active and affecting climate change. Restoration of moorlands, first and foremostly stops the release of this additional carbon into the system, and secondly the formation of new peat sequestrates carbon for the long-term. Moorland restoration also fulfills the recommended actions in the Biodiversity Action Plans of two priority habitats in the UK: blanket bog and upland heathland and therefore has considerable biodiversity benefits.

Restoration Methods Moors for the Future use two main methods of moorland restoration to address two different restoration problems, carbon loss from bare peat and peat (carbon) erosion from water channels ditches/grips (an historic management tool to drain moorland) and gullies (gullies are deep channels formed by water erosion and are a particular issue in the Peak District. Reseeding large areas of bare peat (landscape scale restoration) On areas of bare peat the priority is to halt erosion of the unstable peat by re-vegetating with a temporary nurse crop. The nurse crop has two main functions: 1) the roots stabilize the peat surface and reduce peat erosion and 2) mediate the environmental conditions (e.g. reduce desiccation) to facilitate recolonisation by native moorland plants. (Plate 1). Once the bare peat is stabilized, the next stage is to restore the hydrological and subsequent ecological functioning of the area to enable the formation of new peat and therefore the carbon sequestration benefits. This is done by grip/gully blocking (see below). Click here for further information.

Plate 1. Aerial images showing vegetation on Bleaklow, Sykes Moor before and after reseeding. Before reseeding. In 2002 (left) there are large areas to bare peat (brown) and mineral soils in gullies (white). Two years after reseeding in 2005 (right) there is 40-70% vegetation cover (gullies are lined with geotextiles (white) to stabilize peat against erosion).

Grip / gully blocking Ditches and gullies are blocked using a number of techniques / materials (including coir, wood and degradable plastic) Reduce sediment/carbon loss from eroding peatlands; raise the water table; promote re-vegetation; and reduce peak water flows (Plate 2). Click here for further information.

Plate 2. Gully (left) and drainage grip / ditch (right) with blocks in place.

Table 2. Restoration costs and carbon loss and sequestration potential in the Peak District National Park. Restoration work

Re-vegetation of bare peat (including stabilization) plus grip / gully blocking

Cost

Current Carbon loss

Carbon sequestrated

(£)

(tC/km2/yr) ~100

0.5 million / km2 † £26 – £98 / block

(tC/km2/yr)

Total Carbon ‘saved’ and stored (tC/km2/yr)

Cost (km2)

~40

~140

£665,000*

Cost : sequestration ratio £5 saves and stores ~ 1 kg C/km2/yr‡

†

Calculated from how much it has cost Moors for the Future to restore 2.63 km2 of bare peat in the Peak District. * Calculated on a density of 2750 blocks / km2 (calculated at the average density the National Trust has installed dams on their land in the Peak District) and an average cost of £60 / block (includes materials, labour and transportation). ‡ This is long-term sequestration; in the UK trees lock up carbon for up to ~100 years, peat stores carbon potentially in perpetuity.

Caveats: " Figures are approximate estimates given current evidence base – more detailed data arising from research funded by Moors for the Future should be available shortly; " Restoration costs, rates of carbon loss and rates of carbon sequestration vary with local conditions; " Figures do not incorporate the carbon emissions arising from carrying out restoration work;

Note: " "

Moors for the Future are currently working towards producing accurate carbon budgets for degraded, restored and intact moorlands in the Peak District in collaboration with Durham and Manchester Universities; Moors for the Future have submitted an application to the Carbon Trust for funding to develop accurate carbon offsetting models for moorland;

North West Climate Fund Increasing confidence in the NWCF Outline of validation and verification process Sarah Roberts th

April 15 2008

Ove Arup & Partners Ltd Admiral House, Rose Wharf, 78 East Street, Leeds LS9 8EE Tel +44 (0)113 2428498 Fax +44 (0)113 2428573 www.arup.com

This report takes into account the particular instructions and requirements of our client. It is not intended for and should not be relied upon by any third party and no responsibility is undertaken to any third party

Job number

Introduction 1.1

Purpose of report 1

This document provides an outline of the validation and verification process that will be required by Northwest Climate Fund (NWCF). Validation and verification are required to ensure the credibility of the Fund by assuring stakeholders that that the greenhouse gas (GHG) emission reductions claimed are real, additional and permanent.

1.2

Definitions 2

For the purposes of the NWCF, the following definitions are used: Validation: The assessment of a project’s Project Document, which describes its design, including its baseline and monitoring plan, before the implementation of the project against the requirements of a specific standard. Verification: Provides an assessment of the actual GHG emission reductions of a particular project.

1.3

Development process, challenges and assumptions

The key challenge is to develop an approach that is sufficiently rigorous to provide assurance to stakeholders that claims made about the amount of GHG reduced by NWCF projects are credible and that such reductions are genuinely additional and permanent, without the process being so burdensome that it discourages genuinely good projects or so costly that it is reduces the viability of the Fund. There is a wide range of existing standards and guidance relating to quantifying and verifying GHG emissions that the NWCF needs to be aware of. Although much of it is too complex for our needs, or focuses on Kyoto and Joint Implementation projects which are outside the scope of the NWCF, the NWCF will need to take account of the principles on which these are based and the overall processes that they follow. This is a fast developing area and there will be continued innovation and change as experience grows. In developing the proposed verification process the relevant standards and guidance listed in Appendix 1 have been reviewed. The different standards cover different aspects of designing and implementing an effective scheme. The most important for the NWCF are: -

GHG accounting standards that ensure that reductions are ‘real, additional, and permanent’ which need to be taken account of in the design of the project. These cover issues such as additionality and baseline methodologies and validating projects. These will form the basis for monitoring and verification.

Monitoring and verification standards that ensure projects perform as predicted. These affect the project implementation phase but need to be taken into account in the project design phase

Overall the NWCF is committed to meeting the principles of Defra’s Principles for the Voluntary Offset Market and these have been taken into account in designing the validation and verification approach. 1

The terminology validation and verification is used, rather than auditing, as it fits better with the terminology used in the relevant national and international standards and allows a distinction to be made between what is required prior to project approval and on-going verification. 2

Adapted from Making Sense of the Voluntary Carbon Market, A Comparison of Carbon Offset Standards, SEI 2008

Box 1

Defra: Principles for the voluntary offset market

Additionality – carbon savings must be in addition to reductions that would have been made anyway. Projects must be able to demonstrate that they are additional to business as usual and are not required by legislation or to demonstrate compliance against legally binding targets. Avoiding carbon leakage – the project must demonstrate that its reductions have not led to increased emissions elsewhere.. Permanence – ensuring that emissions reductions are permanent. If there is a risk that (some) of the reductions are impermanent e.g. risks to a forest from disease, then this must be accounted for. The project must be periodically independently reviewed. Verification – a system is in place for verifying reductions by an independent accredited third party Transparency - on the methodologies and procedures used. Stakeholders should be able to view project information and verification information on a publicly available website. Avoiding double counting - ensuring that emissions counted in an offset product are not counted elsewhere, for example as savings through an emissions trading scheme or allocated to two companies

A number of key standards have streamlined procedures for ‘small scale’ and ‘micro projects’ which are particularly relevant for the NWCF’s purposes. Key issues that will influence the appropriateness, credibility and cost-effectiveness of the verification process are •

the number of GHG projects that the NWCF will be dealing with

•

the scale of GHG projects in terms of GHG reductions

•

the complexity and contentiousness of potential NWCF projects

•

the size and capacity of the organisations managing the GHG projects

•

the availability of local verifiers

In order to make this draft as relevant as possible, discussions were held with the consortium members analysing the potential projects (Quantum and Lancashire Wildlife Trusts), Groundwork who are developing the governance structure and operational plan and Steve Connor who is leading the consortium. Although some uncertainty remains about some of the above issues, the following assumptions were made: 1. It is likely that a relatively small number of organisations will be involved in running 4 projects. 2. Most of the projects, at least in the initial stage of the NWCF, will be run by fairly large established organisations, including local authorities, charities such as Wildlife Trusts and existing energy efficiency organisations. 3 4

Defra news release 19 February 2008. Benn announces government offsetting code

The current proposal is for a framework agreement to be established for a limited number of organisations to provide projects. Even if this is not the final proposal, discussions with Quantum and Lancashire Wildlife Trusts point to the NWCF funding a small number of well established organisations, at least in the short-medium term.

3. The annual CO2-e savings for most individual projects will be less than 5000 tCO2-e 6 per year 4. The majority of the energy efficiency projects and renewable energy projects are likely to be straightforward projects where there is a lot of experience in demonstrating additionality and calculating CO2-e savings. 5. Calculating the CO2-e savings of the potential peat projects is more complex and there is less experience in demonstrating additionality and calculating CO2-e savings. 6. The cost of external verification will be too much of a burden for many of the small projects to bear.

These assumptions mean that

most of the projects will fall into the category of what organisations such as the Voluntary Carbon Standard (VCS) and Gold Standard terms a â&#x20AC;&#x2DC;micro-projectâ&#x20AC;&#x2122;, justifying a streamlined verification approach.

the NWCF will be primarily dealing with established organisations with clear governance structures who are used to being audited, making validation and verification easier to implement.

The NWCF may need a slightly different process for validating and verifying different types of project

CO2-e carbon dioxide equivalent. Unit for comparing radiative forcing of a GHG to carbon dioxide. It is calculated using the mass of a given GHG multiplied by its global warming potential. 6 It is possible that some peat projects may exceed this threshold

Proposed validation and verification approach 2.1

Overview

Figure 1 below, illustrates the steps in the development and implementation of a project process and shows how validation and verification fit into the project process. A two-stage validation and verification approach is proposed. 1. Validation occurs at the design stage and is a pre-requisite for NWCF approval. Its aim is to provide assurance that the projected carbon savings are genuinely additional and the projected amounts seem reasonable. 2. Verification occurs during project implementation and provides assurance that the carbon savings documented at the start of the project have occurred.

Project Steps

Documentation

Validation and Verification

Apply to fund. Project document, inc -Project description-Additionality analysis - GHG savings -Monitoring plan

D e si g n

Validation of project document

Validation report Selection checked by external validator

Approval by NWCF Board

I m pl e m e nt at io n

Monitoring GHG savings

Monitoring report Verification of GHG savings

Project implementor

Verification statement Selection checked by external verifier

NWCF Internal or external validator or verifier

Annual verification record released by NWCF Board

2.1.1

Validation

The aim of validation is to check that the claims made about the proposed project seem reasonable and are based on credible assumptions and methodologies. In particular the validation process will provide assurance that the projected carbon savings are genuinely additional and the projected amounts seem reasonable. All the information required for validation will be set out in the project document which will include: o

Project description

Project type e.g. renewable energy

Demonstration of additionality

CO2-e savings over the period of the project and the methodology and assumptions used to calculate those savings

Systems for monitoring CO2-e savings including measurements that will be made, quality control, record keeping

Wider contributions to sustainable development, such as biodiversity, access to wild spaces, community engagement

Stakeholder Engagement Many of the bigger schemes which deal with larger, more complex projects require stakeholder engagement to have taken place before a project can be validated. The assumption made in designing the validation and verification process for the NWCF is that stakeholder consultation will not be required for most of the projects that will be proposed to the NWCF because -

they are small scale, uncontroversial and affect few stakeholders, other than direct recipients e.g. energy efficiency projects

they are likely to be uncontroversial e.g. restoration of peat bogs already in Wildlife Trust ownership

However, there may be projects where this is not the case e.g. renewable energy installations in a particular location, purchasing of land for peat bog restoration where other stakeholders have other interests in the land. The need for stakeholder engagement will be judged at the expression of interest stage by NWCF project staff. If it is required, the stakeholder engagement process and results will form part of the project document and will be included in the validation process. The validator will check that: o

appropriate additionality test have been applied to the project and that based on these, the project is truly additional

CO2-e savings have been calculated according to the principles set out in ISO14064-2 and that appropriate methodologies and assumptions have been used to calculate the baseline and estimate the CO2-e savings

an appropriate system for monitoring CO2-e savings has been documented

the wider sustainability benefits related to the project have been documented and seem reasonable

if stakeholder engagement is required, the validator will check that a reasonable process has taken place and the results support the project going ahead.

Demonstrating additionality No project can be approved by the NWCF unless it demonstrates that it is additional. Additionality tests attempt to establish whether an offset project would have happened anyway ie a project needs to demonstrate that it is additional to business as usual and is not required by legislation or to demonstrate compliance against legally binding targets. Box 2 sets out some common additionality tests. The tests which are most applicable will depend on the type of project in question. For example, the common practice test will be of most relevance to the innovation fund, while the investment test might be appropriate to some peat projects.

Box 2

Common additionality tests

Regulatory test – a project which is being implemented to fulfil official policies, regulations or industry standards cannot be considered additional. Investment test – carbon finance plays an important role in the financial viability of the project. If the rate of return is acceptable without the carbon finance then generally it cannot be considered additional. However, if the project can demonstrate that there are additional ‘non-monetary’ barriers to its implementation it may be able to demonstrate additionality. Barriers test - This test covers implementation barriers such as local resistance, lack of know-how

and institutional barriers. If the project succeeds in overcoming significant non-financial barriers that the business-as-usual alternative would not have had to face, the project is considered additional. Common Practice Test If the project employs technologies that are very commonly used, it might not be additional because it is likely that the carbon finance benefits do not play a decisive role in making the project viable. This test would be particularly applicable to the innovation fund.

Calculating CO2-e savings The project document will also set out the methodology used for calculating the projected CO2-e savings over the lifetime of the project. To calculate the carbon savings of a project the project implementor needs to show the CO2-e savings compared to a ‘business-as-usual’ baseline. The difficulty is that that the baseline is a hypothetical scenario but it needs to be detailed enough to allow the carbon savings of the project to estimated. Key principles in the quantification of greenhouse gas emissions reductions are set out in Box 3 below.

Box 3 ISO 14064-2 Principles for the quantification, monitoring and reporting of greenhouse gas emissions reductions or removal enhancements Completeness – Include al relevant GHG emissions and removals. Include all relevant information to support criteria and procedures. Consistency – enable meaningful comparisons in GHG-related information. Accuracy – reduce base and uncertanties as far as practical. Transparency – disclose sufficient and appropriate GHG-related information to allow intended users to make decisions with reasonable confidence. Relevance - Select GHG sources, sinks, reservoirs, data and methodologies appropriate to the needs of the intended user. Conservativeness – conservative assumptions, values and procedures are used to ensure that GHG emission reductions or removal enhancements are not over-estimated.

Monitoring CO2-e savings As part of the validation process, the validator will check that a credible system for monitoring CO2-e savings, appropriate for the project and for organisation in question to implement, has been set out in the project document. This will need to include the measurements that will be made, the systems for ensuring quality control and the how records will be kept. Wider contributions to sustainable development The validator will check that the sustainability benefits documented seem reasonable.

2.1.2 Carrying out the validation Most large schemes and those that issue Certified Emission Reduction credits require validation and verification to be carried out by independent third party organisations. This is designed to provide confidence in the schemes, although such requirements have not stopped negative claims being levelled against schemes such as the Clean Development Mechanism. Given the relative simplicity and small scale of the NWCF, the balance needs to be struck between a validation and verification process that provides confidence in the projects and the carbon savings without being overly bureaucratic and costly. As noted above, many of the projects, such as those relating to energy efficiency, are projects where there is likely to be considerable experience in demonstrating additionality and calculating CO2-e savings. In other cases, such as the peat projects, the calculations may be more complex and controversial and validation will require particular technical expertise. Consequently, while external validators will always be required for some projects, if sufficient competence is built up within the NWCF staff team to validate straightforward projects then this should be allowed. In most cases, validation is likely to be a desk-based exercise but complex, unusual or controversial projects may require a site visit. To reduce the problems and perceptions of conflict of interest an external validator will be asked to check a selection of any validations that have been carried out internally to ensure that there is confidence in the process. All validation reports whether internal or external will be passed to the NWCF board (or board subcommittee) who will make the decision on project approval, thereby separating the validation and approval process.

2.2

Verification

Verification provides assurance that the carbon savings projected for the particular time period of the project in question have occurred. Different projects will have different time-periods, for example the energy efficiency and renewable energy projects set out in the interim report assume measures last for between five and twenty years. Each year project implementors will be asked to submit a monitoring report detailing the projects that they have underway, the results from the CO2-e savings monitoring that they have in place and the annual and total CO2-e savings that have resulted. Any differences between the projections in the project document and the results need to be noted and explained. Verifiers will check that the monitoring outlined in the project document is being carried out as proposed and that any changes can be explained and justified. They will check that the monitoring report provides evidence that the expected amount of CO2-e has been saved and that any differences from the projections in the project document can be explained and justified. 2.2.1 Carrying out verification Verification is likely to be a more straightforward activity than validation and if there is sufficient expertise and capacity within the NWCF staff team, then verification can be carried out internally. If verification is carried out by NWCF staff, the verifier needs to be different to the staff member that carried out the validation. Most of the verification will be a paper-based exercise checking the monitoring report against the project document, particularly for projects that have been already been running effectively for several years. However phone calls and site visits may be required to check that what is being reported is happening as described on the ground, particularly in the early years of a project. A selection of any verification reports developed internally will be checked by an independent third party and their report and all internally generated verification reports will be passed to the NWCF board. Each year the NWCF board will issue a Verification Record, detailing all the projects funded by the NWCF, their carbon savings and the total tonnes of CO2-e that have been saved as a result of the NWCF. Any project which is controversial or which the NWCF has received a complaint about will need to be externally verified.

2.3

Paying for verification and validation

All validation and verification will be paid for by the project implementors. Any independent third party validation and verification will be paid for directly by the project implementor, after agreeing who will carry out the assessment with the NWCF. Internal validation and verification and the costs of selected external checking of internal assessments will be paid for from a fee paid to the NWCF by the project implementor.

Appendix A Relevant standards and guidance

Relevant standards and guidance

Standards/Guidance

Standard developer

Principles

Key issues/relevance for NWCF

ISO 14064-2:2006 - Greenhouse gases — Part 2: Specification with guidance at the project level for quantification, monitoring and reporting of greenhouse gas emission reductions or removal enhancements

International Standard Organisation

Completeness Consistency Accuracy Transparency Relevance Conservativeness

It provides the basis for GHG projects to be validated and verified.

ISO 14064-3:2006 - Greenhouse gases — Part 3: Specification with guidance for the validation and verification of greenhouse gas assertions

International Standard Organisation

Independence Ethical conduct Fair presentation Due professional care

Details principles and requirements for validating and verifying GHG projects.

ISO 14065:2007 - Greenhouse gases — Requirements for greenhouse gas validation and verification bodies for use in accreditation or other forms of recognition.

International Standard Organisation

Impartiality Competence Factual approach to decision making Openness Confidentiality

Provides requirements for bodies that undertake GHG validation or verification using ISO 14064 or other relevant standards.

Most other standards will have regard to this

Most other standards will have regard to this. Fairly generic so that it is applicable to all situations

Contains principles that verification bodies should be able to demonstrate and requirements that reflect these principles. Can be used by verification bodies to self-declare their competence or by GHG programme administrators to recognise the competence of verification organisations Most of the large schemes require verifiers to be accredited to this standard

Voluntary Carbon Standard

Developed by Climate Group, International Emissions Trading Organisation and World Economic Forum, with WBCSD as founding partner.

The Gold Standard

Founded by key NGOs, including WWF. Now supported by 51 NGOs.

Defra Code of best practice for carbon offset providers

UK Department of Environment Food and Rural Affairs

Existing offset organisations

Range of offset providers, e.g. Carbon Neutral Co.

ABBY'S HD:USERS:ABBY:DESKTOP:CARBON V&V PROCESS 15-4.DOC

Taken from ISO 14064-2 (see above)

Released at the end of 2007, aiming to be the leader in the voluntary market

Independent standard aiming to ensure sustainable development benefits ensue from GHG emission reduction projects. Covers CDM and voluntary market.

Additionality Avoiding carbon leakage Permanence Verification Transparency Avoiding double counting

Released February 2008. Currently only covers Kyoto compliant credits but may be expanded to cover the voluntary market if the offset industry can develop an appropriate standard.

Some of their guidance is publicly available and relevant

Page A1

Ove Arup & Partners Ltd Draft 1

Northwest Climate fund Operational and Organisational Plan Final Report

Contents

Author Ben Williams Date 25th April 2008

• • •

Introduction Operational plan Organisational plan

Introduction This report clarifies and builds on the early findings reported in the Interim Report. Since the production of the interim report, a number of key discussions have taken place, which have helped to refine and validate the models proposed. Key areas of progress have included: • Publication of the results of the opinion polling • Discussions with Creative concern and BDO regarding financial modelling • Discussions with Pannone regarding legal structures and Board composition • Discussions with NWDA regarding development of second stage • Full consortium meeting In general, the proposals made in the interim report have been endorsed and supported. The key significant deviation from the original thinking has come from the business survey results, which showed a much greater leaning towards the Fund from the perspective of Corporate Social Responsibility, rather than the initial perception that it would be very much focused towards Carbon. This ties in well with the difficulties that the consortium has been facing regarding the issue of offsetting, and supports the position that NWCF will be offering a value-adding regional CSR package, rather than straightforward Kyoto offset services. That said, it remains important that the fund offers an opportunity for individuals, and particularly for businesses, to invest in products that directly address their own Climate change impact. Therefore NWCF will deliver a programme activity aimed at compensating for, rather than directly offsetting, activities which impact negatively on Climate Change. Much of the detail of the Fund will be picked up in the reports of other consortium members. These linkages are indicated at the relevant parts of this report.

Groundwork Northwest

Operational plan The final report supports the interim report’s proposal for four principal business units: • Carbon compensation • Good causes • Innovation • Corporate centre Carbon Compensation This aspect of the fund will manage a portfolio of projects with an overt carbon focus, and will be promoted to businesses and individuals on the basis of a direct compensation for the impact of their activities on climate change. As stated above, this would be a valueadded model of compensation, rather than Kyoto offsetting, and projects would, as well as their impact on global carbon levels, have a number of other criteria: • Projects should be based within the Northwest • Sequestration projects should demonstrate how they contribute to Regional biodiversity plans or other relevant strategies • Any carbon benefit accrues within the Region • Projects should demonstrate clear additionality in any activities resourced through the Fund • Carbon calculations should be based on robust evidence and accounting methodologies. The portfolio of projects would be procured on a framework basis, with a list of providers being selected, giving options to customers as to which particular project their specific contribution will support. Projects will be scrutinised very closely during the selection process, to ensure that all framework members closely support the above 5 criteria, and have robust and demonstrable audit processes in place. Once active, the Fund would spot audit individual projects, to ensure that contractual agreements are being maintained. The major project currently identified under this aspect is the restoration and management of peat bogs. Other options are currently being explored, and are expected to come to light through the procurement process. LINK TO: LANCASHIRE WILDLIFE TRUST Good Causes This aspect of the fund will manage a programme of small grants within the Region, supporting smaller-scale, community focused projects which have a positive impact on climate change. Decision making over this element of the work will be devolved to the sub-regional level, allowing more locally responsive allocation of resources. The infrastructure already exists at sub-regional level – either through Sub-regional Partnerships or through the sub-regional Change Up hubs, although these partnerships have not yet been formally approached with this. While this element of the fund will target projects that have a positive impact on climate change, it is accepted that these projects will have a broader suite of outcomes, focused more on local priorities, than the main compensation programme. Project types could include small scale renewables, energy efficiency, a ‘concierge’ service to enable people to take up renewable energy and energy efficiency, and other types of community projects. LINK TO: QUANTUM Innovation (further research and market testing required) This aspect of the fund will promote innovation in businesses and individuals within the Region, to bring new environmentally responsible ideas to the public. This aspect of the Fund is less well developed than the others, since it will require careful mapping of existing business support provision prior to launching. It is important that any innovation activity both complements existing business support mechanisms, and

Groundwork Northwest

retains a niche and purpose specific to the NWCF. Early thoughts have included the provision of specific support to businesses to enable them to access the supply chain for the compensation work outlined above. Equally, research is needed into whether this innovation aspect would involve grants or loans to recipients. Corporate Centre The Fund will require a strong corporate centre, to effectively house and manage the above aspects. Management, accounting, reporting and audit will all need to be carried out to a high standard. Businesses, individuals and public sector financiers will all have different reporting requirements to meet if the Fund is to operate properly. Additionally, there will be a high demand for marketing and business development. The Fund will be operating in an increasingly competitive marketplace, and will need strong and active relationship management if it is to continue to generate the required revenues over the medium to long term. Additionally, it is expected that the fund will engage with Regional strategic activity â&#x20AC;&#x201C; partnership working, championing the role of positive Climate change activity within the Region, influencing Regional policy, and supporting major infrastructure developments, even in the absence of direct funding through NWCF.

Groundwork Northwest

Northwest Climate Fund â&#x20AC;&#x201C; Schematic

Note â&#x20AC;&#x201C; All revenues for compensation activity are ringfenced for that purpose. Compensation activity above this threshold at the discretion of the Fund board.

Groundwork Northwest

Organisational Plan As recommended by Pannone, we agree that the Company Limited by Guarantee is the preferred organisational option for NWCF. It leaves options open for conversion to registered charity or community interest company at a later date, and in the interim provides sufficient safeguarding of purpose and protection for Directors to suit the needs of the Fund. More detail and discussion of governance will be provided in Pannoneâ&#x20AC;&#x2122;s report, but it is our firm conclusion and recommendation that the Board of NWCF be a skills-based business Board, rather than a representative management committee. The competitive environment in which NWCF will be operating demands strong business leadership, and this can only be achieved with a focused and manageable Board acting in concert for the good of the fund. Accountability and representation can be achieved through company membership and AGMs, but the Fund will need to be able to operate responsively at Board level. LINK TO: PANNONE Managerially, we recognise two distinct phases to the Fund. The first phase, while the Fund is in development, has a lesser staff structure and running cost, while the longer term organisational structure takes on board the need for ongoing marketing and business development, and has a higher level of cost associated with it. When considering income and turnover, it has not been practical with the information available to make detailed income models. We have arrived at target income figures based on proportion of turnover to be spent on Fund management and administration. Comparator organisations in the Carbon Offset industry were sampled, and found to be generally in the vicinity of 45-50%, with one company sampled being as high as 60% of turnover. To remain competitive in this marketplace, we have targeted an initial proportion of 40% of turnover being used to cover organisational costs, with a long term target of reducing this proportion to 25%. Depending on the eventual balance of the Fund between charitable activities and carbon compensation, there may need to be a review of the comparator organisations used to calculate these forecasts. In any case, it is important that the Fund practice transparency in evidencing and clarifying its running costs to stakeholders, as this will be an important factor in promoting and maintaining public trust and goodwill, which will be crucial to the long term sustainability of the Fund. The organisation is largely a fixed cost business, with a minimum staffing level required to deliver and account for the objectives of the Fund, which will accommodate a significant volume of business before needing to expand. Therefore as turnover increases, the value for money offered by the Fund will also be enhanced.

Groundwork Northwest

Stage 1 â&#x20AC;&#x201C; Incubation

This model operates during the first 2 years of the fundâ&#x20AC;&#x2122;s life, while it is receiving support from NWDA in covering its operational costs and providing seed funding for delivery activity. Marketing work is outsourced through a contract, to reduce overhead expenditure at this stage and to take advantage of the positioning work done in preparation to the launch of the fund. This model is also likely to require a further element of outsourced work in setting up systems and processes, and other costs associated with business start up. This model is scaleable, in that the fund will be able to be launched with a lesser number of staff, but we would advise careful consideration of the balance between reducing costs during the early phase of activity, where such costs can be met through startup funding, and securing additional development capacity that early investment in staffing will bring, to secure business opportunities for the future. There is also a key issue in that during this phase of development, the organisation will be managing NWDA funding, which brings with it an administrative and financial accounting burden which necessitates a well developed support service.

Groundwork Northwest

Stage 2 â&#x20AC;&#x201C; longer term

The key differential between the two models is the bringing in-house of marketing and business development. This will be more sustainable over the long term, where the advantages of having marketing outsourced are displaced by the benefits of having all functions run in-house, and being able to manage and direct the organisation more effectively. This structure will effectively accommodate a volume of business well in excess of the levels currently being forecast, but as with the incubation phase, care should be taken when considering reducing staff numbers, not to compromise the ability of the organisation to develop and bring in new business. LINK TO: BDO

Groundwork Northwest

REPORT ON THE PROPOSED STRUCTURE OF THE NORTHWEST CLIMATE FUND

Pannone LLP has been asked to advise on the most appropriate structure for the Northwest Climate Fund. It is assumed that the Fund will be set up as a not for profit organisation. The following main issues are considered in our report: 1

The legal structure to be adopted.

The question of charitable status.

Implementation of Business Plan.

Other work streams/input required from Pannone LLP.

LEGAL STRUCTURES

There are a number of possible structures commonly used for bodies of this type: •

an unincorporated association governed by a trust deed;

•

an Industrial and Provident Society (IPS);

•

an incorporated company; or

•

an community interest company.

Unincorporated Association

An unincorporated trust is a collection of individuals. It has no separate legal identity of its own. The assets of the association are held on trust by trustees, to be used in furtherance of the trust’s objects. These trustees are personally responsible for the assets. Advantages An unincorporated trust is simple and flexible and there is no statutory requirements to publish accounts. Disadvantages The disadvantages are:

•

no separate legal identity - all liabilities are those of the trustees personally;

•

the trustees personally enter into all contracts;

•

any criminal offences of non compliance are deemed to have been committed by the trustees and they are also personally liable for any wrongful acts and omissions of their employees. In normal circumstances the trustees do have a right to be reimbursed for the trust’s assets provided that sufficient assets are available and that they have not breached their duties as trustees. Industrial and Provident Society

1 i:\corp\ag\clients\northwest climate fund\docs\report (v2).doc

Registration as an Industrial and Provident Society with the Chief Registrar of Friendly Societies is only available to an association which is formed for the carrying on of an industry, trade or business which is either a bone fide co-operative society or is intended to be conducted for the benefit of the community. Advantages An IPS has the following advantages: •

registration confers corporate status on the association with the resultant benefits of limited liability and a legal identity in its own right. The IPS enters into contracts not the individual board members thus: •

any legal proceedings are brought against the IPS and not individuals, and judgments are entered in its name;

•

acts of employees are the liability of the IPS as are all issues of non-compliance;

•

if an IPS falls within the definition of a charity, it will be an exempt charity under the Charities Act 1993 and is not required to be registered with the Charity Commission. It is therefore not subject to regulation by the Charity Commission;

•

it may be easier to attract and retain high calibre board members if they know they have limited liability, as is usual in business affairs;

•

retiring board members will not risk continuing liability.

Disadvantages The disadvantages are:

•

some loss of freedom of activities and privacy (similar to that for a company). In order to be registered as an IPS the Northwest Climate Fund would have to submit Rules to the Chief Registrar and file accounts and an annual return. In addition, an auditor must be appointed annually to audit the accounts of an IPS;

•

an IPS is under the direct supervision and control of the Chief Registrar and he has the power to appoint and inspect to examine the affairs of an IPS;

•

an IPS is more expensive to register and administer than either a trust or a company. For example, the cost of registering a new company at Companies House is £20, while the cost of registering an IPS with the Chief Registrar is over £800. In addition to these costs, substantial fees are also payable on the registration of a change of name, on the registration of accounts, and on the registration of a majority of amendments to the Rules;

•

as an exempt charity no advice or support from Charity Commission is available to an IPS. Company

Like an IPS a company exists as a separate legal entity and can own property and enter into contracts independently of its directors and members. The directors of the company must act within the company’s Objects as expressed in its Memorandum of Association. The Objects clause of the Memorandum should set out the purpose for which the company is established and what it is empowered to do. 2 i:\corp\ag\clients\northwest climate fund\docs\report (v2).doc

The usual form for not for profit companies is a company limited by guarantee. Companies limited by guarantee are commonly formed for charitable, social or other non trading purposes. Rather than shareholders the company has members who guarantee to pay a nominal sum, usually £10, towards the company’s debts if it is wound up. Provided that they do not breach any of their duties as directors (and as trustees if charitable) the liability of the individuals would be capped at £10. Advantages A company has all the advantages of an IPS such as limited liability status and existence as a separate legal entity. In addition a company structure has the following advantages: •

although not intrinsically as democratic as an IPS, is sufficiently flexible to allow a democratic and community oriented structure;

•

considerably less expensive to register and administer than an IPS;

•

a more straight forward and flexible structure than an IPS.

Disadvantages The disadvantages are: •

less freedom and privacy than in an unincorporated association;

•

regulatory compliance such as filing of annual accounts and an Annual Return at Companies House. However, we understand that the Government requires annual accounts to be submitted by Northwest Climate Fund regardless of which structure the Working Group adopts.

These are no more onerous than an IPS. 4.

Community Interest Companies

Community interest companies (CIC) are a new type of limited company designed specifically for those wishing to operate for the benefit of the community rather than for the benefit of the owners of the company. This means that a CIC cannot be formed or used solely for the personal gain of a particular person, or group of people. CICs can be limited by shares, or by guarantee, and have a statutory "Asset Lock" to prevent the assets and profits being distributed, except as permitted by legislation. This ensures the assets and profits are retained within the CIC for community purposes, or transferred to another asset-locked organisation, such as another CIC or charity. A CIC cannot be formed to support political activities and a company that is a charity cannot be a CIC, unless it gives up its charitable status. However, a charity may apply to register a CIC as a subsidiary company. Advantages •

specifically designed for entities for the benefit of the community;

•

regulator envisaged as having a "light touch";

•

you are able to convert a company to a CIC.

Disadvantages 3 i:\corp\ag\clients\northwest climate fund\docs\report (v2).doc

•

relatively new and untried - difficult to see real advantages over a properly constituted not for profit company;

•

risk of inflexibility and uncertainty in how definition of community benefit may develop - could give rise to issues where individuals/their business are to receive support;

•

not available if entity is charitable

5. Charitable Incorporated organisation (these companies are not yet available and are to be implemented towards the end of 2009) The Charities Act 2006 introduces a new legal form of incorporation which is designed specifically for charities, the Charitable Incorporated Organisation (CIO). At present charities can be set up with a corporate structure but this means that they normally fall within the requirements of company law as well as charity law. In particular, they have to register both with the Charity Commission and the Registrar of Companies at Companies House and provide accounts and returns to both. As the framework of company was designed primarily for commercial organisations this may mean that it is not always suitable for charities. The CIO will combine the advantages of a corporate structure such as reduced risk of personal liability without the burden of dual regulation. If the Northwest Climate Fund is a charitable entity, as and when CIO's are available, we recommend that a regular review of the status is carried out to see if a conversion to CIO status is advantageous. It is envisaged that the conversion from charitable company limited by guarantee to CIO will be a very simple and straightforward process. 6.

Conclusion

A not for profit company limited by guarantee would in our opinion be the simplest structure and it is already and tried and tested route for companies such as Northwest Climate Fund. B

CHARITABLE STATUS

Charity

A charity is a body which is established to benefit the general public. As discussed above there is a wide variety of legal entities that can be charities (including trusts, unincorporated associations, IPSs, and companies). Somewhat unhelpfully, there is no clear strict legal definition of a charity and what are accepted as charitable purposes has been extended and developed over the years to reflect changes in social conditions and attitudes. Registered charities enjoy a particular standing in the eyes of the public as well as benefiting from certain tax relief. In order to achieve charitable status a body must: •

pursue activities which are exclusively charitable;

•

not engage in political activity;

•

comply with certain restrictions on trading activities;

•

comply with the general restrictions of charity law. 4 i:\corp\ag\clients\northwest climate fund\docs\report (v2).doc

Charity Trustees

These are the people responsible for ensuring that a charity complies with its responsibilities, duties and with all applicable legislation. They have the general control and management of the charity and the Charity Commission normally expects there to be at least three trustees. If the charitable company route is taken the board of directors will be the charity trustees. The position carries legal responsibilities and duties and cannot be filled by a person who is under the age of 18, an undischarged bankrupt or someone who has been convicted of an offence involving deception or dishonesty. The trustees have individual and collective responsibilities, taking ultimate responsibility for all assets of the charity and they may be liable for any loss which results from their negligence or from any willful default or dishonesty. There is a basic premise that trustees of a charity must not benefit in way from their position, though the Charity Commission will authorise payment of trustees where it can be shown to be both reasonable and necessary in the interests of the charity. The main duties of charity trustees are:

•

to act together and not to delegate control of the charity to others;

•

to act in accordance with the charity’s governing document;

•

to act in the charity’s interests only and without regard to their own private interests;

•

to manage the charity’s affairs prudently and take a long-term as well as a short-term view;

•

not to derive any personal benefit or gain from the charity of which they are trustees;

•

to take proper professional advice on matters on which they are not themselves competent. The Charity Commission

The Charity Commission aim to give the public confidence in the integrity of charities. It carries out a variety of functions including the registration, monitoring and support of charities and investigation of alleged wrong-doings. The only charities which are not subject to the regulation of the Charity Commission are exempt charities. These include the Universities, many national institutions such as museums and art galleries, the Church Commissioners and Industrial and Provident Societies. Such charities are not subject to regulation by the Charity Commission, but they do have to comply with general charity law and, as an important part of the Commission’s work is advice and support for charities, being exempt is not necessarily an advantage (see above). C

IS THE NORTHWEST CLIMATE FUND PROJECT CHARITABLE?

To be charitable, a body must confer a benefit on the public as a whole or on a sufficient section of the public. It must also only carry out charitable activities and (save in very limited circumstances) no other activities. Depending on the nature of the projects to be supported by the Northwest Climate Fund, it is necessary to consider whether the benefits could seem to go, in the first place, to individuals and individuals’ businesses rather than to the wider public. If an organisation is to be a charity, its purposes and activities must therefore be restricted so that any private benefits arise only as a necessary means of achieving the overall charitable purpose and incidental to 5 i:\corp\ag\clients\northwest climate fund\docs\report (v2).doc

it. It would not be acceptable if the private benefits were an end in themselves. This is a very difficult area on which to advise and we recommend that we work closely with the Charity Commission and the other members of the project team (especially Groundwork and with BDO on the tax side) to assess whether or not the proposed activities are likely to exclusively charitable. If the Northwest Climate Fund is to be established as a charity, Pannone LLP can draft suggested charitable objects for the project. Once the Steering Group have worked on and approved these Charity Commission approval can be sought and registration applied for in due course. D

IMPLEMENTATION OF BUSINESS PLAN

The main issues to be considered in establishing the appropriate legal entity for the Northwest Climate Fund are as follows: •

identification of and meetings with relevant stakeholders to discuss their views and aspirations as to their respective roles;

•

involvement of charity commission (as appropriate) in reviewing and considering the likely activities of the entity and establishing whether or not it will be a charity;

•

close working with Groundwork in respect of compliance and governance issues to ensure appropriately reflected in the structure of the entity as well as contractual arrangements;

•

agreement on constitutional/governance and status of criteria for evaluating projects;

•

working closely with BDO on structural and tax issues of the entity (including impact of charitable status);

•

working with a core team/steering group to agree the structure including, but not limited to:

• E

whether all members are to be directors or whether there is to be separate membership;

whether stakeholders or their representatives should be the members;

confirmation of quorum and voting rights;

whether a chairman should be appointed;

whether any particular matters need to be reserved to the members rather than the board of directors; and

agreeing main objects; and

advice on addressing potential conflicts of interest for individuals appointed by the subcommittees and agreeing the relevant powers of the subcommittees. SUMMARY AND CONCLUSIONS •

A not for profit company limited by guarantee would in our opinion be the simplest structure and it is already and tried and tested route for companies such as Northwest Climate Fund. 6 i:\corp\ag\clients\northwest climate fund\docs\report (v2).doc

•

This form of legal entity is equally suitable for charitable and non charitable entities (so avoiding any duplication of work whilst liaising with the Charity Commission).

•

A decision as to who are going to be the members and directors needs to be made. 

One possible method and our recommendation would be to have the same people as members and directors but this will be dependent on the needs and requirements of the various stakeholders.



It is our recommendation that the board of directors be more than just a strategic advisory board and that the articles allow sufficient flexibility to ensure that they have the necessary skills and authority in order to run the company.



The stakeholder entities could be the legal member of the Company and then they appoint individuals from the entities to be the directors or alternatively the entities can appoint individuals at the outset to be both the member and the director in their own right. The simplest method would be to have the same people as directors and members as this becomes a much more manageable system, however, you then do not have the split decision making. It is our recommendation that unless there is an actual need to have a different group of decision makers at member level, the route of the members as directors is preferable. If however, the stakeholders themselves wish to be the legal members, a clear understanding needs to be reached as to the respective roles.



Depending on who the stakeholders are consideration needs to be given as to whether additional co-opted directors with particular skills should form part of the board and if so whether this needs to be entrenched in the articles.



Whatever structure is agreed it is essential to ensure that the board has the necessary skills and expertise to run the company effectively.



If an executive officer is appointed to actually run the company, they could either be a director (unless charitable) or they could be an observer at board meetings in order to implement the actions following the board meetings.

•

As discussed with Groundwork it is anticipated that the company would have between three and eight subcommittees (Offset Scheme subcommittee, Good Causes subcommittee and Venture Capital subcommittee and sub regional committees). This structure fits well with the suggested company entity, and appropriate reporting procedures can easily be built into the Articles of Association - either on a general or a specific basis. The Offset Subcommittee would procure and performance manage the framework and would also provide technical skill and experience. The Good Causes Subcommittee would be involved in the decision making and the Venture Capital Subcommittee would provide business support. The whole board of directors would have overall responsibility, drawing on the recommendations and advice of the subcommittees.

•

We need to discuss the relevant powers of the individuals who sit on the various subcommittees and the directors and members of the company in order to draft the Articles of Association. Ultimate responsibility and accountability should be 7 i:\corp\ag\clients\northwest climate fund\docs\report (v2).doc

kept with the board of directors and it is proposed that the committees put forward ideas/proposals to the full board of directors who then vote upon such matters.

•

The company must have sufficient flexibility to address changes over the next 100 years.

•

It may be sensible to incorporate a company limited by guarantee at the outset and then convert to a community interest company in due course if it is decided that the company is not to be charitable.

•

In order to finalise the legal structure of the company we need to fully understand what Northwest Climate Fund intends to invest in/support (in order to determine whether it is to be charitable or not) and we also need to liaise with Groundwork and BDO to ensure the governance and tax advice suits the entity we wish to incorporate. For these reasons, setting up a company limited by guarantee would be the safest, simplest and most flexible method.

Other work streams/input required from Pannone LLP •

Proof Check Work Packages (due to take place on 28th/29th April 2008).

•

Advising on funding documentation from NRDA.

•

Advising on other standard funding arrangements for donating entities (monies in).

•

Advising on standard form funding agreements for recipients (monies out).

•

Advising on employment/secondment matters.

•

Advising on property issues in due course.

•

Advice on protection of intellectual property rights.

•

Other contractual and governance legal advice as required from time to time.

Pannone LLP 25 April 2008

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THE COMPANIES ACT 1985 & 2006 COMPANY LIMITED BY GUARANTEE AND NOT HAVING A SHARE CAPITAL PRECEDENT/MEMORANDUM OF ASSOCIATION of [NORTH WEST CLIMATE FUND] NB – The memorandum is a precedent document and schedule 1 [powers] and paragraph 3 [objects] both need tailoring to specifically detail the powers and objects of North West Climate Fund This precedent includes the drafting we expect to be required if the company is to be charitable.

Name

1.1

The name of the Company ("Company") is [North West Climate Fund].

Registered Office

2.1

The registered office of the Company shall be in England and Wales.

Object

3.1

The objects for which the Company is established is to [ ] by: (a)

the provision of [ ];

(b)

[the promotion of any charitable purposes for the benefit of [ ]];

(c)

[such other exclusively charitable purposes as are or may be beneficial to [ ]]; and

(d)

[the undertaking of any equivalent charitable purposes for the benefit of [ ] that can be conveniently undertaken in combination with and without detriment to the aforesaid purposes].

3.2

The objects will be pursued in line with the provisions of [ ] and in compliance with [ ] for so long as such [ ] shall apply and thereafter in line with and in compliance with such other relevant provisions as the Trustees resolve.

Powers

4.1

For the purpose of attaining the above mentioned object but not further or otherwise the Company shall have the powers set out in Schedule 1.

Income and Property

5.1

The income and property of the Company obtained from any source shall be applied solely towards the promotion of its objects as described in this Memorandum of Association and no part of it shall be paid or transferred, directly or indirectly by way of dividend, bonus or in any other way by way of profit, to members of the Company and no Trustee shall be appointed to any office of the Company paid by salary or fees or receive any remuneration or other benefit in money or moneys worth from the Company.

5.2

PROVIDED THAT the Company may make payment in good faith of:

I:\CORP\AG\CLIENTS\Northwest Climate Fund\Docs\Memorandum and Articles of Association(v1).doc

(a)

Reasonable and proper remuneration and benefits to any officer or servant of the Company (not being a member of the Company) for any services actually rendered to the Company; and/or

(b)

reasonable and proper rent or other payment for premises demised, let or licensed to the Company by any member of the Company or any member of the Board of Trustees; and/or

(c)

interest on money lent by any member of the Company or of its Trustees at a rate per annum not exceeding 2% over the base rate prescribed for the time being by Barclays Bank plc, or 30% whichever is the greater; and/or

(d)

fees, remuneration or other benefit in money or moneyâ&#x20AC;&#x2122;s worth to a company of which a Trustee is a member holding not more than 40% of the capital thereof and such member shall not be bound to account for any share of profits he may receive in respect of any such payment; and/or

(e)

reasonable out-of-pocket expenses incurred by any Trustee in connection with the performance of his duties as Trustee; and/or

(f)

all usual reasonable professional or other charges for work done or the supply of services or goods by any Trustee or by his firm or company (or by a Trustee's spouse or partner or their firm or company) in connection with the affairs of the Company PROVIDED THAT

(g)

(i)

at no time shall a majority of the Board of Trustees benefit under this provision; and

(ii)

a Trustee shall withdraw from any meeting at which his or her appointment or remuneration or that of his or her spouse or partner is under discussion; and

(iii)

the Trustee takes no part in making the decision; and

(iv)

the other Trustees are satisfied the arrangements are advantageous to the Company; and/or

the payment of any premium in respect of indemnity insurance as referred to in clause 24 of Schedule 1.

Limited Liability

6.1

This liability of the members is limited.

Contribution on Winding-up

7.1

Every member of the Company undertakes to contribute: (a)

to the assets of the Company, in the event of its being wound up while he is a member, or within 1 year after he ceases to be a member;

(b)

to payment of debts and liabilities of the Company contracted before he ceased to be a member, and of the costs, charges and expenses of winding-up; and

(c)

to the adjustment of the rights of the contributories among themselves.

such amount as may be required not exceeding ten pounds (ÂŁ10).

I:\CORP\AG\CLIENTS\Northwest Climate Fund\Docs\Memorandum and Articles of Association(v1).doc

Cy-Pres

8.1

If upon the winding-up or dissolution of the Company there remains, after the satisfaction of all its debts and liabilities, any property whatsoever, the same shall not be paid to or distributed among the members of the Company, but shall be given or transferred to some other charitable institution or institutions, having objects similar to the objects of the Company.

Accounts

9.1

Proper accounts shall be kept of the sums of money received and expended by the Company and the matters in respect of which such receipts and expenditure take place, of all sales and purchases of goods or services by the Company and of the property, assets and liabilities of the Company; and, such accounts shall be open at all reasonable times to the inspection of the Members.

9.2

Once at least in every year the accounts of the Company shall be examined and the truth and fairness of the income and expenditure account and balance sheet ascertained by 1 or more property qualified auditor or auditors as defined by the Companies Act 1985.

Amendments to the Memorandum

10.1

No addition alteration or amendment to which s.64 of the Charities Act 1993 applies shall be made to or in the provisions of the Memorandum of Association for the time being in force unless the same shall first have been submitted to and approved by the Charity Commissioners for England and Wales and no addition alteration or amendment shall be made to or in the provisions of such Memorandum which would cause the Company to cease to be a charity at law.

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SCHEDULE 1 TO THE MEMORANDUM OF ASSOCIATION (Powers of the Company)

Pursuing the [Fund's] Objects

1.1

The power to carry on the Fund in pursuance of the objects under the name of [North West Climate Fund] or such other name as the Trustees shall decide from time to time.

Financial Support

2.1

The power, in the absolute discretion of the Trustees to provide on such terms as they think fit, financial support to [ ].

Acquisition

3.1

Subject to such consents as shall be required by law, the power to purchase, take on lease, or in exchange, hire or otherwise acquire any property (whether real or personal and whether in the United Kingdom or elsewhere) and any rights or privileges the acquisition of which the Company may think necessary or convenient for any of the purposes of the Company, including but not restricted to the power to acquire the property, rights, privileges and associated liabilities of the Fund. ["the "Charity")]

Co-operation

4.1

The power to promote and organise co-operation in the achievement of its objects and to that end to bring together representatives of the statutory authorities and voluntary organisations engaged in the furtherance of the Company’s objects.

[Pursuing the Charity's Objects]

5.1

[The power to carry on the charity in pursuance of its objects under the name of [North West Climate Fund] or such other name as the Trustees shall decide from time to time.]

Additions and Alterations to Buildings

6.1

The power to construct, maintain, keep in repair, add to, improve, furnish, equip and alter any or all building(s) or erection(s) necessary for the purpose of the Company.

Facilities

7.1

The power to provide offices and other facilities for [ ], and such other persons as may from time to time be instructed or employed by the Company, including facilities for [ ] and any other facilities that the Trustees think fit.

Disposal of Assets

8.1

The power (subject to the Charities Act 1993 as from time to time amended extended or reenacted) to sell, lease, mortgage, turn to account, manage, repair and improve all or any of the property or assets of the Company subject to such terms and conditions as may be thought expedient and to exercise any rights privileges or advantages, easements or other benefits attached to such property or assets and to undertake, maintain, execute and do all such lawful acts, matters and things as the Company may be obliged or required or ought to do as the owner of such property or assets.

8.2

The power, in exchange for full value consideration and subject to the Charities Act 1993 (as from time to time amended, extended or re-enacted), to grant licences or make any disposition of the property or assets of the Company to a trading company formed and operated for a purpose (inter alia) of benefiting the Company. It shall be a condition of any such licence or

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disposition that the trading company shall have entered into such agreement as to ensure that of all its profit, capital and income are applied in favour of the Company and that no licence or disposition shall be of such a nature or scope as to make improper or excessive use of the property or other assets of the Company for non-charitable purposes. 9

Procurement of Funds

9.1

The power to procure, obtain, collect and receive money and funds by way of fees, contributions, donations, subscriptions, legacies, grants, licence fees, appeals for funds or any other lawful method, and to accept and receive any gifts or property of any description, whether subject to any special trust or not. Provided always that any moneys so received by the Company shall be used or applied by the Company for or towards its charitable objects. In doing so the Charity must not undertake any substantial permanent trading activity and must comply with any relevant statutory regulations.

Acting as Trustee

10.1

The power to act as trustee and to undertake and execute any charitable trust which may lawfully be undertaken by the Company and may be necessary for the attainment of its objects, and to perform any services in furtherance of the objects of the Company, gratuitously or otherwise.

Publicity and Communication

11.1

The power to adopt such means of publicising, the Company and its objects and activities as may seem expedient, and in particular by advertising in any media, and by granting prizes, awards and donations.

11.2

The power to procure to be written and to print, publish, issue and circulate gratuitously or otherwise any reports, periodicals, books, pamphlets, leaflets or other documents and otherwise to procure and provide information in such manner and for such purposes as the Company may think desirable for the attainment of its objects.

11.3

The power to promote, encourage or undertake experimental work on research and to publish the results of such work or research.

Methods of Raising Income

12.1

The power to take such steps by personal, written or electronic appeals, public meetings, film shows, sales of booklets and advertising matter, or otherwise, as may from time to time be deemed expedient for procuring contributions or donations or income to enable the Company to carry out any of its objects which may require such assistance.

Borrowing

13.1

Subject to such consents as may be required by law (including the Charities Act 1993 (and in particular Part V)), the power to borrow and raise money and to secure by mortgage, charge or lien upon the whole or any part of the Companyâ&#x20AC;&#x2122;s property or assets (whether present or future) the discharge by the Company or any other person of any obligation or liability, or raise money for the purposes of the Company on such terms and in such manner as the Board of Trustees may think fit.

Advancing Money

14.1

The power to lend and advance money on any terms and with or without security to any person, firm or company, to enter into guarantees, contracts of indemnity and suretyships of all kinds, to receive money on deposit or loan upon any terms and to secure or guarantee in any manner and upon any terms the payment of any sum of money or the performance of any obligation by any person, firm or company.

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Subscriptions and Guarantees

15.1

The power to subscribe or guarantee money for charitable purposes in any way connected with the purposes of the Company or calculated to further its objects.

Donation

16.1

The power to make any reasonable charitable donation either in cash or assets for the furtherance of the objects of the Company.

Investment

17.1

The power to invest the moneys of the Company not immediately required for its purposes in or upon such investments securities or property as may be thought fit, subject to such conditions (if any) and such consents (if any) as may be imposed or required by law.

Reserve Fund

18.1

The power to build up a reserve fund whose purpose shall be to ensure that a fund is in place which may be used to sustain key revenue projects into the future; and to set up an endowment fund which may be invested and the interest used to provide grants for local people.

Alliances

19.1

The power to establish, support, subsidise, promote, co-operate or federate with, affiliate or become affiliated to, act as trustees or agents for, or manage or lend money or other assistance to any other educational association, society or other body, corporate or unincorporated, established for charitable purposes only.

19.2

The power to subscribe to, become a member of, or amalgamate or co-operate with any other charitable organisation, institution, society or body not formed or established for purposes of profit whose objects are wholly or in part similar to those of the Company and which by its constitution prohibits the distribution of its income and property amongst its members to an extent at least as great as is imposed on the Company.

19.3

[The power to act as trustee of any Charitable trust].

Amalgamation

20.1

The power to amalgamate, federate, affiliate, co-operate or combine wholly or in part with or to any charitable institutions, societies or companies formed for objects similar to those of the Company, such institutions, societies or companies being prohibited from distributing profits and assets among their members to at least the extent imposed by this Memorandum upon the Company.

Transfer of Assets

21.1

The power to transfer or make over with or without valuable consideration any part of the property or assets of the Company not required for the purposes for which it is formed to any body having charitable purposes or a charitable purpose as its objects or object, provided that such body is by its constitution prohibited from distributing its profits or assets among its members to at least the extent imposed by this Memorandum upon the Company and subject in all respects to the provisions of the Charities Act 1993 (and in particular Part V) and any amendment or re-enactment thereof.

Pensions and Supperannuation

22.1

The power to make all reasonable and necessary provision for the payment of pensions and superannuation to or on behalf of employees and their widowers and other dependants.

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Indemnity Insurance for Employees

23.1

The power to suitably insure at the expense of the Company and arrange insurance cover for and to indemnify its officers, staff, voluntary workers and members from and against all such risks incurred in the course of their duties as may be thought fit and (in relation to the Board of Trustees (or any Trustee or Trustees)) so far as is permitted by clause 23 of this Schedule.

Trustees’ Indemnity Insurance

24.1

The power to provide indemnity insurance to cover the liability of the Board of Trustees (or any Trustee or Trustees) which by virtue of any rule of law would otherwise attach to them in respect of any negligence, default, breach of trust or breach of duty of which they may be guilty in relation to the Company: PROVIDED THAT any such insurance shall not extend to any claim arising from any act or omission which the Board of Trustees (or any Trustee or Trustees) knew to be a breach of trust or breach of duty, or which was committed by the Board of Trustees (or any Trustee or Trustees) in reckless disregard of whether it was a breach of trust or breach of duty or not.

Insurance of the Company

25.1

The power to insure the Company’s property against such risks as the Board of Trustees shall consider it prudent or necessary to insure against including insurance to the full value against fire and other risks for all of the buildings owned by the Company and suitable insurance in respect of public liability.

Enactment

26.1

The power to make bye-laws, rules and regulations with regard to the affairs or the management of the Company.

Expenses of Formation and Management

27.1

The power to pay out of the funds of the Company all the costs, charges and expenses preliminary or incidental to the promotion, formation, establishment and incorporation of the Company.

27.2

The power to first pay out of the income of the Company the cost of repairs and insurance and all other changes and outgoings payable in respect of the property of the Company and all the proper costs, charges and expenses of and incidental to the administration and management of the Company.

Employment

28.1

The power to employ and pay such architects, surveyors, solicitors, accountants and other professional persons, workmen, clerks and other staff as are necessary for the furtherance of the Company’s objects.

Territories

29.1

The power to do all or any of the above things in any part of the world, and as principals, agents, trustees or otherwise, and by or through trustees, agents or otherwise.

Additional Powers

30.1

The power to do all such other lawful things as are necessary for the attainment of the above objects or any of them.

Other

31.1

Employees etc.

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The objects of the Company shall not extend to the regulation of relations between workers and employers or organisations of workers and organisations of employers. 31.2

Trust Property In case the Company shall take or hold any property which may be subject to any trust, the Company shall only deal with the same in such manner as allowed by law having regard to such trusts.

31.3

Charitable Property In case the Company shall hold any property subject to the jurisdiction of the Charity Commission for England and Wales, the Company shall not sell, mortgage, charge, or lease such property without such authority, approval or consent as may be required by law.

[Advice]

32.1

The power to provide advice [ ].

[Promote or carry out research]

33.1

The power to promote or carry out research [ ].

[To co-operate with other bodies]

34.1

The power to co-operate with other bodies [ ].

[To support, administer or set up other charities]

35.1

The power to establish and support or aid the establishment and support of any charitable trusts, associations or institutions and to subscribe or guarantee money for charitable purposes in any way connected wit or calculated to further any other objects.

[To enter into contracts to provide services to or on behalf of other bodies]

[To establish subsidiary companies to assist or act as agents for the Fund]

In this Memorandum "the Board of Trustees" shall mean the persons appointed as such under the Articles of Association to have the general control and management of the administration of the Company. Headings, sub-headings are for ease of reading and do not form part of the Memorandum.

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WE, the persons whose names and addresses are subscribed, wish to be formed into a company in pursuance of this Memorandum of Association.

NAMES, ADDRESSES AND DESCRIPTIONS OF SUBSCRIBERS Signature of Subscriber: Name in full: Address:

Date: Witness signature: Witness name in full: Witness address:

Witness occupation: Next retirement date:

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THE COMPANIES ACTS 1985 to 2006 COMPANY LIMITED BY GUARANTEE AND NOT HAVING A SHARE CAPITAL

PRECEDENT/ ARTICLES OF ASSOCIATION OF [NORTH WEST CLIMATE FUND] PLEASE NOTE THIS IS A PRECEDENT AND WILL NEED TO BE TAILORED SPECIFICALLY TO THE REQUIREMENTS OF NORTH WEST CLIMATE FUND. This Precedent includes the drafting we expect to be required if the Company is to be charitable. NB 1 The Company must have sufficient flexibility to address changes over the future as well as the short term. NB 2 As discussed, it may be sensible to incorporate a company limited by guarantee at the outset and then convert to a community interest company in due course if it is decided that the company is not to be charitable. NB 3 In order to finalise the legal structure of the company we need to fully understand what Northwest Climate Fund intends to invest in/support (in order to determine whether it is to be charitable or not) and we also need to liaise with Groundwork and BDO to ensure the governance and tax advice suits the entity you wish to incorporate.

Interpretation

11.1

In these Articles unless the context otherwise requires. Articles means these Articles of Association and the regulations of the Company from time to time in force. The Acts means the Companies Act 1985 (as amended) and the Companies Act 2006. The Board means the board of Trustees. The Charities Act means the Charities Act 1993. The Company means [North West Climate Fund] The Fund means [North West Climate Fund] Clear Days in relation to the period of a notice means that period excluding the day when the notice is given or deemed to be given and the day for which it is given or on which it is to take effect. In writing means written, printed, partly one and partly another and all other modes of representing words in visible form and shall include electronic communication. Month means calendar month. Notice means notice in writing given personally or sent to the Company at its registered office or by or on behalf of the Company to any other person at his address as it appears in the Register of Members or such address as is notified to the Company from time to time including

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an electronic mail address. Only those for whom the Registrar of Members shows an address in the United Kingdom shall be entitled to receive notices from the Company. Any notice sent by first-class prepaid post shall be deemed to have been served within 48 hours after it was posted. Any notice sent by electronic mail shall be deemed to have been served 48 hours after it was sent. Office means the registered office of the Company. Secretary means the secretary of the company or any other person appointed to perform the duties of the secretary of the company, including a joint, assistant or deputy secretary. The United Kingdom means Great Britain and Northern Ireland. Trustee means a director of the Company for the time being appointed and holding office. 11.2

Words in the masculine include the feminine genders and vice versa. Words in the singular include the plural and vice versa.

11.3

Headings, Sub-Headings, Underlinings and Format Lines are for ease of reading and unless they form part of a phrase or sentence, do not form part of these Articles.

11.4

The following rules of interpretation shall also apply: (a)

Reference to any provisions of the Acts or the Charities Act or any other statute, shall be a reference to such provisions as modified or re-enacted by any statute or regulations for the time being in force.

(b)

Except as provided above, words or expressions defined in the Acts or the Charities Act (subject to any statutory modification or re-enactment) in force at the date on which these Articles become binding on the Company shall bear the same meanings in these Articles unless inconsistent with the subject or context.

(c)

Where the words "include(s)", "including" or "in particular" are used, they are deemed to have the words "without limitation" following them.

Table C 11.5

The Regulations contained in Table C referred to in the Acts shall not apply to the Company except so far as the same are repeated or contained in these Articles.

Objects

12.1

The Company is established for the purposes and has the powers set out in the Memorandum of Association.

APPOINTMENT OF MEMBERS AND TRUSTEES

Members and Trustees

13.1

The subscribers to the Memorandum of Association and such other persons wishing to be admitted as members of the Company as the Board shall resolve to admit to membership shall be members of the Company and shall be the Trustees of the Company of the Board. They shall be the charity trustees of the charity [North West Climate Fund] and shall be referred to as Trustees in these Articles]. Their names shall be entered into the Register of Members of the Company; for the purposes of this Article "person" shall be taken to include any body corporate. A Trustee shall be deemed to have been admitted as a member of the Company pursuant to this Article forthwith upon his on her appointment as a Trustee.

13.2

Membership of the Company shall not be transferable and shall cease on death and, any member of the Company may at any time retire by notice in writing to the registered office of the Company, provided that after such retirement the number of members is not less than

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[ ]. In the event that a member of the Company who is also a Trustee ceases to be a Trustee for any reason, he or she shall be deemed forthwith to have retired as a member pursuant to this Article. NB: The stakeholder entities could be the legal member of the Company and then they appoint individuals from the entities to be the directors or alternatively the entities can appoint individuals at the outset to be both the member and the director in their own right. The simplest method would be to have the same people as directors and members as this becomes a much more manageable system, however, you then do not have the split decision making. It is our recommendation that unless there is an actual need to have a different group of decision makers at member level, the route of the members wish to be the legal members, a clear understanding need to be reached as to the respective roles. 13.3 (a)

The initial Trustees shall remain as Trustees until the elections provided for in Article [ ] have taken place or until the AGM at which they retire in accordance with Article [ ].

(b)

If any of the initial Trustees resigns or is otherwise removed or disqualified from office before the time specified in Article [ ] a casual vacancy shall be deemed to have arisen.

(a)

Subject to Articles 23 and 3.4 (d) the Board may at any time appoint further Trustees to a maximum membership of [ ], when the Board is complete [ ] shall be Nominated in accordance with Article 3.6 and [ ] shall be Elected in accordance with Article 3.13.

(b)

Each subsequent Trustee shall be a charity trustee of the charity [North West Climate Fund] and shall be referred to as Trustee in these articles. The name of each subsequent Trustee shall be entered in the Register of Members.

(c)

No person employed by the Company shall be a Trustee.

(d)

The Board may appoint any such person as they in their discretion consider suitable to be a Member and Trustee to fill a casual vacancy or as an additional Member and Trustee to the maximum number of Trustees permitted under these Articles ay any one time.

13.4

13.5

[The Membership and the Board shall when complete consist of: (a)

between [ ] and [ ] Nominated Trustees; and

(b)

up to [

] Elected Trustees.

provided that the total number of Trustees and Members shall not exceed [ ] at any one time.] Nominated Trustees 13.6

13.7

The Nominated Trustees shall be appointed as follows: (a)

[ ] and [ ] by [ ]; and

(b)

[ ].

Each Nominated Trustee to be appointed by [ ] shall be appointed for a term (as far as practicable) ending on the day of appointment of his or her successor (which may be at any time after the day next following his or her appointment on which members of [ ] ordinarily retire).

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13.8

Each Nominated Trustees (other than the Nominated Trustees appointed by [ ]) shall be appointed for a term of [ ] years. A Nominated Trustees shall (subject to Articles 25.2, 25.3 and 25.4) be eligible for re-appointment following the expiry of their [ ] year term.

13.9

The Trustees shall be entitled without stating reasons to disapprove a nomination and to request the nomination of two alternative individuals together with such relevant information about those individuals as the Trustees may reasonably require. The Trustees shall thereupon nominate one of the alternatives.

13.10

A casual vacancy in the Board shall be deemed to arise if, without default of the Trustees, a nomination has not been made within eight weeks of a written request by the Trustees and Articles 3.4 (d) and 26 shall apply.

13.11

If a Nominated Trustee vacates office, either as a result of Article 26 and 27, or for any other reason, the body by whom the Trustee was nominated shall have the right to nominate a replacement Trustee Article [removal of trustee] shall apply.

Depending on who the stakeholders are consideration needs to be given as to whether additional co-opted /elected directors with particular skills should form part of the board and if so whether this needs to be entrenched in the articles. If an executive officer is appointed to actually run the company, they could either be a director (unless charitable) or they could be an observer at board meetings in order to implement the actions following the board meetings. 13.12

Elected Trustees (a)

There shall be a maximum of [ ] Elected Trustees.

(b)

The [ ] shall elect Trustees as provided below:

•

[ ] - [ ] Trustees

•

[ ] - [ ] Trustees

(c)

An Elected Trustee must be [ ]. In the event of an Elected Trustee [ ] who elected them, their Trusteeship shall automatically cease, irrespective of whether [ ].

(d)

The first elections shall take place before the end of [ ] and then every year [ ].

(e)

Each Elected Trustee shall be appointed for a term of [ ] years. An Elected Trustee shall be eligible for re-appointment following the expiry of their [ ] term.

(f)

The [ ] shall vote for Trustees on a [ ] yearly rotation as follows: •

Before the end of May [ ] ([ ] and every [ ] years subsequently) [ ]

•

Before the end of May [ ] ([ ] and every [ ] years subsequently) [ ]

(g)

Following each election any Trustee not re-elected by the residents shall forthwith be deemed to have resigned from the Board and membership of the Company.

(h)

Any vacancy arising among the Elected Trustees shall either be a casual vacancy or the Trustees may, at their discretion, decide to hold a by-election for the particular vacancy or vacancies.

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(i)

The Trustees may determine by majority vote that an election which would otherwise be required to take place in accordance with Article [ ] need not take place if it is in the best interests of the Company. In the event that an election does not take place under this Article the relevant election shall take place in the subsequent year unless the Trustees determine again by majority vote that it shall not.

14.1

The provisions of Section 352 of the Companies Act 1985 (Obligation to keep and enter up register) shall be observed by the Company and every person shall upon consenting to act as a Trustees and director by signing form 288a (or such replacement form as may be required to be signed to signify consent to be appointed a director under the Acts) be deemed to have consented to become a Member of the Company.

14.2

Each new member shall become entitled to the privileges and benefits of membership including but not limited to the right to such information and advice with regard to the activities of the Company as it or any of its officers may reasonably be able to supply.

Cessation of Membership

15.1

A person shall cease to be a Member should he cease to be a Trustee in accordance with Articles [ ] to [ ] or otherwise.

ANNUAL GENERAL MEETING

Articles Applicable

16.1

Articles [

Timing

17.1

An Annual General Meeting shall take place during [ ] each year.

17.2

The Company must hold its first annual general meeting within 18 months after the date of its incorporation.

17.3

An annual general meeting must be held in each subsequent year and not more than 15 months may elapse between successive annual general meetings.

Convening an Annual General Meeting

18.1

The Annual General Meeting shall be convened by the Secretary who shall send at least 21 clear days notice in writing of the meeting by first class post to each Member and all persons (including the Auditors) entitled to receive notice of it. With the consent of all Members a meeting may be convened by such notice as the Members think fit.

Contents of Notice

19.1

The notice shall state the date, time and place of the meeting and the general nature of the business to be conducted and in the case of an Annual General Meeting shall say that it is an Annual General Meeting.

Omission to give notice

20.1

The accidental omission to give notice or the non-receipt of notice by any person entitled to receive it shall not invalidate any resolution or proceeding of the meeting.

20.2

A Member whose registered address is not within the United Kingdom and who gives to the Company an address within the United Kingdom at which notices may be given to him shall be entitled to have notices given to him at that address, but otherwise no such Member shall be entitled to receive any notice from the Company.

] to [

] (Proceedings) shall apply to each Annual General Meeting.

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20.3

A Member present, either in person or by proxy, at any meeting of the Company shall be deemed to have received notice of the meeting and, where requisite, of the purposes for which it was called.

20.4

Proof that an envelope containing a notice was properly addressed, prepaid and posted shall be conclusive evidence that the notice was given. A notice shall be deemed to be given at the expiration of 48 hours after the envelope containing it was posted or in the case of a notice contained in electronic communication at the expiration of 48 hours after the time it was sent.

Business

21.1

The business of the Annual General Meeting shall include:

21.2

(a)

consideration of the accounts and any documents annexed to them;

(b)

consideration of the reports of the Board and of the Auditors;

(c)

the appointment of Auditors and the fixing of their remuneration;

(d)

the appointment of [Trustees] [Members] in place of those retiring; and

(e)

such other business as the Board thinks fit.

Resolutions on these matters (where required) shall be by a simple majority of those attending and entitled to vote in person or by proxy.

GENERAL MEETINGS

Articles Applicable

22.1

Articles [ ] and [ ] (Notices) and Articles [ (Proceedings) shall apply to each General Meeting.

Convening a General Meeting

23.1

A General Meeting other than the Annual General Meeting:

] to [

]

(a)

may be convened whenever the Board sees fit; or

(b)

shall be convened by the Board if not less than 10% of the Members having a right to vote (or 5% in the circumstances of section 303(c) Companies Act 2006) make a written requisition which must be left at the Office, stating the object of the proposed meeting; or

(c)

may be convened by the requisitioners if the Board has not complied with the provisions of the Companies Act 2006 following a requisition.

At least 14 clear days notice in writing must be given of the meeting by first class post to each Member and all persons (including the Auditors) entitled to receive notice of it. If a special resolution is to be considered the notice period shall be 21 clear days. With the consent of 95% of the Members a meeting may be convened by such notice as the Members see fit. PROCEEDINGS AT GENERAL MEETINGS

Rules about Quorum

24.1

Subject to article 14.2, the presence of [ ] Trustees shall constitute a quorum for a General Meeting. A Member shall not be counted in the quorum on any matter on which he is not entitled to vote.

24.2

No business shall be transacted at any General Meeting unless a quorum is present.

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24.3

If a quorum is not present within half an hour from the time appointed for a meeting to start: (a)

a meeting convened on the requisition of Members shall be dissolved;

(b)

any other meeting shall be adjourned to such other time date and place not less than 15 days and not more than 30 days thence as the Chairman shall appoint; and

(c)

if the adjourned meeting is inquorate half an hour after the time appointed for it to start, the Members present shall constitute a quorum.

The Chairman of a General Meeting

25.1

The Chairman of a General Meeting shall be: (a)

the Chairman of the Board; or, if he is not present within 15 minutes after the time appointed for the meeting to start or is unwilling to preside or has an interest in a matter to be decided;

(b)

the Vice Chairman of the Board, or if he too is not present within 15 minutes after the time appointed for it to start or is unwilling to preside or has an interest in a matter to be decided;

(c)

a Trustee chosen by the Members present to chair the meeting.

Adjournment of a General Meeting

26.1

The Chairman of a General Meeting may with the consent of the meeting or when so directed by a quorate meeting, adjourn the meeting to such other time and place within the next 90 days as the Chairman thinks fit.

26.2

No business shall be transacted at an adjourned meeting except business which could have been transacted if that meeting had taken place.

26.3

If a General Meeting is adjourned for 30 days or more, notice of the adjourned meeting shall be given in the same manner as for an original meeting save that, Members shall not be entitled to notice of the business to be transacted at an adjourned meeting.

26.4

If a General Meeting is adjourned for less than 30 days, Members shall not be entitled to notice of the adjourned meeting or the business to be transacted at it.

Votes of Members

27.1

At a General Meeting of the Company every Member present in person or by proxy and entitled to vote shall have one vote.

27.2

Votes may be given on a poll or on a show of hands. On a poll, votes may be given either personally or by proxy.

27.3

No objection shall be raised to the qualification of any voter except at the meeting or adjourned meeting at which the vote objected to is tendered, and every vote not disallowed at the meeting shall be valid. Any objection made in due time shall be referred to the Chairman whose decision shall be final and conclusive.

27.4

No Member shall be entitled to vote on nay question at a General Meeting either: (a)

personally; or

(b)

by proxy; or

(c)

As a proxy for another Member

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unless his membership is duly registered and he has paid every subscription and other sum (if any) due and payable to the Company in respect of his membership.

Proxy

28.1

The instrument appointing a proxy shall be in writing and signed by the appointing Member ("principal").

28.2

Only one proxy may be given by the principal for any one meeting.

28.3

The principal may require their proxy to vote or abstain from voting on behalf of the principal as he thinks fit on matters arising for determination at any meeting.

28.4

The instrument appointing a proxy shall be deposited at the Office not less than forty-eight hours before the time for holding the meeting or adjourned meeting at which the person named in the instrument proposes to vote; or in the case of a poll, not less than twenty four hours before the time appointed for the taking of the poll. For the purposes of this Article 18.4 no account shall be taken of any part of a day that is not a working day. In default of compliance with these timing obligations, the instrument shall not be treated as valid.

28.5

An instrument appointing a proxy may be in the form set out in the schedule or in any other form the Board may approve.

28.6

No instrument appointing a proxy shall be valid after twelve months from the date of its execution.

28.7

The instrument appointing a proxy shall be deemed to confer authority to demand or join in a poll.

28.8

The death or insanity of the principal or revocation of the proxy or the authority under which the proxy was executed shall not invalidate a vote given in accordance with the terms of an instrument of proxy unless intimation in writing of any such event was received at the Office before the commencement of the meeting or adjourned meeting at which the proxy was used.

Resolutions at a General Meeting

29.1

Resolutions put to the vote of a General Meeting shall be decided: (a)

on a show of hands; or

(b)

on a poll if demanded by: (i)

the Chairman; or

(ii)

by at least five Members present in person or by proxy; or

(iii)

by a Member or Members representing not less than one tenth of the total voting rights of all the Members entitled to attend and vote at the meeting.

29.2

If a poll is not demanded by the Chairmanâ&#x20AC;&#x2122;s declaration that a resolution has or has not been carried unanimously or by a particular majority is binding. An entry to that effect in the Minute Book of the Company shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favour of all against that resolution.

Poll

30.1

When a poll is demanded as described in Article 19 it shall be taken at such time and place in such a manner as the Chairman of the meeting shall direct. The result of the poll shall be deemed to be the resolution of the meeting.

30.2

The demand for a poll may be withdrawn.

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30.3

The demand for a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which a poll has been demanded.

30.4

A poll shall be taken as the Chairman directs and he may appoint scrutineers (who need not be Members) and fix a time and place for declaring the result of the poll. The result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.

30.5

On a poll every Member present in person or by proxy shall have one vote.

[Chairman’s Second or Casting Vote

31.1

The Chairman of the General Meeting shall be entitled to a second or casting vote in the case of an equality of votes whether on a show of hands or on a poll. ]

Written Resolutions

32.1

A resolution in writing signed by all the members for the time being entitled to receive notice of and attend and vote at General Meetings shall for the purpose of these Articles be as effective as if the same had been passed at a General Meeting of the Company duly convened and held.

32.2

Such a resolution may consist of several documents in like form, each signed by one or more persons bit a resolution so signed shall not be effective to do anything for which the Act requires Special Notice (resolutions to remove a director und s303 or an auditor under s391.

THE BOARD OF TRUSTEES [Need to ensure the board is more than just a strategic advisory board and that the articles allow sufficient flexibility to ensure that they have the necessary skills and authority in order to run the company]

[Number of Trustees

33.1

The Board shall comprise a maximum of [ ] individuals at any one time (subject to Article 23.2 below) being between [ ] and [ ] Nominated Trustees and up to [ ] Elected Trustees provided that the maximum of [ ] Trustees shall not be exceeded at any time.]

33.2

Each Trustee shall be a Director and Member of the Company.

33.3

The Company may however by Special Resolution passed in General Meeting increase or reduce the number of Trustees.

33.4

If, by reason of Articles [ ] or [ ] or otherwise there is a vacancy in the Board the Trustees shall cause a note to be entered into the minute book at the next Trustee's meeting. If there is a vacancy in the office of Nominated Trustees the Trustees shall give notice to the proper appointing body as soon as possible.

33.5

Subject to these Articles any Trustees may be re-appointed.

Remuneration of Trustees

34.1

Except as provided for in the Memorandum of Association, the Trustees shall not be entitled to receive any remuneration other than travelling, hotel and other expenses properly and reasonably incurred by them in connection with the conduct of the affairs of the Company.

Trustees

35.1

No person employed by the Company shall be appointed as a Trustee.

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35.2

No one may be appointed a Trustee if he or she would be disqualified from acting under the provisions of Article [ ].

35.3

No one may be appointed as a Trustee if the Trustees, in their absolute discretion, are not satisfied with the outcome of any Criminal Record Bureau Check (or equivalent check from time to time in force).

35.4

If pursuant to Article [ ] the Trustees decide that the existing Trustee's appointment should not continue then that Trustee's appointment shall immediately cease with effect from notification of the same.

35.5

Where any Elected Trustee, who was [ ], moves out of [ ], the Board may, by notice in writing, require that Trustees to resign and upon receipt of such notice that Trustee shall be deemed to have given notice of resignation in accordance with Article [ ].

Removal of a Trustees

36.1

The Company may by passing an Ordinary Resolution (in accordance with ss.168 and 169 of the Companies Act 2006 (or in accordance with any equivalent replacement or amending legislation)) remove any Trustees before the end of his period of office notwithstanding anything in these Articles or any agreement between the Company and the Trustees to the contrary.

36.2

The removal of a Trustee shall be without prejudice to and shall not affect any obligation or liability incurred by him or to which he was subject prior to his removal.

36.3

Upon ceasing to be a Trustee for any reason the person shall simultaneously cease to be a Member.

36.4

Any person appointed to fill a vacancy resulting from the removal of a Trustees from office under Article 26 or to any other casual vacancy shall be subject to retirement at the same time as if he had become a Trustees on the day on which the Trustees in whose place he is appointed was last elected a Trustees.

Ceasing to be a Trustees

37.1

A Nominated Trustee being a Trustee appointed by [ ] shall vacate office upon the appointment by [ ] of his successor.

37.2

Any Trustee shall cease to be a Trustee with immediate effect: (a)

Upon ceasing to be a member of the Company.

(b)

Upon dying or becoming incapable of managing his affairs.

(c)

Upon being declared bankrupt or making any composition or arrangement with his creditors.

(d)

Upon resignation in writing given by the Trustees to the Board Such resignation may not be withdrawn without the written consent of the Board.

(e)

Upon removal from office by Ordinary Resolution of the Company in accordance with Article 26.1.

(f)

Upon failure to declare the nature of any direct or indirect interest in Company business as required by the Acts.

(g)

Upon being disqualified under Section 72 of the Charities Act or ceasing to hold office by virtue of any provision of the Act.

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(h)

Upon being absent from meetings of the Trustees for a continuous period of 12 months or more without the prior permission of the Trustees.

(i)

Upon him suffering from mental disorder and either:

(j)

38 38.1

(i)

he is admitted to hospital in pursuance of an application for admission for treatment under the Mental Health Act 1983 or, in Scotland, an application for admission under the Mental Health Act (Scotland) Act 1960; or

(ii)

an order is made by a court having jurisdiction (whether in the United Kingdom or elsewhere) in matters concerning mental disorder for his detention or for the appointment of a receiver, curator bonis or other person to exercise powers with respect to his property or affairs.

An Elected Trustee must be and remain [ ]. In the event of an Elected Trustee an Elected Trustee [ ], their Trusteeship shall automatically cease, irrespective of whether their [ ].

Rotation of Trustees [Elected Trustees shall rotate in accordance with the provisions of [ ]]

THE CHAIRMAN

Appointment and Removal

39.1

The Chairman of the Board shall be the Trustees appointed by a simple majority by the Board at the Annual General Meeting in each year to serve as Chairman. The Chairman may be removed as Chairman by the Board at any time by a simple majority of the Board.

39.2

An intended Chairman must not vote on a resolution confirming his appointment.

39.3

The Chairman shall be appointed for a term until the commencement of the Annual General Meeting in the next year. The Chairman shall always be eligible for re-election.

39.4

The Chairman can resign at any time by giving notice in writing to the Secretary. Upon resignation of the Chairman the Board shall appoint a new Chairman by simple majority at the next meeting of the Board.

39.5

If at any meeting the Chairman or the Vice Chairman is not present within 10 minutes after the time appointed for the start of the meeting nor is not willing to preside or if no Chairman or Vice Chairman for the time being is appointed, the Board shall choose one of their number to be chairman of the meeting.

Powers and Responsibilities of the Chairman

40.1

The Chairman shall have all the powers and responsibilities of the chairman as set out in these Articles including the right (unless disqualified by reason of a personal interest) to chair each General Meeting of the Company (and each meeting of the Board) and the right to a second or casting vote whether he or she has or has not voted previously on the same question in the case of equality of votes at any such meeting. The expression "Chairman" includes the person who is at any time entitled to exercise the powers of the Chairman.

THE VICE CHAIRMAN

Appointment and Removal

41.1

The Vice Chairman of the Board (if appointed) shall be the person(s) appointed by a simple majority of the Board at the Annual General Meeting in each year to serve as Vice Chairman. Any Vice Chairman may be removed as a Vice Chairman by the Board by a simple majority of the Board.

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41.2

An intended Vice-Chairman must not vote on the resolution confirming his appointment.

41.3

The maximum number of Vice Chairmen who can be appointed by the Board is [ ].

41.4

Any Vice-Chairman can resign at any time by giving notice in writing to the Secretary. Upon resignation of the Vice Chairman, the Board shall appoint a new Vice Chairman by simple majority at the next meeting of the Board.

SECRETARY

General

42.1

The Board shall appoint and remove the Secretary. In the absence of a suitable member of staff, the Trustees may appoint one of their number to act, without remuneration, as the Secretary. The Secretary shall be appointed for such time as the Board think fit. The Secretary shall attend Board meetings.

42.2

The Secretary may be removed from that office by the Board at any time by simple majority of the Board.

Absence of the Secretary

43.1

An assistant or deputy Secretary may be appointed by the Trustees to act in place of the Secretary in his absence.

THE POWERS OF THE BOARD OF TRUSTEES

The General powers of the Trustees

44.1

The business of the Company shall be managed by the Board who may exercise all the powers of the Company except those which by these Articles or by the Acts are required to be exercised only in a General Meeting. No alteration of the Memorandum or Articles and no such direction shall invalidate any prior act of the Board which would have been valid if that alteration had not been made or that direction had not been given. The powers given by this regulation shall not be limited by any special power given to the Board by the Articles and a meeting of Trustees at which a quorum is present may exercise all powers exercisable by the Trustees.

44.2

The Board shall have full power from time to time to make regulations bye-laws and rules for the management of the Company [any/or the charity] and for the conduct of their business including the deposit of money at a proper bank and the custody of documents in such terms as the Trustees in their absolute discretion think fit but consistent always with the terms of these Articles (if/as amended).

44.3

Any alteration in these Articles must be made by a Special Resolution of the members.

44.4

The Board may pay all such initial expenses of the promotion, formation, establishment and registration of the Company as they think fit.

44.5

The Board may act even though there is a vacancy in their body provided that if there are fewer than [ ] Trustees, they may act as the Board only to: (a)

appoint Trustees; and/or

(b)

call a General Meeting.

Borrowing

45.1

The Board may exercise all powers of the Company to: (a)

borrow money;

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(b)

mortgage or charge the whole or any part of its undertaking in property (subject to the provisions of Part V of the Charities Act);

(c)

issue debentures, debenture stock and other documents, whether outright or as security for any debt, liability or obligation of the Company;

in such manner and to such extent as they see fit.

[Delegation of Powers to Sub-committees

46.1

The Board may delegate any of its management powers to sub-committees consisting of such Trustees or other persons as it thinks fit. The Trustee shall indicate in writing to such a committee the extent and nature of the powers so delegated.

46.2

Sub-committees of the Trustees shall conform to any regulations imposed by the Board.

46.3

The meetings and proceedings of any sub-committee of the Trustees or of an executive committee shall be governed by the provisions of these Articles for regulating the meetings and proceedings of the Board so far as applicable unless superseded by any subsequent decisions of or regulations made by the Board provided that in no circumstances shall any subcommittee be permitted to delegate its authority.

46.4

Any sub-committee so formed shall meet as necessary but normally at least once every [ ] and shall report all acts and proceedings and resolutions passed to the Board as soon as is reasonably practicable.]

[As discussed with Groundwork it is anticipated that the company would have between three and eight subcommittees (Offset Scheme subcommittee, Good Causes subcommittee and Venture Capital subcommittee and sub regional committees). This structure fits well with the suggested company entity, and appropriate reporting procedures can easily be built into the Articles of Association - either on a general or a specific basis. The Offset Subcommittee would procure and performance manage the framework and would also provide technical skill and experience. The Good Causes Subcommittee would be involved in the decision making and the Venture Capital Subcommittee would provide business support. The whole board of directors would have overall responsibility, drawing on the recommendations and advice of the subcommittees.] [We need to discuss the relevant powers of the individuals who sit on the various subcommittees and the directors and members of the company in order to draft the Articles of Association. Ultimate responsibility and accountability should be kept with the board of directors and it is proposed that the committees put forward ideas/proposals to the full board of directors who then vote upon such matters.] PROCEEDINGS OF THE BOARD OF TRUSTEES

Generally

47.1

Subject to Article 37.2 the presence of [ ] Trustees shall form a quorum for all business transacted at meetings of the Board.

47.2

Without prejudice to Article 37.1, a minimum of three quarters of the Trustees (rounded up) must be present when the business transacted consists of the following: (a)

[ ]; and

(b)

[ ];

and in either such case, a minimum of three quarters of the total number of Trustees present (rounded up) must vote in favour of any such resolution.

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47.3

Subject to Article 37.2 resolutions of the Board shall be by a simple majority vote of the Trustees present and voting on the question. In the event of equality of votes the Chairman shall have a second or casting vote. No other Trustees in any other circumstances shall be given more than one vote.

47.4

The Secretary upon the request of a Trustee at any time shall by notice in writing served upon the Trustees call a meeting of the Board.

47.5

At a Trustee's meeting every Trustees present and entitled to vote shall have one vote.

47.6

A Trustees shall not be entitled to vote in respect of any matter in which he is interested and shall not be counted in the quorum at any meeting at which any such matter is considered.

47.7

A quorate meeting of the Board shall be competent to exercise all the authorities, powers and discretions by or under the regulations of the Company for the time being vested in the Board generally.

47.8

There shall be at least [ ] meeting(s) of the Board every [ ].

Adjournment of Inquorate Meetings of the Board of Trustees

48.1

A meeting of the Board shall be adjourned to the same day in the next week at the same time and place or to such other day, time and place as the Trustees shall appoint if within 30 minutes of the time appointed for the start of the meeting a quorum is not present.

48.2

If at the adjourned meeting a quorum is again not present within 30 minutes of the time appointed for the start of the meeting those Trustees present shall be a quorum.

Acts of the Trustees

49.1

All bona fide acts done by the Trustees or the Board at any meeting shall be valid even if it is discovered afterwards that there was some defect in the appointment or continuance in office of any Trustees or other irregularity.

Minutes

50.1

The Trustees shall cause proper minutes to be made of: (a)

all appointments of Officers; and

(b)

proceedings of all meetings of the Company, the Board and any sub-committees.

50.2

Such minutes if purporting to be signed by the Chairman of such meeting or the Chairman of the next succeeding meeting shall be sufficient evidence of the facts stated therein. Such minutes shall be under the control of the Secretary.

Written Resolutions of the Trustees

51.1

Notwithstanding Article [ ] a resolution in writing signed by each serving Trustees shall have the same effect as if it had been passed at a meeting of the Board duly convened and constituted.

51.2

The resolution in writing may comprise several documents containing the text of the resolution in like form signed by one or more Trustees.

ACCOUNTS

Accounting Records

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52.1

Accounting records shall be kept by the Trustees in accordance with the Acts and the Charities Act and any Statement of Recommended Practice in force from time to time at the Office or such other place or places as the Trustees think fit.

52.2

The accounting records shall be open to inspection by the Trustees at all reasonable times.

52.3

The Trustees shall cause the accounts and all annual statements and reports to be laid before the Company in accordance with the Charities Act and the Acts.

52.4

A copy of every annual statement of accounts, auditorâ&#x20AC;&#x2122;s report and report of the Board which is to be laid before the Company at a General Meeting shall be sent to every Member and every holder of debentures of the Company at least 21 days before the meeting.

AUDIT

Appointment of Auditors

53.1

Auditors shall be appointed by the members at the Annual General Meeting and their duties regulated in accordance with the Acts.

53.2

At least once in every year the Company accounts shall be independently examined by one or more properly qualified auditor or auditors as defined by the Acts.

[INVESTMENT MANAGERS

Appointment of Investment Managers

54.1

The Board may appoint as the investment manager for the Company any person whom they are satisfied after enquiry is a proper and competent person to act in that capacity and who is either: (a)

an individual of repute with at least 15 years experience of investment management and who is an authorised person within the meaning of the Financial Services Act 1986; or

(b)

a company or firm of repute which is an authorised or exempted person within the meaning of the Financial Services Act 1986 otherwise than by virtue of section 45(1) (J) of that Act as amended or re-enacted from time to time.

Powers of Investment Managers

55.1

The Board may delegate to investment managers so appointed at the discretion of the Board the power to buy and sell investments for the Company on behalf of the Board in accordance with the investment policy laid down by the Board The Board may do so only on terms consistent with these Articles.

Delegation by the Board of Trustees

56.1

When the Board makes any delegation under these Articles it shall: (a)

inform the investment manager in writing of the extent of the Companyâ&#x20AC;&#x2122;s investment powers;

(b)

lay down a detailed investment policy for the Company and immediately inform the investment manager in writing of it and of any changes to it;

(c)

ensure that the terms of the delegated authority are clearly set out in writing and notified to the investment manager;

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(d)

ensure that it is kept informed and review on a regular basis the performance of the investment portfolio managed by the investment manager under his delegated authority;

(e)

take all reasonable care to ensure that the investment manager complies with the terms of the delegated authority; and

(f)

review the appointment at such intervals not exceeding 24 months as it thinks fit.

Terms of Delegation

57.1

Any delegation by the Board under these Articles shall be on the terms that: (a)

the investment manager shall comply with the terms of his delegated authority;

(b)

the investment manager shall not do anything which the Board do not have the power to do;

(c)

the Board may on reasonable notice revoke the delegation or vary any of its terms in a way which is consistent with the terms of these Articles; and

(d)

the investment manager shall report in the manner directed by the Board all sales and purchases of investments made on its behalf.

Nominee

58.1

The Board may make such arrangements as they think fit for any investments by the Company of income from those investments to be held by a corporate body as the nominee of the Board. The Board may pay reasonable and proper remuneration to any corporate body acting as the Board nominee in pursuance of this article. ]

PERSONAL INTEREST OF THE TRUSTEES

Remuneration of Trustees

59.1

No person shall receive remuneration for acting as a Trustee under these Articles.

59.2

No Trustees shall be interested in the supply of services, work or goods at the cost of the Company unless: (a)

he is absent from all meetings of the Trustees during the relevant discussions;

(b)

he takes no part in the relevant decision; and

(c)

the other Trustees are satisfied the transactions arising out of such decisions are advantageous to the Company.

PROVIDED THAT at no time shall a majority of the Board benefit under this provision. INDEMNITY

Indemnity of Officers

60.1

The Company may indemnify any Director, Auditor or Reporting Accountant or other officer of the Company against any liability incurred by him or her in that capacity: in the case of a Director, to the extent permitted by sections 232 to 239 Companies Act 2006; in the case of an Auditor, to the extent permitted by section 310 of the Companies Act 1985 (or to the extent permitted by any replacement or amending legislation).

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Insurance

61.1

The Board shall have the power to purchase and maintain for any Trustees such insurance as is permitted by the provisions of the schedule to the Memorandum of Association of the Company.

DISSOLUTION

Cy Pres

62.1

Clause 8 of the Memorandum of Association of the Company relating to the winding up and dissolution of the Company shall have effect as if its provisions were repeated in these Articles.

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SCHEDULE Proxy Vote [NORTH WEST CLIMATE FUND]

I or We (name of (address)

hereby appoint (name) of (address)

to vote for me and on my behalf as he/she thinks fit at the (Annual, or Adjourned, as the case may be) General Meeting of the Company to be held on the [ ] day of [200*] and at every adjournment thereof

NAMES, ADDRESSES AND DESCRIPTIONS OF SUBSCRIBERS Signature of Subscriber: Name in full: Address:

Date: Witness signature: Witness name in full: Witness address:

Witness occupation: Next retirement date:

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Draft for discussion The Northwest Climate Fund Work package: Financial business planning and review Work package lead: BDO Stoy Hayward LLP Organisational costs Set out below is an analysis of the estimated organisation costs relating to the operation of the Northwest Climate Fund (‘the Fund’). The costs have been developed from the operational model proposed by Groundwork and are described in more detail below. Analysis of the estimated operational costs of the Northwest Climate Fund £’000

2008/09

2009/10

2010/11

2011/12

2012/13

Wages and salaries Marketing and publicity Office costs Travel and subsistence IT support Events and training Accounting and audit

98 55 18 3 5 8 15 202 202 50 252

195 115 35 10 10 15 15 395 20 415 25 440

298 100 60 10 13 25 15 521 24 547 547

298 100 60 10 13 25 15 521 53 574 574

298 100 60 10 13 25 15 521 82 603 603

Add: Inflation (5%) Start up costs

Notes: i. ii.

The fund is assumed to commence operation from 1 October 2008 Inflation has been assumed at 5% on all costs. This is considered to be a prudent estimate

The key assumptions and rationale for the above costs are set out below: Wages and salaries £’000

2008/09

2009/10

2010/11

Chief officer Procurement manager Fund manager Grants officer Finance manager Administrator Development manager Marketing officer Finance officer

20 14 14 10 15 9 82 16 98

40 27.5 27.5 20 30 18 163 32 195

45 30 30 20 35 18 30 20 20 248 50 298

Add: On costs (20%)

Draft for discussion The roles set out above are based upon an organisational structure for the Fund proposed by Groundwork and assumes a fixed establishment of 6 FTEs. By way of comparison, the Target Wellbeing programme, a Lottery funded public health programme operated by Groundwork Northwest which has committed income of £9 million over 3 years and requires 5 FTEs for its administration. It has been assumed that in 2008/09 and 2009/10 the organisation will be in an ‘incubation’ phase with additional FTEs and employee costs required thereafter based on the premise that the fund will be generating more revenues at this point. To the extent that these incomes are not generated these additional costs will not be incurred The salary levels have been estimated by Groundwork based on equivalent roles in other similar charitable organisations An outline description of the individual roles is set out below: Chief officer

Overall responsibility for the Fund and it’s strategic development

Procurement manager

Responsible for the tendering, establishment and administration of framework contracts with those organisations which it is anticipated will identify and source the carbon ‘offsetting’ type schemes in which the Fund will invest This role will also involve the management of contracts between the Fund and Organisations investing in the ‘offset’ type schemes sourced through the framework contract above

Fund manager

Responsible for the strategic direction of investment of income received in relation to carbon reduction projects (as distinct from the ‘offsetting’ type schemes) and developing and supporting partnerships with providers

Grants officer

Responsible for the management and administration of grants to carbon reduction projects

Finance manager

This role will incorporate management and statutory reporting of financial information as well as supporting other management with stakeholder engagement

Administrator

General administration and office management

Development manager

It is anticipated that additional new business development capacity will be required in order to assist with the generation of additional income following the assumed cessation of NWDA seed funding at the end of 2009/10

Marketing officer

The marketing officer will also support fundraising activities, however it is anticipated that this post will replace an element of the outsourced marketing provision assumed during the Fund’s incubation period (see below)

Finance officer

In light of anticipated additional revenues post incubation it is assumed that additional finance resource will be required

‘On costs’

We have assumed that ‘on costs’ such as Employers National Insurance and Pension contributions will be a further 20% on the estimated salaries

Draft for discussion

Marketing and publicity [Rationale for quantum of marketing and publicity cost estimate to be provided by Creative Concern]. Anticipated marketing and publicity activities to be undertaken by the Fund include [advertising [type], commissioning and publication of articles and research]. It is assumed that the provision of these services will be provided externally during the organisation’s incubation period, however in time it is anticipated that some of the proposed functions will be brought ‘in house’, for example through the creation of the posts of the Development manager and Marketing officer. Office costs Office costs relate to rent, rates, heating and lighting, maintenance and cleaning, insurance and security. It is anticipated that the organisation will be located in supported office space and as such the cost estimates have been pro-rated based upon those currently incurred by Groundwork for their office space in Manchester city centre. Travel and subsistence Travel and subsistence costs are assumed to relate primarily to the travel costs of employees for meetings with potential and actual funders, representatives from the organisations delivering the carbon reduction schemes as well as other stakeholders. IT Support IT support costs have been assumed at around £1,500 per FTE per annum incorporating annual cost of equipment lease, software licences and support services [Groundwork benchmark available?]. Events and training [Source of this cost estimate] It is assumed that events and training costs will be required to train the sub-regional committees. It is anticipated that the Fund’s requirement for additional sub regional committees will be delivered either via existing sub-regional partnerships in the charitable sector or volunteers (e.g. the voluntary steering group for Groundwork’s Greening Greater Manchester) Audit and accountancy costs Audit and accountancy fees of around £15,000 per annum have been assumed for an organisation of this size. It is assumed that the certification of carbon reduction outcomes from schemes which the Fund supports will be provided by the delivery organisation and as such no costs have been included for scheme audits/certification (periodic checks/verification of reported outcomes will be undertaken by the relevant Fund managers) Start-up costs We have assumed that start up costs for the organisation will be £75,000 spread over the incubation period of the Fund. Anticipated start-up costs include those for staff recruitment,

Draft for discussion legal fees (e.g. for company set-up establishment of standard forms of contract), partner procurement, training and one off Fund launch costs

Income Research and analysis on charitable organisations contained on Charityfacts.org indicates that fundraising and administration costs should not exceed 40%. In addition, our analysis of the 2006 annual report of Climate Care, a carbon offsetting business, indicates that these costs represent around 43% of income. We have therefore estimated the quantum of income which the Fund will need to raise in order to achieve a fund-raising ratio of 40%, which the above information indicates as the minimum required. These income figures are set out in the table below Northwest Climate Fund minimum income requirements £’000

2008/09

2009/10

2010/11

2011/12

2012/13

Fundraising and administration costs

202

415

547

574

603

Income target

505

1,038

1,368

1,435

1,508

Notes:

Fundraising and administration costs exclude start up costs

NWDA funding We understand that there is potentially up to £1.4 million of revenue funding available for the Fund from the Northwest Development Agency (‘NWDA’)until the end of March 2010. No funding commitment has, at this stage, been made by the NWDA. However, should the Agency fund the organisation costs of £0.7 million for the 18 month period to March 2010, the Fund would then be required to raise over £0.8 million over the same timeframe. The NWDA may also support the Fund’s income generation, for example through a matched contribution arrangement. For the purposes of this analysis we have not assumed any NWDA funding beyond March 2010. Next steps • • • • •

BDO to discuss support for income targets with Creative Concern (taking into account the output of the Vision 21 market testing) BDO to consider the impact of taxation on the organisation and financial forecast (taking into account Pannone’s advice on the legal status of the Fund) Creative concern to provide a rationale/support for the quantum of marketing and PR spend BDO to discuss anticipated nature and presentation of NWDA funding BDO to prepare illustrative cashflow analysis

Results of North West Climate Fund Market Testing

April 2008 For further information please contact: Helen Bidwell Vision Twentyone Milton Hall Deansgate Manchester M3 4BQ Tel: 0161 200 8000 Fax: 0161 200 8010 E-mail: helen.bidwell@visiontwentyone.co.uk Requested by: Creative Concern

North West Climate Fund Market Testing: Results

CONTENTS

Page

1.0 Executive Summary

2.0 Introduction

3.0 Data Tables: Public survey

4.0 Data Tables: Organisation survey

Appendix 1: Telephone questionnaire – public

Appendix 2: Telephone questionnaire – organisations

xiii

Appendix 3: List of organisations interviewed

xxvi

North West Climate Fund Market Testing: Results

1.0

EXECUTIVE SUMMARY

1.1

Introduction

•

To support the development of their business and implementation plan, Creative Concern commissioned Vision Twentyone to test the full extent of public and private market appetite for a North West Climate Fund.

•

Market appetite was tested through a telephone survey of 505 individuals and 54 organisations across the North West. This report illustrates the survey findings in the form of data tables, as proposed.

1.2

Key findings: Public survey

•

Nearly nine out of ten respondents (87.9%) agreed that the world’s climate is changing. When asked what they did personally, or would consider doing, to combat climate change, the most popular measures were recycling household waste (97.4%), buying energy saving light bulbs (89.7%), and spending more money insulating houses or installing more energy efficient heating (82.4%).

•

The most popular types of projects for the fund to invest in were local renewable energy projects (19.2%), local community-based projects (17.8), international carbon offsetting schemes (15.8%) and local energy projects (14.9%).

•

One in ten respondents (10.3%) said that they were ‘quite likely’ or ‘very likely’ to contribute to the fund. A further two in ten (19%) did not rule it out. Results indicate that this proportion is similar across genders, and that younger people are less likely to rule out contributing than older people.

•

Of the three in ten respondents who may consider contributing to the fund (29.3%, or 148 respondents in all), 38.5% thought that they would make a one-off contribution. The most popular values for one-off contributions were £6-10 (24.6%) and up to £5 (21.1%). 12.8% thought that they would make a monthly contribution. The most popular sum for a monthly contribution was up to £5 (47.4%). Just under half (48.0%) were not sure.

•

A quarter (25.7%) of these respondents would be prepared to pay a premium in order to support projects in the North West. Just over a third (37.8%) were not sure, and a similar proportion (36.5%) would not.

•

The three most popular descriptions of the climate fund were: ‘The fund will achieve measurable carbon reductions’ (40.2%); ‘The fund directly benefits climate change projects in the North West (39.0%); and ‘When you contribute to the fund, you get a say in where your money is spent’ (38.8%).

April 2008

North West Climate Fund Market Testing: Results

•

The three incentives most likely to encourage people to contribute to the climate fund were: ‘Seeing [their] local community benefit from the fund’ (35.2%); ‘Being kept informed of how much carbon [they] were saving’ (21.2%); and ‘A loyalty card for carbon friendly behavior’ (12.5%).

•

Over half of respondents (56.6%) said that they would purchase a product where the money they spent went towards climate change projects. A sizable minority (17.6%) would make a contribution towards addressing their carbon emissions if asked to do so in an airport departures lounge, a similar proportion (17.8%) if given the option to do so by their energy provider, and fewer (8.1%) if given the option to do so by their employer.

1.3

Key findings: Organisation survey

•

The majority (87.0%) of organisations interviewed had programmes or policies in place to tackle climate change, most frequently: recycling schemes (25.0%), measures to reduce energy consumption (19.4%), and the use of eco-friendly products (16.0%). Of the six organisations that did not have anything in place, only one said that they would not be interested in doing something to address climate change in the future.

•

Most interviewees said that their organisation did not have an annual budget for reducing carbon emissions or for CSR (51.1% and 42.6% respectively), or that they were not sure (38.3% and 4.4% respectively).

•

When asked whether they would rather contribute to offsetting-style projects or local climate change projects in the North West, 11.1% thought that their organisation would be most interested in investing in offsetting-type schemes, and 27.8% in local climate change projects in the North West. 20.4% of respondents did not mind, and 5.6% would be interested in investing in both. In all, 64.8% of those interviewed (35 out of 50 respondents) did not dismiss contributing to the Fund at the outset.

•

Of these thirty-five respondents, 42.9% were not sure how likely their organisation would be to contribute to the fund. 5.7% were ‘quite likely’ to contribute, 31.4% were neutral, 8.6% were ‘quite unlikely’ to contribute, and 11.4% were ‘very unlikely’ to contribute.

•

Half of all the organisations we spoke to about the Fund said that they would consider encouraging their staff to take measures towards addressing climate change, for example by suggesting that every member of staff who drives a company car contributes £3 a month to compensate for their carbon emissions.

•

NB: Please note that due to the relatively small sample size caution should be exercised when examining the results of the organisation survey. However, the findings provide a useful indicative picture of organisational attitudes.

April 2008

North West Climate Fund Market Testing: Results

2.0

INTRODUCTION

2.1

Purpose of the research

Vision Twentyone were commissioned by Creative Concern to undertake the market testing work package in support of the development of the North West Climate Fund. This consisted of a telephone poll to confirm the full extent of public and private market appetite for the fund. Building on the work packages led by each partner (namely Quantum and Creative Concern), Vision Twentyone sought to explore how both businesses and members of the public from across the North West would respond to the idea of a shared regional climate fund, in order to inform the identification of potential start-up projects, clarify the fund’s pitch, and gain an idea of how much businesses and the public may be willing to invest. 2.2

Methodology

Working in partnership with Creative Concern and our partner organisations, Vision Twentyone designed two questionnaires of between five to six minutes length, including the collation of demographic information. The questionnaires were designed to gather information that could be used to inform the content and development of the fund. Interviews were conducted in Vision Twentyone’s in-house Computer Assisted Telephone Interviewing (CATI) Unit by our experienced team of interviewers. Interviews were conducted using SNAP software enabling respondents’ comments to be captured instantly on screen. For the public survey, 505 interviews were carried out with a random sample of people across the North West. These were stratified by area, with 101 in each sub-region (Cheshire, Cumbria, Greater Manchester, Lancashire and Merseyside). For the organisation survey, 54 interviews were conducted with individuals responsible for environmental issues or corporate social responsibility, randomly selected from the North West Insiders Top 500. Of the 54 interviews, 47 were with private sector companies and 7 were with public sector organisations. Data collated from both surveys was analysed using SPSS (Statistical Package for the Social Sciences). The final output in the form of a series of data tables makes up the body of this report. Findings are to be used by the Consultancy Team to inform the development of their work packages and ultimately the business plan and proposed projects.

April 2008

North West Climate Fund Market Testing: Results

3.0

DATA TABLES: PUBLIC SURVEY

3.1

General interest in climate change issues

Q1: Firstly, do you agree or disagree that the world’s climate is changing? (Single choice) Agree strongly Agree slightly Neither agree nor disagree Disagree slightly Disagree strongly [DO NOT PROMPT] Don’t know/ not sure Total

Frequency 300 144 17 11 10 23 505

Percent 59.4% 28.5% 3.4% 2.2% 2.0% 4.6% 100.0%

Q2: At which levels do you think climate change should be tackled? (Multiple choice) Globally European level National government Local government By community groups By individual households [DO NOT PROMPT] There is no problem to tackle [DO NOT PROMPT] Don’t know/ not sure Other, please state

April 2008

Count 397 168 196 175 125 159 19 23 5

Percent 78.6% 33.3% 38.8% 34.7% 24.8% 31.5% 3.8% 4.6% 1.0%

North West Climate Fund Market Testing: Results

Q3: Which, if any, of the following have you done, or would you be prepared to do, to address climate change? (Multiple choice) Recycle household waste Buy energy saving light bulbs Spend money insulating your house or installing more energy efficient heating Buy local to reduce food miles Share car journeys and use public transport wherever possible Take fewer flights Pay more for flying Donate money to compensate for your energy consumption [DO NOT PROMPT] None of these Other, please state

April 2008

Count

Percent

492

97.4%

453

89.7%

416

82.4%

350

69.3%

275

54.5%

169

33.5%

15.6%

8.7%

.4%

.6%

North West Climate Fund Market Testing: Results

3.2

Favoured types of projects

Q5: If such a fund was set up, what type of projects do you think the money invested should go towards? Please select one of the following: (Single choice) Frequency

Percent

Local renewable energy projects, for example renewable energy on school and community buildings

19.2%

Local community-based projects, for example home energy advisors based in your local community

17.8%

International carbon offsetting schemes, for example investing in bio gas stoves in India

15.8%

Local energy projects, for example providing grants or loans to householders for insulation or renewable energy

14.9%

Local environmental projects, for example community orchards or local food projects

11.7%

9.1%

8.9%

2.6%

505

100.0%

Other, please state [DO NOT PROMPT] None of the above Local offset-style schemes, for example restoring peat bogs Total

Q6: Some of the projects which benefit from the Climate Fund will be set up and run by groups of people in the North West. For example a street, village or group of work colleagues could get together and put steps in place to reduce carbon emissions in their area. Do you know of a local group that could benefit from the Fund? (Single choice) Frequency 17 471 17 505

Yes No Don't know Total

April 2008

Percent 3.4% 93.3% 3.4% 100.0%

North West Climate Fund Market Testing: Results

3.3

Likelihood of contributing and likely value of contribution

Q7: How likely would you be to contribute to a climate fund for the North West? (Single choice) Frequency 3 49 48 69 288 48 505

Very likely Quite likely Neither likely nor unlikely Quite unlikely Very unlikely [DO NOT PROMPT] Don’t know/ not sure Total

Percent .6% 9.7% 9.5% 13.7% 57.0% 9.5% 100.0%

Q7: How likely would you be to contribute to a climate fund for the North West? – Cross-tabulation by gender Male Count Percent 1 .5% 20 9.6% 17 8.2% 25 12.0% 128 61.5% 17 8.2% 208 100.0%

Very likely Quite likely Neither likely nor unlikely Quite unlikely Very unlikely [DO NOT PROMPT] Don’t know… Total

Female Count Percent 2 .7% 29 9.8% 31 10.4% 44 14.8% 160 53.9% 31 10.4% 297 100.0%

Q7: How likely would you be to contribute to a climate fund for the North West? – Cross-tabulation by age 18-30 Count % Very likely Quite likely Neither nor Quite unlikely Very unlikely Don’t know Total

31-50 Count %

51-70 Count %

71+ Count

Prefer not to say Count %

.0%

1.9%

.4%

.0%

15.6%

11.4%

8.0%

10.8%

5.3%

18.8%

13.3%

8.8%

3.6%

15.8%

12.5%

16.2%

13.9%

10.8%

15.8%

43.8%

50.5%

136

57.1%

65.8%

63.2%

9.4%

6.7%

11.8%

9.0%

.0%

100.0%

105

100.0%

238

100.0%

111

100.0%

April 2008

North West Climate Fund Market Testing: Results

Q8: If you were to contribute to such a fund, do you think you would make a one off or monthly contribution? (Single choice) Frequency Percent Valid One off 57 38.5% Monthly 19 12.8% [DO NOT PROMPT] Don't know/ not sure 71 48.0% [DO NOT PROMPT] I would not contribute 1 .7% Total 148 100.0% N/A Not applicable 357 Total 505 N.B: 148 respondents. This question was not asked of those who said that they would be ‘quite unlikely’ or ‘very unlikely’ to contribute to the fund.

Cross-tabulation by likely amount of donation

One off Up to £5 £6 - £10

£11 - £15

£16 - £20

£21 - £25

£26 - £30

£31 or more

[DO NOT PROMPT] Don't know/ not sure [DO NOT PROMPT] Nothing Total

Monthly

[DO NOT PROMPT] Don't know

[DO NOT PROMPT] I would not contribute

Count

Percent

Count

Percent

Count

Percent

Count

Percent

21.1%

47.4%

31.0%

.0%

24.6%

15.8%

12.7%

.0%

1.8%

5.3%

2.8%

.0%

7.0%

5.3%

1.4%

.0%

3.5%

.0%

1.8%

.0%

12.3%

.0%

1.4%

.0%

28.1%

26.3%

50.7%

.0%

100.0%

N.B: 148 respondents. This question was not asked of those who said that they would be ‘quite unlikely’ or ‘very unlikely’ to contribute to the fund.

April 2008

North West Climate Fund Market Testing: Results

Q10: In reality it costs more to contribute to a fund supporting local climate change projects than it would to pay into an international fund because carbon reduction projects can be more expensive to implement in the North West than overseas. Would you be prepared to pay up to double in order to support local climate change projects that will benefit your area? (Single choice) Frequency Percent Valid Yes 38 25.7% No 54 36.5% [DO NOT PROMPT] Don't know/ not sure 56 37.8% Total 148 100.0% N/A Not applicable 357 Total 505 N.B: 148 respondents. This question was not asked of those who said that they would be ‘quite unlikely’ or ‘very unlikely’ to contribute to the fund.

April 2008

North West Climate Fund Market Testing: Results

3.4

Marketing the fund

Q4: Iâ&#x20AC;&#x2122;m now going to read you a list of possible descriptions of the Climate Fund. Please could you tell me which three of these are the most important to you? (Tick three only) Count

Percent

203

40.2%

The fund directly benefits climate change projects in the North West

197

39.0%

When you contribute to the fund, you get a say in where your money is spent

196

38.8%

You will be kept informed of the amount of carbon your contributions have saved

171

33.9%

The fund directly benefits climate change projects in [subregion]

154

30.5%

9.5%

105

20.8%

The fund will achieve measurable carbon reductions

Every four months a large cash prize will be given to the local group who produces the largest cut in carbon emissions [DO NOT PROMPT] None of the above

April 2008

North West Climate Fund Market Testing: Results

Q11: Which, if any, of the following would encourage you to contribute to a climate fund for the North West? Please choose three from this list. (Tick three only) [DO NOT PROMPT] None of the above

Seeing your local community benefit from the fund Being kept informed of how much carbon you were saving A loyalty card for carbon friendly behaviour

The provision of a carbon count website so you can work out your personal carbon emissions A monthly prize for new participants

A scratch card you could buy in an airport departures lounge with the change to win a green prize A certificate recognising your contribution

Other

April 2008

Count

Percent

222

44.0%

178

35.2%

107

21.2%

12.5%

11.7%

7.9%

7.5%

4.8%

2.4%

North West Climate Fund Market Testing: Results

Q12: If you were in the departures lounge at an airport and you were asked to contribute money to compensate for the carbon generated by your flight, would you do this? (Single choice) Yes No Maybe [DO NOT PROMPT] Don't know/ not sure Total

Frequency 89 289 97 30 505

Percent 17.6% 57.2% 19.2% 5.9% 100.0%

Q13: If your energy provider gave you the option of paying a small amount of money along with your bill to compensate for your carbon emissions, would you do this? (Single choice) Yes No Maybe [DO NOT PROMPT] Don't know/ not sure Total

Frequency 90 322 67 26 505

Percent 17.8% 63.8% 13.3% 5.1% 100.0%

Q14: If your employer gave you the option of contributing a small amount of money from your wages to compensate for your carbon emissions, would you do this? (Single choice) Yes No Maybe [DO NOT PROMPT] Don't know/ not sure Total

Frequency 41 381 40 43 505

Percent 8.1% 75.4% 7.9% 8.5% 100.0%

Q15: If you were able to purchase a product such as a car sticker, luggage tag or ethical carrier bag, with the money you spend going towards climate change projects, would you do this? (Single choice) Yes No Maybe [DO NOT PROMPT] Don't know/ not sure Total

April 2008

Frequency 286 126 81 12 505

Percent 56.6% 25.0% 16.0% 2.4% 100.0%

North West Climate Fund Market Testing: Results

3.5

Demographic information

Sub-region (Single choice; coded from database) Cheshire Cumbria Greater Manchester Lancashire Merseyside Total

Frequency 101 101 101 101 101 505

Percent 20.0% 20.0% 20.0% 20.0% 20.0% 100.0%

Frequency 208 297 505

Percent 41.2% 58.8% 100.0%

Frequency 10 22 41 64 123 115 84 27 19 505

Percent 2.0% 4.4% 8.1% 12.7% 24.4% 22.8% 16.6% 5.3% 3.8% 100.0%

Frequency 421 14 35

Percent 83.4% 2.8% 6.9%

35 505

6.9% 100.0%

Q16: Gender Male Female Total

Q17: Age 18 to 20 21 to 30 31 to 40 41 to 50 51 to 60 61 to 70 71 - 80 81 or over [DO NOT PROMPT] Prefer not to say Total

Q18: Which of the following is your house? Owned by you Privately rented Council or Housing Association [DO NOT PROMPT] Prefer not to say Total

April 2008

North West Climate Fund Market Testing: Results

4.0

DATA TABLES: ORGANISATION SURVEY

4.1

General interest in climate change issues

Q1: Does your organisation currently have any programmes or policies in place to address climate change? This might be anything from recycling waste or using energy saving light bulbs to carbon offsetting and energy management programmes. (Single choice) Frequency 47 4 3 54

Yes No Don't know/ not sure Total

Percent 87.0% 7.4% 5.6% 100.0%

Q2: What does your organisation currently do to address climate change? (Multiple choice)

Recycling Measures to reduce energy consumption Eco-friendly products Other - please state Measures carbon footprint Carbon offsetting style schemes Measures to reduce water consumption Investment in green technology Ethical investment policy Operate car-share scheme

Count

Percent

25.0%

19.4%

16.0%

8.3%

7.6%

6.9%

5.6%

3.5%

2.1%

Subsidised public transport for 0 employees NB: This question was only asked of those who answered â&#x20AC;&#x2DC;yesâ&#x20AC;&#x2122; to Q1.

April 2008

.0%

North West Climate Fund Market Testing: Results

Q3: Do you think your organisation would be interested in doing something to address climate change in the future? (Single choice) Frequency Percent 6 85.7% 1 14.3% 7 100.0% N/A 47 Total 54 NB: This question was only asked of those who answered ‘no’ or ‘don’t know’ to Q1. Valid

Yes No Total Not applicable

April 2008

North West Climate Fund Market Testing: Results

4.2

Budgetary information

Q4: Approximately what is your an annual budget for reducing your carbon emissions? (Single choice) Valid

Up to £9,999 £10,000 to £99,999 £100,000 to £199,999 Over £200,000 We don't have an annual budget for reducing our carbon emissions Don't know/ not sure Total Not applicable

Frequency 3 1 0 1

Percent 6.4% 2.1% .0% 2.1%

51.1%

18 47 N/A 7 Total 54 NB: This question was only asked of those who said ‘Yes’ to Q1.

38.3% 100.0%

Q5: Approximately what is your annual CSR budget? (Single choice) Frequency 2 2 0 3 23 24 54

Up to £9,999 £10,000 to £99,999 £100,000 to £199,999 Over £200,000 We don't have an annual CSR budget Don't know/ not sure Total

Percent 3.7% 3.7% .0% 5.6% 42.6% 44.4% 100.0%

Q6: Approximately what is your organisation's annual energy bill? (Single choice) Frequency 5 9 12 6 3 19 54

Up to £49,999 £50,000 to £249,999 £250,000 to £999,999 £1,000,000 to £9,999,999 Over £10,000,000 Don't know/ not sure Total

April 2008

Percent 9.3% 16.7% 22.2% 11.1% 5.6% 35.2% 100.0%

North West Climate Fund Market Testing: Results

4.3

Interest in offsetting-style projects versus interest in local climate change projects across the North West

Q7: If your organisation was looking to invest in this fund, would you prefer to… (Single choice) [DO NOT PROMPT] We would not be interested in investing in the Fund …invest in local climate change projects across the North West [DO NOT PROMPT] Either/ don't mind …make a contribution to ideally offset your carbon emissions [DO NOT PROMPT] Both

Total

Frequency

Percent

35.2%

27.8%

20.4%

11.1%

5.6%

100.0%

Q7: Cross tabulation by organisation type Type of organisation Private sector

Public sector

Count

Percent

Count

Percent

[DO NOT PROMPT] We would not be interested in investing in the Fund

38.3%

14.3%

…invest in local climate change projects across the North West

25.5%

42.9%

21.3%

14.3%

12.8%

.0%

2.1%

28.6%

100.0%

[DO NOT PROMPT] Either/ don't mind …make a contribution to ideally offset your carbon emissions [DO NOT PROMPT] Both Total

April 2008

North West Climate Fund Market Testing: Results

4.4

Types of projects

4.4.1 Types of projects favoured by those interested in investing in carbon offsetting-style schemes Q9: What type of project do you think your organisation would be most interested in contributing towards? All of these projects would be in the North West. (Single choice)

Energy efficiency improvements in businesses Innovations and new technology Renewable energy installations in private homes or businesses Renewable energy installations for schools, community buildings Energy efficiency improvements in homes Energy efficiency improvements in non-profit organisations Restoration of peat bogs to store carbon Other, please state Total

Count

Percent

50.0%

33.3%

16.7%

.0%

100.0%

NB: This question was only asked of those who said they would prefer to â&#x20AC;&#x2DC;make a contribution to ideally offset [their] carbon emissions or help [them] to become carbon neutralâ&#x20AC;&#x2122; at Q7.

April 2008

North West Climate Fund Market Testing: Results

4.4.2 Types of projects favoured by those interested in investing in local climate change projects in the North West Q10: What type of project do you think your organisation would be most interested in contributing towards? All of these projects would be in the North West. (Single choice)

Renewable energy installations for schools, community buildings Energy efficiency improvements in businesses Increasing energy & carbon-saving advice to local communities Renewable energy installations in private homes or businesses Energy efficiency improvements in homes Developing and promoting alternatives to car use Developing new technologies to reduce carbon emissions Promoting local food and food-growing Energy efficiency improvements in non-profit organisations Restoration of peat bogs to store carbon Innovations and new technology Other, please state Total

Count

Percent

20.0%

13.3%

6.7%

.0%

100.0%

NB: This question was only asked of those who said they would prefer to â&#x20AC;&#x2DC;invest in local climate change projects across the North Westâ&#x20AC;&#x2122; at Q7.

April 2008

North West Climate Fund Market Testing: Results

4.4.3 Types of projects favoured by those who would not mind whether they invested in offsetting-style schemes or local climate change projects across the North West, or would be interested in both [DO NOT PROMPT] Either/ don't mind

[DO NOT PROMPT] Both

Count

Percent

Count

Percent

Renewable energy installations for schools, community buildings

27.3%

33.3%

Energy efficiency improvements in businesses

18.2%

66.7%

27.3%

.0%

Increasing energy & carbon-saving advice to local communities

18.2%

.0%

Developing and promoting alternatives to car use

9.1%

.0%

100.0%

Other, please state

Promoting local food and foodgrowing Renewable energy installations in private homes or businesses Energy efficiency improvements in homes Energy efficiency improvements in non-profit organisations Developing new technologies to reduce carbon emissions Restoration of peat bogs to store carbon Innovations and new technology Total

NB: This question was only asked of those who said they would not mind whether they invested in offsetting-style schemes or local climate change projects across the North West, or would be interested in both, at Q7.

April 2008

North West Climate Fund Market Testing: Results

4.5

Motivations for contributing

Q8: What would your organisation's motivations be for contributing to such a fund? (Multiple choice) â&#x20AC;&#x201C; Overall results Count

Percent

It means we're seen to be a forward thinking, responsible business

29.2%

We are concerned about our contribution to climate change

28.1%

23.6%

19.1%

.0%

It would enable us to increase the profile of our business through PR etc. It increases business profitability Other, please state

April 2008

North West Climate Fund Market Testing: Results

4.6

Likelihood of contributing and likely value of contribution

Q11: How likely would your organisation be to contribute to such a fund? (Single choice) – Overall results Valid

Frequency 0

Percent .0%

5.7%

31.4%

8.6%

Very unlikely Don’t know/ not sure Total

4 15

11.4% 42.9%

100.0%

System

Very likely Quite likely Neither likely nor unlikely Quite unlikely

Missing Total

54 NB: This question was not asked of those who said ‘We would not be interested in investing in the Fund’ at Q7

Q12: How much would your organisation be likely to contribute towards such a fund? (Single fund) – Overall results Valid

Up to £4,999 £5,000 to £9,999 £10,000 to £49,999 £50,000 to £99,999 £100,000 to £149,999 £150,000 to £199,999 Over £200,000 We would not donate to such a fund

Frequency 2

Percent 6.5%

3.2%

0 0 0 0 0

.0% .0% .0% .0% .0%

6.5%

Don't know/ not sure Total System

26 83.9% 31 100.0% Missing 23 Total 54 NB: This question was not asked of those who said ‘We would not be interested in investing in the Fund’ at Q7 or those who said ‘Very unlikely’ at Q11.

April 2008

North West Climate Fund Market Testing: Results

4.7

Extra questions to those who would prefer to make a contribution to ideally offset their carbon emissions or help them to become carbon neutral

Q13: Would one driver of your decision to contribute to the fund be the cost per tonne of carbon saved? (Single choice) Frequency Percent 0 .0% 0 .0% 3 100.0% N/A 51 Total 54 NB: This question was only asked of those who said they would like to ‘make a contribution to ideally offset [their] carbon emissions or help [them] to become carbon neutral’ at Q7. Valid

Yes No Don't know/ not sure Not applicable

Q14: Would you be likely to place any conditions on your contribution? (Open ended) Valid

N/A

Frequency

Percent

1.9%

3.7%

No answer

94.4%

Total

100.0%

We would prefer to have local projects so we can see where the money is being spent directly. However we’d be happy to have money spent on any worthy cause. -

NB: This question was only asked of those who said they would like to ‘make a contribution to ideally offset [their] carbon emissions or help [them] to become carbon neutral’ at Q7.

April 2008

North West Climate Fund Market Testing: Results

4.8

Additional questions

Q15: How much say would you want to have in where the money went? Would you... (Multiple choice) ...like to be able to specify projects in your local area …like to be able to specify the type of project e.g. energy …be happy for your contribution to go to any eligible projects

Count

Percent

40.5%

18.9%

Q16: In reality it costs more to contribute to a fund supporting local climate change projects than it would to pay into an international fund because carbon reduction projects can be more expensive to implement in the North West than overseas. Would you be prepared to pay up to double in order to support local climate change projects that will benefit your area? (Single choice) Frequency Percent 11 35.5% 7 22.6% 13 41.9% 31 100.0% N/A 23 Total 54 NB: This questions was not asked of those who said they were ‘very unlikely’ to contribute to the fund at Q11. Valid

Yes No Don't know/ not sure Total Not applicable

Q17: Organisations have the potential to encourage their staff to contribute towards addressing climate change. For example you might suggest that every staff member who drives a company car contributes £3 a month to the fund to compensate for their carbon emissions. Would your organisation consider encouraging staff to take measures like this? (Single choice) Frequency 27 17 10 54

Yes No Don't know/ not sure Total

April 2008

Percent 50.0% 31.5% 18.5% 100.0%

North West Climate Fund Market Testing: Results

4.9

Demographic information

Type of organisation (Single choice; coded from database) Frequency 47 7 54

Private sector Public sector Total

Percent 87.0% 13.0% 100.0%

Sub-region (Single choice; coded from database) Frequency 17 4 7 20 6 54

Cheshire Cumbria Greater Manchester Lancashire Merseyside Total

Percent 31.5% 7.4% 13.0% 37.0% 11.1% 100.0%

Q18: How many people does your company employ? (Single choice) Frequency 1 7 7 39 54

Fewer than 20 20 to 100 101-200 201 or more Total

April 2008

Percent 1.9% 13.0% 13.0% 72.2% 100.0%

North West Climate Fund Market Testing: Results

Q19: What sector is your organisation in? (Single choice) Frequency

Percent

51.9%

16.7%

7.4%

5.6%

Construction

3.7%

Transport, Storage and Communication

3.7%

1.9%

100.0%

Other - please state Manufacturing Public Administration and Defence; Compulsory Social Security Wholesale and Retail Trade; Repair of Motor Vehicles, Motorcycleâ&#x20AC;Ś

Real Estate and Renting Financial Electricity, Gas and Water Supply Don't know/not sure Total

April 2008

North West Climate Fund Market Testing: Results

APPENDICES

April 2008

North West Climate Fund Market Testing: Results

APPENDIX ONE: Telephone survey â&#x20AC;&#x201C; public

April 2008

North West Climate Fund Market Testing: Results

April 2008

North West Climate Fund Market Testing: Results

April 2008

iii

North West Climate Fund Market Testing: Results

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North West Climate Fund Market Testing: Results

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North West Climate Fund Market Testing: Results

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North West Climate Fund Market Testing: Results

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North West Climate Fund Market Testing: Results

APPENDIX TWO: Telephone survey â&#x20AC;&#x201C; organisations

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North West Climate Fund Market Testing: Results

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North West Climate Fund Market Testing: Results

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North West Climate Fund Market Testing: Results

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North West Climate Fund Market Testing: Results

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North West Climate Fund Market Testing: Results

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North West Climate Fund Market Testing: Results

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North West Climate Fund Market Testing: Results

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North West Climate Fund Market Testing: Results

APPENDIX THREE: List of organisations interviewed

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North West Climate Fund Market Testing: Results

Private sector organisations interviewed who are happy to have their details passed on to the North West Development Agency Aearo Ltd Agility Logistics Ltd Biwater Treatment Ltd Chemix Plc Clarke Energy Holdings Ltd Cumbrian Holdings Ltd Daniel Thwaites Plc Dew Construction Ltd Fraser Eagle Management Services Ltd Haulfryn Group Ltd Hitachi Automotive Systems Europe Ltd Holt Lloyd International Ltd Hurstwood Group Ltd Innovia Films Ltd Intervoice Ltd Lynteck Group Ltd Manchester Enterprises Ltd Multisol Ltd Paccar Trucks U K Ltd Pilkington Plc Places For People Group Ltd Romec Ltd Stokers Ltd Tetrosyl Ltd The M6 Paper Group Ltd Tote Bookmakers Ltd Ultraframe Plc Waters European Holdings Llp Wtb Holdings Ltd

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North West Climate Fund Market Testing: Results

Private sector organisations interviewed who do not wish to have their details passed on to the North West Development Agency 20:20 Logistics Ltd American Golf Discount Centre Ltd Ball Packaging Europe Uk Ltd British Nuclear Group Sellafield Ltd Cabot Uk Holdings Ltd Celestica (Uk) Holdings Ltd Fircroft Engineering Services Ltd Forticrete Ltd Holidaybreak Plc Inbis Group Ltd James Hall And Company (Holdings) Ltd Jerrold Holdings Plc Kellogg U K Holding Company Ltd Lofthouse Of Fleetwood Ltd Morson Holdings Ltd N R L Group Ltd Rts Thurnall (Holdings) Plc Sgs Holding Uk Ltd

Public sector organisations interviewed who are happy to have their details passed on to the North West Development Agency Allerdale County Council Burnley County Council Chester County Council Chorley County Council Crewe & Nantwich County Council Pendle County Council Preston County Council

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The North West Climate Fund is targeted at 2 separate audiences, organisations and individuals.

Organisation – strategy Research carried out by Vision 21 shows that only 14% of organisations currently address their carbon emissions or monitor their carbon footprint, though 85% (almost the remainder) would be interested in doing something to address climate change in the future. 35% of organisations would not be interested in investing in the Climate Fund, however, it has been suggested that maybe organisations need more information about the fund before we can truly gauge their interest. 65% of organisations would be interested in investing in local projects or carbon offsetting schemes (of this 65%, only 11% showed an interest in wanting to ‘offset’ their carbon emissions). No organisation stated that the driver of the decision to contribute would be the cost per tonne of carbon saved. A key area for organisations is their image and public perception of the organisation. 53% would contribute to the fund to raise their profile and to be perceived as a forward thinking, responsible business. This is a crucial element of the marketing proposal. 81% of businesses stated they would want to specify the project or type of project their money would be invested in. Allocating projects in accordance with each business’ objectives is key to gaining corporate interest. In terms of similar projects, the Northwest Climate Fund can be most likened to Climate Care or the Carbon Neutral Company – organisations that also offer businesses the opportunity to ‘offset’ their carbon emissions by investing in bespoke emission reduction projects. However, our research shows that the locality of projects and perception of their business are the most important factors to organisations in the Northwest. Previously, the benefits of carbon offsetting schemes and projects have proved difficult to clarify which may have an impact on corporate attitudes. From a marketing perspective ‘offsetting’ is not a key message.

There is a correlation between energy expenditure amongst businesses and their interest in improving energy efficiency.

22% of organisations spend between

£250,000 – £999,999 per annum, 5.6% of organisations spend more than £10 million per year. Of those who did not mind whether they invested in offsetting schemes or local climate change projects, 66% said they would be most interested in contributing towards energy efficiency improvements in businesses. It may be beneficial to communicate with businesses via their energy provider and give the opportunity to make a donation in accordance with their annual expenditure. Plan Organisations that show an interest in investing in the climate fund will go through a consultation process to assess their objectives and to identify the types of projects that will be relevant to them. The organisation will then be provided with a corporate pack stating their contribution (this contribution could perhaps be directly liked to a business operation e.g. number of company cars the organization funds), the project or projects that have been allocated to them, a fully integrated PR plan and a system to measure and monitor their carbon footprint based on their own operations and also taking into account how the projects they have invested in have an impact on their footprint. (See appendix for example corporate information) Depending on the response from energy providing organizations, Creative Concern would also endeavour to give corporate investors the opportunity to donate via their energy provider. Costs to take into consideration Administration costs of consultation process Cost of producing corporate pack Administration costs attached to donating via energy provider – if any

Individuals – strategy Research carried out by Vision 21 shows that 60% of people agree that the worlds climate is changing - though only 8% would be prepared to donate money to

compensate for their energy consumption. 57% people stated they were very unlikely to contribute to a climate fund for the North West. •

57% of people wouldn’t make donation at the airport to compensate for emissions

•

63% of people wouldn’t make donation via energy provider

•

75% of people wouldn’t donate from their wages each month

Initially it was suggested that Creative Concern looked at charity models to gain an understanding of what income to expect from individuals in the form of a donation, however it is conclusive that the public would not be receptive to being asked for a charity donation. However, a massive 56.6% of people stated that they would purchase a product such as a car sticker, luggage tag or ethical shopping bag with the money spent going towards climate change projects, and 35% of people stated that seeing their local community benefit from the fund would encourage them to donate money/purchase said product. Previous campaigns prove that the public are receptive to this approach and are keen to show their support by purchasing and owning something that is a display of their support for a cause. In April 2007, the ‘must have bag of the season’ was designed by Anya Hindmarch and carried the slogan ‘I am not a plastic bag’. These bags, which cost £5 and made available from Sainsbury’s stores, were designed to encourage people not to use plastic carrier bags. They sold out within an hour of going on sale. The BBC claimed that ‘sustainable is the new black. Eco friendly used to be a byword for dull and worthy, but now it’s officially fashionable’. This campaign gave the public a chance to own a designer item at a price they could easily afford (Anya Hindmarch bags ordinarily retail at around £500) and to make a statement showing they were supporting this cause. With the Northwest Climate Fund being a Northwest focussed campaign and locality clearly being an important factor for both audiences, it would make perfect sense to appoint a designer from the Northwest to design and endorse the product created for the NWCF:

Henry Holland - from Rossendale, close friends with Agyness Dene and famed for his controversial slogan t-shirts. See www.houseofholland.co.uk Vivienne Westwood - from Glossop, Westwood is famed for applying political statements to her clothing and has just released her manifesto to encourage people to change the way they think and behave along with the ‘Worlds End’ clothing range. See www.activeresistance.co.uk (in particular, article on how the ‘Creative Concerned’ could be the people to change the world) Matthew Williamson - from Chorlton, has previously worked with Marni and Pucci, owns his own label favoured by the likes of Sienna Miller & Jade Jagger Celia Birtwell - from Salford, Birtwell was famous in the 1960’s for working with The Rolling Stones, Pink Floyd and Jimi Hendrix among others, recently designed a clothing line for Topshop that sold out in a matter of weeks Wayne Hemmingway - from Morecombe, co founder of Red or Dead Peter Saville – from Manchester, most famous for his design work with Factory Records In terms of the product itself, there are a number of options that have proven to be successful sellers: Bags - the Anya Hindmarch bag with the slogan “I am not a plastic bag” cost £5 at selected Sainsbury's stores and sold out within an hour of going on sale. There were 20,000 bags produced, 30 bags per outlet and customers could only buy one each. T-shirts/vests - Stella McCartney designed an exclusive limited-edition vest in support of Oxfam, which was only available at the Glastonbury festival in 2007. Festival goers happily parted with £25! Belts & Scarves – All Saints have signature slogan belts and Vivienne Westwood has produced a series of statement scarves as part of the new Worlds End range e.g. ‘Active Resistance to Propaganda’.

Re-useable coffee cups â&#x20AC;&#x201C; Starbucks are charging less for takeaway coffees if customers provide their own mug, the NWCF could produce a reusable take out coffee cup. Communicating with the public Rather than paid for, above the line advertising, a PR campaign would the be most suitable of raising awareness of this product. If a prestigious designer was on board with the campaign this is a news story in itself it would also be important to send a small number of products out to local or national celebrities in order for them to be seen with the product and help us to make the public aware of the campaign. Creative Concern would recruit a number of ambassadors in the Northwest to show their support for the campaign and encourage the public to back the campaign e.g. tv/radio presenters. It is important that the public understand how the fund operates and how their money will be spent. A local building firm has offered to undertake an energy efficient regeneration project free of charge as part of a radio promotion, giving the public the opportunity to nominate and select the most worthy project and see the outcome of the building project. This helps to demonstrate how the investors have financial â&#x20AC;&#x2DC;controlâ&#x20AC;&#x2122; over the fund and also demonstrates the direct benefit to the Northwest and local communities. All activity should be supported by an online campaign with Manchester, Liverpool and Leeds confidential. This covers the majority of the Northwest, though is available to everybody and gives the NWCF the opportunity to communicate with a local audience as and when necessary. Additional ideas Although on the whole the public were not open to making straightforward donations to the fund and the majority were not prepared to donate via their wages, energy bills or at POS, 17% would make a donation at the airport to compensate for their emissions, 17% would make a donation via an energy provider and 8% would make a donation from their wages each month. Although these are a relatively small

proportion of those interviewed, if the administration costs attached to this were not high, this approach may still be of value to the public campaign. Costs to take into consideration Design and production costs of NWCF promotional product Costs of radio promotion Online costs Administration costs attached to donation via transmitters An ‘Iconic’ Status To support an ‘iconic’ project would consume a good proportion, if not all, of the Northwest Climate Fund. However, it has been suggested that the people and communities involved with the project become our icons. Creative Concern propose that throughout each project photographs are taken of investors, employees and volunteers involved, culminating in a high profile photography exhibition presenting our North West icons. The CEO of an investing company could become an icon for their investment/ contribution to a project that has had an impact on their community and/or their role in compensating for their organizations carbon emissions. A teenage volunteer could become an icon for taking time out of their weekend and evenings to work on one of the funded projects.

Creative Brief – how does brand need to look and feel? In terms of the creative and messaging, the terminology needs to be considered. Research shows that the idea of offsetting is not in the forefront of either audiences minds. Their focus is on contributing to local projects and initiatives and making a visible statement about their thoughts and behaviour. Creative Concern need to ensure that the campaign has a local identity and enables both organisations and the public to factors are considered in any communication. Messaging needs to be simple and easily understood, not requiring either audience to have an in-depth knowledge of climate change issues. Although the reference to ‘offsetting’ is not necessary, both audiences should be made aware that this is about climate change and giving people the opportunity to make a difference.

Previous public campaigns have proved that if a brand or object is aspirational (like the Anya Hindmarch campaign), people will want to buy into the campaign and be seen to be a supporter. It is important that the right designer is on board for this campaign to achieve a similar outcome. Also, should we go ahead with the photography exhibition we would seek a renowned portrait photographer to further raise the profile of this campaign.

Organisations

Key Findings From Research •

Only 14% of organisations interviewed currently address their carbon emissions/carbon footprint

•

85% would be interested in doing something to address climate change in the future

•

22% of organisations have an energy bill between 250,000 – 999,999 per annum, 5.6% of organisatons spend more than 10M per year!

•

35% of organisations would not be interested in investing in the fund, however 65% would either invest in local projects or be interested in offsetting their carbon emissions

•

Of those who did not mind whether they invested in offsetting schemes of local climate change projects, 66% said they would be most interested in contributing towards energy efficiency improvements in businesses

•

6% would be likely to contribute up to £4,999 but 84% were not sure what a likely figure would be

•

81% would want a say in the project/type of project they invested in

•

53% would contribute to the fund to improve their profile or to be perceived as a forward thinking, responsible business

Questions Raised •

Energy expenditure is really high in the majority of organisations interviewed and improving energy efficiency in businesses is high on many company agendas – there is an obvious link here! Should we be looking at a scheme where businesses donate via their energy provider?

•

PR opportunities and public image are important to over 50% of organisations – should this be the main focus of our corporate package?

•

Can we specify projects that companies will be investing in? We need to work out a way to do this as it’s clearly an important factor for investors

Proposal •

Corporate package with specified projects/types of projects and full PR plan

•

Option to donate via company’s energy provider

Next Steps • Start to put together corporate package • Collate list of existing and potential projects • Create full PR plan for potential investors, highlight all opportunities • Speak to energy providers about donation options and energy efficiency schemes (e.g. energy companies to work with organisations and find most efficient ‘programme’ for them, donations to fund via billing)

Costs to consider Cost of producing corporate pack Time spent contacting potential investors Administration costs attached to donating via energy provider(?)

The Public

Key Findings From Research •

60% of people agree that the worlds climate is changing though only 8% would be prepared to donate money to compensate for their energy consumption

•

57% people stated they were very unlikely to contribute to a climate fund for the North West, however 56.6% would purchase a product such as a car sticker, luggage tag, ethical shopping bag with the money spent going towards climate change projects

•

57% of people wouldn’t make donation at the airport to compensate for emissions 17% would

•

63% of people wouldn’t make donation via energy provider

17% would

•

75% of people wouldn’t donate from their wages each month

8% would

•

35% of people stated that seeing their local community benefit from the fund would encourage them to donate money

Questions Raised •

What product can we produce that will be affordable and desirable and make money for the NWCF?

•

How are we going to raise awareness of the fund and product availability in the North West?

•

Although only a small percentage of people are willing to donate via their energy bills and wages, the cost of implementing this could be really low so is this still worth looking into?

Proposal •

Production of ?? to be sold to the public at selected outlets

•

PR activity surrounding the NWCF and product e.g. send product to North West celebrities and ask them to endorse the campaign

•

Radio promotion reaching 316,000 people in the North West to demonstrate to the public how the NWCF will work

•

Online campaign with Manchester Confidential reaching 273,000

•

Next Steps Approach designers to design/endorse campaign product •

Designers we would like to approach: – Henry Holland - from Rossendale, famed for controversial slogan shirts. See www.houseofholland.co.uk – Vivienne Westwood - from Glossop and has just released her manifesto to encourage people to change the way they think and behave. See www.activeresistance.co.uk – Matthew Williamson - from Chorlton, favoured by the likes of Sienna Miller & Jade Jagger – Celia Birtwell - from Salford, famous in the 1960’s for work The Rolling Stones, Pink Floyd and Jimi Hendrix among others, recently designed a line for Topshop that sold out in weeks – Wayne Hemmingway - from Morecombe, co founder of Red or Dead – Peter Saville – from Manchester, most famous for his design work with

Next Steps cont. Finalise what product will be •

•

Suggestions: –

Bags - the Anya Hindmarch bag with the slogan “I am not a plastic bag” cost £5 at selected Sainsbury's stores and sold out within an hour of going on sale. There were 20,000 bags produced, 30 bags per outlet and customers could only buy one each

–

T-shirts/vests - Stella McCartney designed an exclusive limited-edition vest in support of Oxfam, which was only available at the Glastonbury festival in 2007. Festival goers happily parted with £25!

–

Belts & Scarves – All Saints have signature slogan belts and Vivienne Westwood has produced a series of statement scarves as part of the new Worlds End range e.g. ‘Active Resistance to Propaganda’

–

Re-useable coffee cups – Starbucks are charging less for takeaway coffees if customers provide their own mug, could we produce a stylised take out coffee cup?

Research production costs/timescales

Next Steps cont. â&#x20AC;˘

Finalise radio and online activity

â&#x20AC;˘

A local building company has offered to undertake a community build project at no charge as part of a radio promotion if, from the marketing budget we can contribute to airtime activity, this would be a great way to raise awareness of the NWCF and demonstrate how it will directly benefit the North West â&#x20AC;&#x201C; something that research shows is important to our public audience

Costs to Consider •

Design costs – logo/statement/brand – products and any supporting material

•

Production costs

•

Cost of radio promotion

•

Cost of online promotion

Your Allocated Projects The crucial difference between the North West Climate Fund and other similar initiatives is that the finances are controlled by those who invest in the scheme. All of our investors have stated that they would like a say in the projects/types of projects that they are to invest in. When consulted, you expressed an interest in projects related to improving energy efficiency. Energy projects fall into the following categories: • • • •

Insulation – reducing the need for energy Controls and metering equipment – managing the use of energy efficiently Replacement boilers – increasing the efficiency off heat production Renewable energy – reducing the carbon emissions from energy generation

In accordance with this interest and in order to meet your objectives, you have been allocated the following project: Energy Efficiency Measures in Housing – Pendle Provision of funding on a sliding-scale for the installation of a range of insulation measures, boiler replacement and low-energy lightbulbs, for households unable to meet the contribution required under CERT. Match funding will come from CERT, Baxi-Potterton and Scottish & Southern Energy. Pendle Borough council will part-fund the programme management. Number of homes - 30 NWCF contribution - £100,000 CO2 saving – 75 tonnes/year over a range of periods. Assuming measures last 10 years, total equivalent cost of CO2 = £133/tonnes CO2 Note: CO2 savings would need to be split with CERT You will receive a quarterly report to update you on this project – all progress, any changes and also any opportunities for PR activity relevant to your organisation. Should any PR opportunities arise between reports, you will be notified.

Public Relations Plan (Based on this project) 1. Project launch and company involvement 2. 1 story about employees from the investing company, working on site and helping to implement the project 3. Case study on a member of the community that has benefitted from the scheme, this could be a straightforward with the investing company credited within the article or there is the possibility of involving the investing company in the report e.g. MD or CSR Manager interviewing a member of the community 4. Quarterly report may highlight PR opportunities 5. Event for investing company, partners and beneficiaries â&#x20AC;˘

NWCF/Partnership will provide photographs and imagery where possible

â&#x20AC;˘

If the investor has their own press office, NWCF/Partnership to provide list of publications to target

â&#x20AC;˘

NWCF/Partnership to notify investor of any PR opportunities that present themselves throughout the duration of each project

Engaging Your Employees By working with the North West Climate Fund, you also have the opportunity to engage your employees in the programme. Research shows that where the government and organisations lead the way, individuals will follow! 2 scenarios here: NWCF is set up as a registered charity – donation taken from gross income and qualifies for gift aid – increasing donation. NWCF is set up as a not for profit company limited by guarantee – donation is taken from net income and does not qualify for gift aid – question for BDO.

Your Carbon Footprint This will be monitored throughout your involvement with the North West Climate Fund. You may reduce your emissions by changing the way your company operates, also the projects you invest in will impact on your footprint as by investing in energy efficient projects you will be compensating for your own carbon consumption. Number of persons within the business ………………………………………. Energy used per year Electricity (KwH) Gas (KwH) Gas (Btu) Gas per cubic meter Low pressure gas (LPG) Heating oil Coal Wood

Unit

Annual Usage

Tonnes of CO2

Kilowatt Hours Kilowatt Hours Therms Cubic Meter Kilograms Litres Kilograms* Kilograms* TOTAL

Travel per year Unit Car Miles Miles Train or bus miles Miles

Usage

Tonnes of CO2

TOTAL No of return flights each Per year year

Tonnes of C02

(there and back is one unit)

Short haul return

(e.g. London to Paris, Edinburgh to London)

Medium haul return flights (e.g. UK to Cairo, UK to Majorca)

Medium to long haul return flights

(e.g. UK to South Africa, or Japan)

Long haul flights

(e.g. UK to New Zealand or Australia)

TOTAL TOTAL CO2 EMISSIONS ………………………………………………………….. EMISSIONS PER PERSON ………………………………………………………...

North West Climate Fund

Initial proof check

Sarah Roberts and Alice Owen

April 18th 2008

Ove Arup & Partners Ltd Admiral House, Rose Wharf, 78 East Street, Leeds LS9 8EE Tel +44 (0)113 2428498 Fax +44 (0)113 2428573 www.arup.com

Job number

Purpose of report The purpose of this document is to provide our conclusions on the initial ‘proof check’ review that we have carried out on the documents relating to the Northwest Climate Fund (NWCF) available on 18th April 2008. The aim is to provide the project consortium and the NWDA with our thoughts on how well the existing documents make the case for the establishment and effective operation of the NWCF, issues that need to addressed and suggestions on how to strengthen the project. The documents that were reviewed were: • • • •

Interim report Appendix of all work package inputs to 31 Mar Further work packages to date: Validation and verification model Sample Memorandum and Articles of Association & Arts Additional marketing work (Implications of research, corporate proposal) Additional information on projects from the Wildlife Trusts Operational costs and income discussion from BDO Issues list

Summary of conclusions The proposed operational model, legal and governance structure and validation and verification model indicates that an effective organisation could be set up relatively quickly and should have the governance and processes to engender trust in the organisation. The number and variety of projects identified suggest that there should be sufficient projects to meet initial investor interest and give them enough choice, particularly in terms of type of reduction approach and locality. Most of the projects proposed would be run by established organisation increasing confidence that they could come on-stream quickly and could be verified as making real, permanent and additional carbon savings. The main issues relate to money. At this point, greater confidence is required that businesses will invest in the NWCF in the short to medium term, although there appears to be latent interest in the approach. In addition, the projected cost of carbon savings in terms of tCO2-e 1 of the proposed projects are high when compared to national and international offset firms, making it more difficult to market to companies. The proposed approach of separating the ‘Carbon Compensation’ and ‘Good Causes’ funds and a marketing approach focusing on the wider corporate responsibility and PR benefits will help to address these issues. In addition, we would suggest that: •

The search for potential projects is widened with the aim of identifying projects with a lower cost per tonne of CO2e saved and of identifying inspirational and transformational projects which could capture the imagination of the media, public and potential investors.

•

A compelling case is developed around the additional benefits (over and above the carbon reductions) of investing in the NWCF.

•

The costs of the initial set up phase are decreased by reducing the number of FTE staff to 3 or 3.5, thereby reducing the initial investment required.

CO2-e carbon dioxide equivalent. Unit for comparing radiative forcing of a GHG to carbon dioxide. It is calculated using the mass of a given GHG multiplied by its global warming potential. 1

Ove Arup & Partners Ltd Draft 1

•

Some flexibility is built into the aim of fundraising and administration costs not exceeding 40% of the income.

•

Further effort is expended on understanding the potential for public bodies to invest in the NWCF

•

The analysis of the CO2-e savings and costs of projects is tightened up and better referenced.

•

The expression of interest and application forms ask for appropriate information to enable streamlined validation and verification.

Key issues 3.1

Overall proposition

The consortium has identified a suite of carbon reduction projects, across the region, which could be brought on stream quickly, enabling investors to choose projects that fit their key criteria (e.g. type of carbon reduction, locality, price, additional sustainability benefits). This should enable NWCF to be marketed effectively to potential organisational and individual investors. A practical and appropriate organisational and governance model has been identified that could be operational reasonably quickly. The issues of demonstrating that carbon reductions related to the projects are real, additional and permanent have been identified and a credible and workable verification process has been developed. So, provided sufficient investment can be accessed, the NWCF could be established relatively swiftly and carbon savings could be demonstrated soon after establishment. The key issue is whether there is sufficient interest in investing in the Fund. While the market testing did not demonstrate significant interest from companies in immediate investment in the Fund, it did indicate latent interest in climate change and managing its effects which good NWCF marketing should be able to tap into. Market testing also highlighted particular aspects of the Fund which different investors are interested in. This provides useful guidance for the NWCF but also provides some challenges. On-going investment from business is most likely if •

The investment is in local projects

•

The projects provide them with other corporate responsibility and public relations benefit

•

The projects are linked to the investors’ emissions

•

The price is right The main challenge in terms of business investment in the NWCF is that the cost per tonne of CO2-e saved from all the projects is significantly higher than the market average. Voluntary offset schemes through companies such as The Carbon Neutral Company and Climate Care cost companies between £15 and £25 tCO2-e. Certified emissions reductions through schemes such as the Clean Development Mechanism are even cheaper. A small number of the proposed NWCF energy efficiency projects and most of the peat projects are estimated at £24-30 tCO2-e, with the costs per tonne of remainder of the energy efficiency projects much higher. So if companies are looking to link their investment in the NWCF to their emissions, the NWCF needs to convince them that there 7

Ove Arup & Partners Ltd Draft 1

are considerable additional benefits to investing in the NWCF over and above using a national or international offset firm. The strategy of separate ‘Carbon Compensation’, ‘Good Causes’ and ‘Innovation’ funds is a good one, allowing projects with a high cost/tCO2-e to be considered through the Good Causes or Innovation Funds where investors are likely to be less interested in the per tonne costs and the link to emissions and more interested in the overall approach and benefits. A key aspect of the case for the NWCF, i.e. the significance of the NWCF to the Northwest and the regional economy, has not yet been made clearly. The project spend proposed needs to be equated to some level of regional emission reductions, recognising that this will be a range of possible reductions depending on the project mix. This reduction can then be considered in relation to the targets in the regional climate change strategy and the current level of domestic, industrial (including land based) and transport emissions in the region. The number of businesses, and employees, involved in the scheme proportional to the regional workforce would also help place the Fund in context. If these proportions appear small, then there is the opportunity to indicate the role of the fund in regional innovation, which would be expected to start small, and move towards a transformation of the regional economy. It is better to surface the issues of significance early rather than be placed in a defensive position as those critiquing the Fund examine its role and impact, as the NWDA's performance management framework will do.

Suggestions

•

Widen the search for potential projects, particularly those which are likely to a have a lower cost per tonne. These could include reduction of gases other than CO2 e.g. methane, nitrous oxide which would widen the search to industrial processes and agriculture. Tree planting was ruled out in the initial scope of work but this could be revisited.

•

Develop a compelling case around the additional benefits of investing in the Fund. This should cover issues such as -

contributing to improvements to the regional economy (see above)

contributing to the regional competitiveness through future-proofing the region’s businesses and developing innovative and effective local approaches to reducing climate change impacts

wider sustainability benefits from particular projects such as biodiversity, community cohesion, reducing fuel poverty, or increased access

improving employee motivation though corporate involvement at addressing climate change impacts and local investment

potential for increased support in the context of national and international developments such as rising energy prices and increasing support for action on climate change

regional first mover advantage, an asset to NW businesses and those considering investing in the region

Ove Arup & Partners Ltd Draft 1

3.2

Organisational and legal structure and financial plan

The operational and organisational plan seems practical and the proposed legal structure seems appropriate. However, the number of staff, particularly in the set-up phase, appears high for the likely budget of the organisation. This seems to be bo rne out by the comparison with the Groundwork Wellbeing programme which appeared to have a significantly bigger budget with fewer FTE staff. The aim of 40% of the overall budget being spent on fundraising and administration costs is laudable but it might ease initial operation of some flexibility was built into this. Although the consortium has done very well in identifying projects which could come on stream quickly, the requirements of the application process and the need to ensure that the right issues have been considered in terms of additionality and measuring carbon d savings means that there will be a time lag in terms of projects becoming operational and carbon savings occurring. This might affect the timing of investments and needs to be factored into the financial planning.

Suggestions

o Reduce the initial staff requirements and associated costs e.g. to 3 or 3.5 FTE (potentially with slightly higher salaries to attract good people with a wider skillset who can â&#x20AC;&#x2DC;hit the ground runningâ&#x20AC;&#x2122;.) Options could be a) Chief officer, who covers key aspects of the Fund manager role at least initially 1 FTE covering grants and procurement Part-time or contract finance Full or part-time admin b) Chief officer, who covers key aspects of the Fund manager role at least initially 1 FTE covering grants and admin 1FTE Procurement manager, who support aspects of grants e.g. organising validation and verification Part-time or contract finance

o Increase the flexibility associated with the 40% target. There are a number of options for doing this, for example a) the NWCF will aim that only 40-48% of its budget is spent on fundraising and administration costs. b) the NWCF will aim that over the first five years of its existence an average of only 40% of its budget is spent on fundraising and administration costs.

Ove Arup & Partners Ltd Draft 1

3.3

Marketing and market testing

The market testing was helpful and has provided useful guidance. Results from the public survey reinforce the need for a robust approach to calculating and verifying carbon savings. They also provide helpful indications on which approaches to engaging with individuals on the NWCF are likely to be successful, which the marketing plan has picked up on. Key issues for business investors have been identified in Section 3.1 above and the marketing focus on setting out the broad PR / CSR benefits is a good one. Interestingly, corporate interest in developing some kind of employee giving scheme does not seem to be reflected in the enthusiasm by employees reported in the results of the public survey. There seems to be some indication that public bodies may potentially be interested in this Fund which should be investigated in more detail.

Suggestions

o Investigate further the interest from public bodies

3.4

Potential projects and project application process

As well as the issues relating to projects raised above in terms of the overall proposition, three other project-related issues have been noted. 1. A fairly good mix of projects have been identified but few of the projects listed are likely to be seen as ‘transformational’ or ‘innovative’ projects that could really catch the imagination of the public, media and potential investors. 2. There is little justification or referencing for the figures used to calculate potential carbon savings leaving them open to challenge. 3. The project application process needs to incorporate the needs of the validation and verification process

Suggestions

Widen the scope of project selection and aim to identify some potentially inspirational and transformational projects among the selection. Ideally these should also demonstrate strong regional distinctiveness, as the blanket bog projects do. Regional environmental assets such as regional parks, river systems and catchments, or cultural landscapes could be a starting point to identify

Tighten up the analysis of projects, with clearer references justifying the figures used. If there is still a good deal of uncertainty this needs to be made clear.

Ensure that the expression of interest form allows additionality to be judged at this early stage and that the project application document includes appropriate questions on additionality, calculating carbon savings, wider sustainability benefits and the monitoring process that will be in place, in order to streamline validation and verification.

Ove Arup & Partners Ltd Draft 1

North West Climate Investment Fund

Briefing Note National Policy and Voluntary Carbon Offsetting March 2008

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Ove Arup & Partners Ltd Draft 1 17 March 2008

Purpose of this note This note summarises our informal assessment of the likely response from national policy makers and decision makers to proposals for a regional voluntary carbon offsetting scheme in the North West. It is based on both published information from national government and informal, unpublished, personal communications.

Scope Carbon offsetting – the purchase of credits for emissions reductions. Voluntary carbon offsetting - provides companies, public bodies and individuals with the opportunity to purchase credits generated from projects that reduce the amount of greenhouse gases entering the atmosphere. Such projects might include schemes for afforestation, energy efficiency or for the cleaning up of carbon-intensive industries. Regional, local, project and sector schemes might all come under this heading.

National Policy activity The Environmental Audit Committee held an enquiry into the Voluntary Carbon market, launching a call for evidence in December 2006 and publishing a final report in July 2007. Defra consulted on a Code of Best Practice for the Provision of Carbon Offsetting to UK Customers in January 2007. This led to the publication, in February 2008, of a Framework for the Code of Best Practice for Carbon Offsetting. This code covers “certified emissions reductions” (CERs) that are compliant with the Kyoto Protocol, but it does allow for future expansion to industry-led voluntary emissions reductions, subject to verification. AEA Technology are the accreditation body for the scheme and Defra have effectively asked AEAT to progress this area of policy work on Government’s behalf. The Framework for the Code is very firmly focused on the purchase of overseas carbon offsets from certified sources. The reason for this is that 'offsetting' in the UK is not additional because the UK's emissions are already capped under the Kyoto Protocol which require the government to make a certain cut in emissions. Therefore, any individual action that seeks to pay for carbon reductions in the UK is simply helping government to meet its targets. The informal advice from government is therefore that, unfortunately, local and regional schemes should avoid using the term 'offsetting’. The EAC came to the view that it is primarily individuals who have to take steps to avoid and then reduce their own carbon emissions. The EAC also concluded that “carbon neutral” remains a contested term and there is extreme caution in Defra about using the term. We are currently seeing multiple definitions of zero carbon in the housing and property markets (with HMT and CLG using different standards) and there is concern this could be duplicated for “carbon neutral”. The Framework for the Code sets out requirements that offset providers must meet if the emissions reductions that are sold can be accredited. The requirements are set out as twenty-two criteria across the headings of: 

Administration – including offset providers must pay a fee to get accredited (effectively £4500 for initial registration and a lower annual fee thereafter);



Calculating emissions – transparent and consistent calculations of emissions that cover direct emissions only. Acceptable methodologies include Defra’s company Reporting guidelines, WRI’s Greenhouse Gas Protocol and ISO14064;

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

Environmental integrity – including conditions relevant to forestry related emissions reductions and links to the Environment Agency’s registry of emissions. A timescale of 6 months maximum is suggested between purchase of offset credits and real emissions reductions being achieved;



Consumer information – marketing material and transparency; and



Quality mark – licensing conditions for the use of accreditation.

The Framework for the Code poses a number of questions which will be addressed before the Code itself is finally issued. Defra have asked AEA to gather industry views with the intention of finalising and implementing the Code in April 2008. The Annexes to the Framework for the Code include extensive lists of conversion factors for electricity use, energy consumption and transport using different modes and fuels to carbon dioxide emissions. Although offset companies such as the CarbonNeutralCompany are highlighting Defra interest in the offset industry proposing a common standard for VERs (Verified Emissions Reductions) offered to consumers in the UK, our analysis is that this is not likely to be strongly pursued by Defra. Key issues: Care must always be taken to position carbon offsetting as action which is taken after actions on energy demand management and increasing the use of renewable resources have been taken. The Framework for the Code refers to “offset products”. The NorthWest Climate Investment Fund’s may choose to buy certified emissions reductions from overseas which may need careful definition in order to minimise the costs of accreditation. The Code will only grant accreditation to providers of Kyoto-compliant emissions reductions. There does not seem to be much interest within Defra in developing a code for VERs, so the focus for the NWCF should be on relevant aspects of other VER standards such as the Voluntary Carbon Standard and the Gold Standard.

International policy activity It should be noted that IETA, the International Emissions Trading Association, is active in developing the voluntary carbon offset market. IETA is an NGO, based principally in Europe and the USA, which brings together financial and legal interests in the emerging carbon markets, with major industrial and commercial player who are responsible for emissions. A number of the companies mentioned in IETA’s 176-strong membership list have a presence in the North West. IETA’s membership also includes many of the “competitor” offset schemes to the North West Climate Investment Fund. While a feature of the international voluntary carbon offset market is that it has struggled to establish a single set of guidelines for certification, IETA still appears to be the closest that the market gets to a trade body. IETA and The Climate Group launched a Voluntary Carbon standard in March 2006. Internationally, the focus of voluntary carbon offset is on the implementation of the Joint Implementation and Clean Development Mechanisms of the Kyoto Protocol. It seems unlikely that the North West Climate Investment Fund will want to engage with these international schemes, but consistency with they standards they deploy may be useful.

Informal assessment Elements of the emissions reductions proposed under the NorthWest Climate Investment Fund would probably not be eligible for accreditation under the UK Code for Best Practice in Carbon Offsetting unless the emissions reductions were achieved overseas.

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Formal national support for a regional voluntary carbon offset scheme (called something other than an ‘offset’ scheme) is possible but may be difficult to achieve in the current policy environment. National support for the scheme is more likely to be achieved through showing how the NorthWest Climate Investment Fund is evidence of regional capacity to deliver, rather than trying to position the scheme as a pilot for further rollout to achieve major greenhouse gas emissions reductions. Clearly, the selling points for the private sector investors are likely to be in the greenhouse gas emissions reductions that the Fund can help them achieve, so there is a tension here between selling the Fund to public and private sectors.

Recommendations 

As suggested by Damian Burton, avoid using the term offsetting in relation to the Fund



The Fund needs to determine whether or not it will deal with Kyoto compliant emissions reductions (CERs). Only the Kyoto compliant emission reductions will be eligible for UK voluntary offset accreditation.



The North West Climate Investment Fund should consider the costs and benefits associated with becoming an IETA member.



That an early action from the North West Climate Investment Fund, once feasibility is established, is to make direct links to the AEA / Defra team working on Voluntary Carbon Offsetting, if any of the Fund’s emissions reductions are achieved overseas.



That the regional minister, Beverley Hughes, and the relevant Defra minister (probably Phil Woolas) should receive a briefing on the initiative.



Boundary issues dog the aviation industry particularly, and the North West Climate Investment Fund may wish to have region specific rules on the inclusion of aviation emissions in order to encourage the participation of Manchester Airport as a key regional economic asset (in addition to the other regional airports).



While the North West Climate Investment Fund will not operate internationally as, say the CDM schemes do, the Fund should consider consistency with international standards such as the “gold standard” developed by WWF and partners for CDM schemes.

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Together we have the power to beat climate change.

The Northwest Climate Fund. Concept Paper. October 2007. Page 1

The Northwest Climate Fund Concept Paper, October 2007

What is the Northwest Climate Fund?

It’s a carbon reduction fund supporting projects in local communities across the Northwest, financed both by individuals and by organisations keen to neutralise their emissions. Overseen by panels in Cumbria, Lancashire, Merseyside, Manchester and Cheshire but crucially controlled by the people who have paid into it.

It’s our region’s shared ‘carbon kitty’, part lottery, part offset fund, a way for you to put something back for your CO2 emissions and stand the chance of winning a major prize, monthly.

It’s a quarterly prize challenge offering a £10,000 prize to the street, club, network or community that can save the biggest amount of CO2.

It’s a programme that will give every citizen and every organisation the chance to take a collective pledge to tackle climate change.

The Northwest Climate Fund. Concept Paper. October 2007. Page 2

Summary 1/3

Making a difference, locally and globally

A fund you can trust

Part ‘offsetting’ programme, part lottery

Your fund, your choice

This paper sets out the proposals for a Northwest Climate Fund that invests in carbon reduction programmes for local communities across the Northwest, financed through a shared pot or regional ‘carbon kitty’ which is financed by concerned citizens, major regional organisations and the private sector.

The projects the Fund finances will clearly report on the carbon reductions they can achieve, which means that both individuals and organisations can pay into the fund in the knowledge that they are investing in carbon reductions which are proportionate to their own, unavoidable emissions. In short, it will be a way for you to ‘neutralise’ any unavoidable emissions by investing in good, local schemes.

To radically boost contributions, anyone who pays into the fund, whether it be to ‘neutralise’ the carbon emissions across an entire area of their business or simply to account for a single flight or holiday, will stand the chance of winning a major (low carbon) prize.

The projects which are proposed for funding will be carefully vetted by panels in each of the Northwest’s five sub-regions of Cumbria, Lancashire, Merseyside, Manchester and Cheshire but crucially, the final choice will be made by the people who have paid into the Fund. Literally, after you have paid into the Fund online, the next screen you see will be proposed projects, arrange by theme and by proposer or sponsor and you will have a number of votes to support the projects you would like to see happen.

The Northwest Climate Fund. Concept Paper. October 2007. Page 3

Summary 2/3

We’re not planting trees

The power of people

Kick the habit, take the pledge

Bring on the major players

The projects financed by the Fund will be largely supportive of energy efficiency schemes, renewable energy projects or low carbon innovations and there will be a priority given to projects that can show strong social outcomes (such as fighting fuel poverty) and that have a wider suite of strong environmental outcomes, too. If trees get planted, it won’t be as a tool for carbon sequestration but as a secondary aspect of the project.

The Northwest Climate Fund will do more than simply offer a route for carbon ‘atonement’, it will also promote energy efficiency as a primary course of action. Each quarter a major cash prize (£10,000) will be given to the group of people (such as a street, a school or a group of work colleagues) that can prove the largest reduction in energy use during the preceding three months. As with the primary Fund itself, this will be given a local ‘flavour’ by operating across Cumbria, Lancashire, Merseyside, Manchester and Cheshire. All entries will be offered up as case studies of how to make major carbon cuts.

To get people started on their low carbon journey, the Fund will also support the establishing of pledge programmes across the region, strengthening the already successful pledge programmes that have been operating and building a strong, local communications channel with hundreds of thousands of concerned citizens across the region.

The Fund’s success will rely on public engagement but will also only succeed if it wins the support and engagement of large organisations and businesses across the region who will be able to pay into the Fund. In doing so they will have projects directly identified with their own organisation and be given an audited account of the carbon reductions that they have invested in. As an added benefit, they will also be able to run the prize challenge, voting and pledging programmes as internal communications campaigns with staff or customers.

The Northwest Climate Fund. Concept Paper. October 2007. Page 4

Summary 3/3

By the region, for the region The proposal for a Northwest Climate Fund has emerged from the Northwest’s own Climate Change Action Plan and is being supported by the Northwest Regional Development Agency (NWDA) and a range of partners from the Northwest Climate Change Partnership.

Who made this?

Making it happen

The concept has been drawn together by Creative Concern working with a steering group that has included Peel Holdings, Oldham MBC, Lancashire County Council, Manchester: Knowledge Capital, the Northwest Regional Assembly and the Northwest Regional Development Agency. The scheme is being drawn up with the help of dozens of regional stakeholders and has benefited significantly from consultation sessions with Manchester Airport, MWH, The Co-operative Group and two of the region’s Passenger Transport Authorities.

This concept paper will provide the basis for a tender to be issued by the NWDA calling for consortia to come forward with proposals to establish a shadow secretariat for the Fund which will establish the required legal entity to oversee the Fund and allocate project support, launch an online payment website and voting platform, a promotional campaign and the first of the £10,000 prize challenge competitions for collaborative carbon reductions. The target is to have the Northwest Climate Fund operational in January 2008.

The Northwest Climate Fund. Concept Paper. October 2007. Page 5

I emit, therefore I can. The background

The power of us

Rising to the challenge

In our homes and in our daily lives, the seven million people of England’s Northwest are a major contributor to Britain’s carbon load. Each time we boil a kettle, leave a TV on standby or drive a car, we use energy. The more we use, the more greenhouse gases we create and the more we change the world’s climate.

People like us - the seven million citizens of England’s Northwest - are responsible for between 30% and 60% of the region’s greenhouse gas emissions, making us the ‘low hanging fruit’ in the battle against climate change, particularly when it comes to energy efficiency. If we choose to act, we represent a secret powerstation, just waiting to be switched on.

Big impact, but great potential. The citizens and the businesses of the Northwest could also have a pivotal part to play in reducing our national carbon emissions through positive action and a shift in behaviour.

To quote Amory Lovins, we are a potential ‘negawatt revolution’ on our hands.

We all have the power to make a difference. We just need to know how.

The Northwest Climate Fund. Concept Paper. October 2007. Page 6

Key themes This concept paper outlines a scheme that will powerfully engage the people of the region in an imaginative, interactive and optimistic programme of change. With the region’s climate change action plan - Rising to the Challenge - as its starting point, this proposed project will build on a number of groundbreaking local programmes across the region to ensure that wherever you are in England’s Northwest, you can play a part in making ours the lead region on climate change.

Collaborative and collective action. Networks of activity. A shared ‘carbon kitty’ for the region. Peer-based inspiration and motivation. Genuine and audited carbon reductions. Local relevance and ownership.

Ground rules Sub-regions and the local scale are vital (think Carbon Subsidiarity) in achieving real buy-in and awareness. The Northwest Climate Fund is about energy efficiency and behavioural change as a priority and only seeks to offer a â&#x20AC;&#x2DC;paybackâ&#x20AC;&#x2122; for unavoidable emissions. Business buy-in is essential across all four of the key activity areas outlined in this paper. The Northwest Climate Fund will build on the successful Northwest Climate Change Charter. To succeed, the Fund has to appeal to the mass market and not target niche, committed audiences or enter into battle with the tiny minority for whom climate change is not an issue of concern.

The Fund will be formally established with the strictest of legal guidelines governing the release of charitable donations to local schemes. It will also report, transparently, on all of its operations. Vitally, this project will provide a pan-regional framework for domestic action on climate change but it will NOT duplicate or negate the efforts of local or county-wide programmes, particularly as many are proving successful. Wherever possible, each element of this ambitious project will be delivered by or will support local partners. We need to think global, talk local and save the planet, simple as that.

The Northwest Climate Fund. Concept Paper. October 2007. Page 7

Each component part of the programme will also engage comprehensively with business and large organisations, whether it be encouraging employees to pledge, helping deliver lowcarbon advice, paying into the Fund or indeed benefiting from the Northwest Climate Fund. The starting point for this engagement with business will be the Northwestâ&#x20AC;&#x2122;s Climate Change Charter. From the activists and partnerships across the region that are already working hard to tackle climate change, to the businesses or households that are concerned but unsure how they can help, the Northwest Climate Fund will give each and every one of us the chance to rise to the challenge of climate change.

How the Fund will work

Investing together in a low carbon future.

Introducing the Fund.

There is an appetite for action on carbon but we need to radically increase the speed and scale of carbon reduction projects and programmes across the region. We need a venture capital fund for carbon reduction, making major cuts in emissions possible right across the region and potentially, beyond.

A willful and inspiring blend of venture capital fund, lottery programme and fairy godmother, the Fund would make things happen, engage a wider than ever group of stakeholders in its decisionmaking and would celebrate the successes it helps to bring about.

Seed-funded by the region but with its long term sustainability secured through individual and corporate support, the fund would invest in energy efficiency, particularly in deprived areas, in low carbon technologies, renewable energy programmes and innovative schemes to block major carbon emissions. It would also potentially support â&#x20AC;&#x2DC;biologicalâ&#x20AC;&#x2122; solutions to the climate challenge, such as the preservation of peat bogs. It would operate regionally but with local representation both in governance and in the projects it helps to fund. It would dispense money but its audit trail would tightly monitor carbon reductions as well as the prudence of financial investments. It would in short deal in two currencies: sterling and carbon.

The Northwest Climate Fund. Concept Paper. October 2007. Page 8

A target will be set for the expected income generated through the payback scheme above but when combined with contributions of the public sector and business, the Fund will be a multi-million pound programme that helps to deliver projects and support the continued promotion of pledge programmes and the CO2 prize challenge outlined in this document.

The shape of the programme The Fund would invest in a wide range of carbon reduction programmes across the five following thematic areas: energy efficiency schemes; renewable energy installations; low carbon innovation; biological carbon ‘storage’ (with caution); and global partnerships. The proposed detail behind these five thematic strands is outlined below.

The governance of the Fund There would also be the opportunity for large supporters of the Fund - for example contributing more than £50,000 per year - to have specific projects earmarked as ones that they particularly endorse.

To qualify for consideration, schemes would have to show a minimum level of CO2 reduction per pound of funding. There would also be a mechanism built into the fund to ensure that for four out of the five strands above, there was a good regional ‘spread’ of projects.

The Northwest Climate Fund. Concept Paper. October 2007. Page 9

Though the final detail regarding the Governance of the Northwest Climate Fund should be an early action of the Fund’s secretariat and Trustees once established, but ideally the Fund would be a legally constituted charitable fund that would have a board of trustees drawn from the members of the Northwest Climate Change Partnership and including representatives from each of the sub-regions of Cumbria, Lancashire, Merseyside, Greater Manchester and Cheshire. Its operation would be overseen by a small secretariat. The trustees would meet physically each quarter but would agree virtually, each month, on the range of projects to be accepted into the scheme. The trustees would not, however, agree which of the accepted schemes gets the money.

In addition to overseeing the fund’s investment programme the secretariat and trustees would also be charged with closely auditing the Fund’s carbon reductions and keeping a keen eye on the ‘carbon bank’ that the fund had amassed. The Fund’s structure and status would have to be reviewed regularly to futureproof it and to ensure that, for example, it was supportive of Defra’s emerging code on offsetting.

So is this an offset scheme or what?

The wisdom* of crowds.

This is an offset ‘style’ scheme but that largely invests locally, meaning that under the Kyoto protocol, regardless of how much carbon it saves, it could not call itself an offset scheme. It will be shaped by Defra’s code on offsetting, however and will seek to follow best international practice on offsetting, but it is basically a shared Fund for supporting vital local carbon reduction projects. It will not be marketed as a Kyoto-style offset fund and will not seek to compete with national and international offerings in this area.

This multi-million pound fund will be controlled by people like you. Once the Fund’s trustees have agreed that a proposed project or programme meets the criteria for entry, a summary of the project will be posted on the fund’s website and each month, members of the scheme who have paid into it will be given the opportunity to vote on which schemes get funding.

The Northwest Climate Fund. Concept Paper. October 2007. Page 10

At least one scheme from each of the thematic strands will win out each month. In doing so it will powerfully engage people in the ways in which carbon reductions can genuinely be achieved; it will help to bridge the widely recognised ‘chasm’ between awareness and action.

What will we invest in?

More than just widgets and turbines

Energy efficiency schemes

Renewable energy

Low carbon innovation

What kind of schemes would the Fund invest in? The priority would always be given to energy efficiency as our most pressing and important area of concern, followed by other direct ‘carbon savers’ like renewable energy schemes.

For example fuel poverty alleviation in deprived areas or the support of area-based promotional activity around insulation, behavioural change or even the addressing of transport emissions. The fund would prioritise carbon reductions such as this as being the ‘low hanging fruit’ on climate change, our ‘secret powerstation’ waiting to be switched on. Proposed schemes so far have included a ‘Lightbulb Library’ in Lancashire and major home insulation projects for Wythenshawe in Greater Manchester.

Supporting the deployment of both small and large schemes whether it be biomass, wind or solar energy sources. Potentially through routes trialled by Manchester: Knowledge Capital on energy co-operatives. A good example of a project that would merit consideration is a local £50,000 biomass trial recently supported by the Cooperative Fund. Other projects proposed during early consultations have included solar water heating for local schools and a CHP programme for parks in Preston.

From new marine technologies to solid-state lighting to new design concepts for zeroenergy transport, a stream of the fund would be available to seedcorn great ideas both within and without the higher education sector. This stream of funding will present a clear challenge (compared to the above two) in terms of audited carbon reductions and this is an issue for the Fund’s Trustees to address at their earliest opportunity.

The Northwest Climate Fund. Concept Paper. October 2007. Page 11

Biological carbon ‘storage’

Global partnerships.

Project headlines:

Although planting trees to offset carbon has come in for some criticism in the media, there are still a number of really viable schemes that could help ‘lock’ carbon into our landscape AND enhance biodiversity and regional image. Schemes would range from new, accessible woodland areas (although this should be approached with caution) to the protection of moorland that holds significant amounts of stored carbon. The Lake District National Park, the Wildlife Trusts and Natural England have all expressed an interest in this area.

The above schemes would be supported across the Northwest but there would be scope for a number of more ‘traditional’ offsetting projects in the developing world such as some recent concepts proposed by Lancashire for a carbon reduction partnership with an area of Africa.

A five-strand fund that supports carbon reduction projects across the five subregions of the Northwest and, to a degree, globally.

The Northwest Climate Fund. Concept Paper. October 2007. Page 12

A fund that prioritises energy efficiency and low carbon innovation but that also accepts a limited number of schemes that provide ‘biological’ solutions. A fund that is steered by regional partners but that is controlled - online - by the people who have chosen to ‘payback’ for their carbon emissions.

The CO2 prize challenge

The Power of US As an early priority, the Fund will set up a CO2 prize challenge to award mass collaborations for carbon reduction, with a potential £10k award being given quarterly to any group such as a school, a street or a collection of work colleagues who can provide written evidence that they have achieved the largest cut in carbon.

The Trustees of the Fund will be charged with outlining the detail of the challenge, but it could be that the challenge is themed so that during one quarter it could be schools competing, or hospitals, or streets, or even sports clubs. Any network and any partnership could have the potential to take action.

The Northwest Climate Fund. Concept Paper. October 2007. Page 13

For those that don’t win the cash, they will have saved energy and so hopefully, will have saved money in the process, so everyone wins. Each entry to the challenge will also provide a great case study of how carbon reductions could be achieved.

Issues to be resolved regarding the challenge include sub-regional networks should Merseyside have it’s own award, for example? The correct scale needs to be worked out, too; should the award criteria be per-capita reductions for example, to ensure that it isn’t just large networks that win every time and should there be special awards for innovative ideas rather than simple, raw, reduction figures.

Paying into the Fund

This is not an offset scheme. There are up to 60 schemes running currently across the UK and Europe offering consumers and business a chance to ‘offset’ their carbon emissions. Offsetting has received mixed coverage, particularly in the environmental press, and may become the subject of a voluntary code from Defra. The Northwest Climate Fund is not an offset. It is a way for individuals and organisations across the Northwest to support a powerful regional climate change Fund that invests in major carbon reductions; to contribute to our shared ‘carbon kitty’.

The appetite for such a scheme? While the long term arrangements for offsetting, domestic tradable quotes and personal carbon accounts or credit cards are currently being debated, one thing is certain: many people are willing to pay something back for the carbon they can’t cut and increasingly organisations large and small are seeing it as central part of their corporate responsibility. This means that a regional carbon reduction fund, into which both consumers and business could pay - could over the next few years generate significant investments in emission reduction projects.

The Northwest Climate Fund. Concept Paper. October 2007. Page 14

At some future point when international and national policy has coalesced to a greater degree, such a scheme could be ‘reverse-engineered’ to accommodate a new policy environment but for the moment, action can and should be taken to help meet consumer demand across the Northwest.

Recent surveys exploring whether individuals would contribute on a voluntary basis, for example for their flights, reveal a market segment of 5-20% willing to ‘offset’. A higher proportion are willing to make other economic interventions such as switching to green energy (60-70%). 10% of 7 million is still a healthy possible market but much more could be achieved if a mass market scheme were offered that included substantial inducements to participants. In short, we need to create a climate change lottery for the region.

Everyone’s a winner Each month new entrants to the scheme would stand the chance of winning a prize. There would be a number of medium-sized prizes for individual payback entrants (e.g. 100 short breaks in the Lakes) while for households or businesses that had ‘carbon zeroed’ there would be one big prize each month (e.g a hybrid car, free green energy for five years, or a PV roof).

How much should you pay? We have done some early polling of individuals who have taken the Manchester is my Planet pledge and the results appear promising. The results are outlined later in this paper.

Many of these prizes could be secured from corporate partners and from companies seeking to promote low carbon solutions to a much wider audience but the goal is simple, to offer a strong enough inducement to boost take-up of the Fund’s offer from the current market for offsetting (in single figure percentages) to something much more mass market.

The Northwest Climate Fund. Concept Paper. October 2007. Page 15

A vital issue of course is how much individuals or organisations should pay into the Fund. Here there should be generic amounts that allow people to ‘neutralise’ the carbon they might emit for a standardised activity such as an airflight, or a new car, or their wedding! A carbon calculator will be avoided as a) this puts people off and b) suggests that this is a Kyotostyle offset scheme. There are a profusion of online carbon calculators out there, including Defra’s and links to these can be offered; this scheme will use generic carbon loads for actions and types of households.

For small and medium-sized organisations who wish to neutralise their unavoidable emissions a simple calculation service will be available to help them get an idea of what would represent a suitable donation into the fund. And for larger corporations a bespoke service will be offered to help agree an acceptable level of funding. Early discussions with very large corporations across the region suggest that neutralising business travel and head office functions, for example, could be anywhere in the range of £50,000 to £250,000 per year.

You pay, you say And for anyone paying into the Fund, the next stage, after an e-commerce transaction, will be a screen displaying the various projects which have been submitted to the Fund for consideration. People paying into the Fund will then be given the opportunity to vote on which projects get support. You’ll be able to see the carbon reductions that you’re supporting and powerfully engage with what can be achieved, locally.

Project headlines For larger organisations the projects that they support could be co-branded and identified as their portfolio of schemes but it is recommended that these schemes are still voted on by the public; there could be an opportunity for large organisations to run voting schemes internally as a great way to engage staff or customers in their carbon reduction activities and this could be part of a much broader sweep of internal communications activities that could also include pledge activities and even perhaps a CO2 prize challenge bid.

The Northwest Climate Fund. Concept Paper. October 2007. Page 16

A scheme that allows businesses and individuals to ‘neutralise’ the carbon they can’t reduce and contribute to the Northwest Climate Fund. A pan-regional payback scheme offered to people who have taken the climate change pledge as the ‘next step’ in their low carbon lifestyles. Using generic activities and household types, with detailed carbon calculations as an optional extra. Each month new participants get the chance to win a prize the value of which is determined by the level at which they enter the scheme.

Taking the pledge

The chance to make a difference. A journey of a thousand miles starts with a single step. Nine out of ten people think that climate change is an issue that has to be tackled, yet when asked, only as few as one in ten know what to do about it. Most people are ready to take their first step towards a low carbon lifestyle, they simply need to be asked.

Project headlines This first programme will ensure that there is universal coverage across the region of a climate change pledge campaign. Locally-owned and run, pledge campaigns will follow and/or support successful models of pledge programmes including CRED, RSA and Manchester is my Planet.

The Northwest Climate Fund. Concept Paper. October 2007. Page 17

The appetite? When the residents of Greater Manchester were polled at the close of 2005 as part of Manchester is my Planet, 7 out of 10 said they would consider taking a pledge on climate change. If just 20% of the Northwest were given the chance to pledge, this conversion rate would deliver almost a million pledges.

CO2 pledge schemes with true coverage across the entire region. Delivered through sub-regional and local partners - think global, talk local. Names and contact details captured to begin work on low carbon lifestyles. Regional support and advice given to create new schemes where needed or energise existing schemes where they are already running.

Corporate partnerships

Emissions ‘neutralised’ through local schemes For major corporate supporters of the Northwest Climate Fund we should consider how we can 'ring fence' a number of projects that offer verifiable and audited CO2 reductions; these could be ‘attached’ to the organisation in question and could reflect the specific corporate concerns of that particular supporter. We should also include the opportunity for these projects to be nominated by the corporate sponsor and we will have a thread in the online voting area that identifies projects as being linked directly to a specific corporate supporter.

All of these projects should have a very specific and audited CO2 reduction clearly communicated alongside their project cost AND the other, non-CO2 related benefits of the project (e.g. fuel poverty, biodiversity, climate change adaptation etc). The wider sustainability of the projects (resource efficiency, biodiversity, impact on the environment, social impact) should be measured. The only thing we mustn't do is create an auditing regime which is so comprehensive that it starts to bite into the funding of projects: for example if it costs £15,000 to fully audit a £45,000 project then this doesn’t offer value for money.

The Northwest Climate Fund. Concept Paper. October 2007. Page 18

Tradable credits and verified schemes

Representation and engagement

It will be for the Trustees of the Fund to consider, but for corporate partners who may wish to trade carbon reductions, some of the schemes under our ‘global partnerships' strand, such as some projects being proposed by Lancashire County Council, could offer ‘gold standard’ offsets, but this should be approached with caution.

A key challenge in establishing the Fund will be to widen our engagement with business. Launch partners of the Fund have taken part in the project steering group and it is recommended that they are represented on the Fund’s board of trustees.

Vitally there will be NO local schemes that qualify under current guidelines as they are considered 'additional' to the UK's existing Kyoto commitment.

The project team

Project lead

With advice from...

Stakeholders

Creative Concern

MWH Manchester Airport GMPTE The Co-operative Group Quantum Strategy and Technology The Tyndall Centre

Community Forests Northwest Manchester Airport Mersey Basin Campaign Environment Agency Cumbria County Council University of Manchester Sustainability Northwest Envirolink Northwest MMU/CATE The Co-operative Bank Friends of the Earth AGMA University of Cumbria United Utilities Lancashire Woodlands Project Natural England Cheshire County Council Lancaster University Northwest Business Leadership Team Cumbria Woodlands Mersey Travel Government Office NW

Project steering group Northwest Regional Development Agency Northwest Regional Assembly Peel Holdings Oldham MBC Manchester: Knowledge Capital Shell Lancashire County Council Legal support Pannone and Partners

The Northwest Climate Fund. Concept Paper. October 2007. Page 19

University of Liverpool CBI Groundwork GMPTE Liverpool John Moores University IoD Ashton Hayes Carbon Neutral Village Network Rail Manchester City Council Becky Willis ITV Granada Lancashire Wildlife Trust Chemicals Northwest Liverpool City Council Trinity Mirror Group Forestry Commission ENWORKS Vale Royal Borough Council Guardian Media Group ENCAMS Energy Savings Trust Fylde Borough Council Virgin Rail AFSL

Envirowise Chester City Council Moors for the Future Manchester City FC Faiths4Change BITC Lake District National Park Domestic Energy Alliance Carbon Trust Envirowise The Mersey Partnership Cheshire and Warrington Economic Alliance Lancashire Economic Partnership

Inspiration drawn from...

*The wisdom of crowds?

Richard Saul Wurman James Surowiecki Solitaire Townsend Ed Gillespie Compass Networkers Chip & Dan Heath Antonio Gramsci Big Brother Restoration Stelios Jeffrey Sachs Jonathon Porritt Wikipedia Walter Gropius

The term is taken from James Surowiecki’s book of the same name and was recently used by David Miliband to discuss Defra’s pioneering attempt at ‘wiki-policy’. Here are the words he used on his blog:

“Defra has therefore launched a significant new approach in wiki-policy - helping us create and debate the idea of an environmental contract, and its components - from energy to waste to finance.”

“The story of wikipedia is astonishing - the 'wisdom of crowds' creating an encyclopaedia of a million items, generated by the knowledge and ideas of citizens around the world, and constantly edited in real time by them. Politicians often say that they learn a huge amount from the people they meet and the things they say, and the wiki-world puts this into practice.

The concept of the wisdom of crowds identifies four elements required to create a ‘wise crowd’. These are: diversity of opinion; independence; decentralization; and aggregation. Much of the ethos behind the Northwest Climate Fund can be seen in these four elements. In short, the people of the Northwest could be a ‘wise crowd’ becoming a truly global model of best practice on low carbon living - we simply need to put some effort into engaging them, inspiring them, and asking them to act in the right way.

The Northwest Climate Fund. Concept Paper. October 2007. Page 20

The timeline

March 07

June 07

January 08

Launch of feasibility study, background research and stakeholder engagement programme.

Building the programme, legal research, design, production, programming.

The Northwest Climate Fund is officially launched.

April 07 Discussion paper circulated on the Project Payback concept. May 07 Stakeholder workshop and wider engagement programme to firm up a project proposal for the NWDA.

October 07 Concept paper and tender issued. December 07 A delivery consortium is appointed to run the shadow secretariat.

The Northwest Climate Fund. Concept Paper. October 2007. Page 21

Contact Steve Connor Chief Executive Creative Concern Fourways House 57 Hilton Street Manchester M1 2EJ 0161 236 0600 steve@creativeconcern.com The Northwest Climate Fund. Concept Paper. October 2007. Page 22