The Mayor of London, Boris Johnson, has announced proposals for a multi-million pound 'London Green Fund' to boost London's low carbon economy, create jobs and tackle climate change.

The fund will unlock the financial savings that can come from going green by developing an innovative financing framework to 'pump-prime' energy efficiency measures to cut carbon across London and money off fuel bills. The resulting guaranteed savings will then pay off the upfront loans to be ploughed back into the green fund.

The fund may also be targeted at decentralised energy and new waste technology initiatives - areas that have experienced difficulties in fulfilling their potential and would benefit from the fund's pump priming function. The fund aims to leverage millions of pounds of private investment to enable the development of carbon-cutting infrastructure at the scale required to meet the Mayor's 60% carbon reduction target by 2025.

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The Mayor has committed to provide an initial £4 million to develop and kick-start the fund with the intention of attracting co-investment from a range of bodies, such as the EU, philanthropic funds, climate charities and the private sector.

The fund is expected to be of particular interest to London's public sector organisations such as NHS Trusts, universities and borough councils that would like to retrofit their large building estates. The Mayor and the London Development Agency are currently developing a simple framework for organisations to replicate the energy efficiency programme that is currently taking place in 100 of the Greater London Authority group buildings. Retrofitting work started on Wembley Police Station last week to install energy saving measures such as solar panels, boiler upgrades and new cooling equipment.

Mr Johnson said: "To tackle energy inefficiency and cut carbon, we need to make London's buildings and energy supply greener. We want to provide an easy way to tackle the maze of complex red tape that currently acts as a deterrent as well as provide the up front funds needed to take action. An innovative eco-fund will help London become energy efficient in a simplified way.

"This will help to boost a low carbon economy in London, creating thousands of green collar jobs and fits with my overall goal to deliver genuine changes through high impact, value for money initiatives."

(CD/KMcA)