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Treasury seeks financial gurus for green investment fund

Treasury seeks financial gurus to advise on $100M green investment fund by July

By Paul McBeth

March 15 (BusinessDesk) - The Treasury is seeking financial advisers to work out the best use of the government's $100 million green investment fund and report back by July.

The government agency this week issued a tender for consultancy services to provide an independent and evidence-based assessment of the green investment fund's (GIF) opportunities to develop and deploy financial products that help reduce carbon emissions. The three-month contract is in two parts, the first being a high-level review of green investment banks around the world to work out where they've been successful and what an appropriate return is, and the second being an analysis of target sectors.

"The Treasury is looking for credible providers who have the capability, experience and depth of financial intermediary and industry relationships to deliver on what are a novel and complex set of requirements," the tender document said. "Providers need a good track record in delivering quality advice in challenging timeframes (that may have required a multi-disciplinary approach and the management and coordination of other consortia member or subcontractor inputs)."

The green fund forms part of the support agreement between the Labour and Green parties, with the $100 million government-backed fund seeking to stimulate $1 billion of new investments in low carbon industries by 2020.

The Treasury has already set up a cross-agency working group with officials from the Ministry for the Environment, the Ministry for Business Innovation and Employment, the Energy Efficiency and Conservation Authority, the Ministry for Primary Industries and a private sector contractor, which has been tasked with recommending the best design for the fund.

The tender document notes New Zealand's emissions profile differs from other nations in that more than half greenhouse gas (GHG) emissions are methane and nitrous oxide due to the large agricultural sector, and that the typically high incidence of carbon dioxide from transport emissions in other nations only account for 40 percent in New Zealand.

The Treasury is targeting process heat such as milk powder plants, electric vehicles, energy efficiency and space heating in industrial and commercial buildings, and waste as the sectors offering the most gains, and "where we consider that there is potential for the GIF to have the greatest impact in the first three to five years".

The document said about 11 percent of New Zealand GHG emissions come from fossil fuels used by manufacturers to process heat, with about 200 meat and dairy process heat sites largely owned by farmer cooperatives. Those plants use 1,800 megawatts of heat plant in dairy and 460 MW in meat with an average annual energy spend of $1 million per site.

"We want to investigate opportunities for the GIF to leverage off established relationships and design financial solutions that incentivise more energy and GHG emissions efficient process heat solutions," the paper said. "Such research includes investigating the types of low GHG emissions plant technologies that are available and suitable in New Zealand."

Fonterra Cooperative Group operates some coal-fired processing plants and has acknowledged that's a significant challenge to overcome. In a submission to the Productivity Commission's inquiry into transitioning to a low carbon economy, the country's biggest company blamed national grid operator Transpower for failing to build the required capacity needed to meet large-scale electrification, and that it "may require some form of direct regulation to enable an economic transition to use" renewable energy for processing.

The Treasury said it expects providers may have to form consortia to meet the tender requirements, and that it might appoint different providers for separate parts.

Proposals are due at the close of business on April 10 and the contract is scheduled to start on May 4. A high-level report will be due on June 1, and the final report no later than July 1.

(BusinessDesk)

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