The Atmospheric Fund

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The Problem

The main contributors to climate change today are greenhouse gases. There has been a significant increase in the emission of greenhouse gases since the time of industrialization. Since 1980, damage due to climate change, storm damage and flooding has totalled more than $1.6 trillion worldwide. For municipalities globally, tackling greenhouse gas emissions is both a financial and a health imperative. Finding alternatives to a system dependent on fossil fuels is key.

The Solution

Launched in 1991, The Atmospheric Fund (TAF) was the world’s first municipal agency designed to innovate solutions to climate change, reduce greenhouse gas emissions, and improve air quality.

TAF produces outcomes by applying a rigorous methodology that leverages partnerships to expand its capacity and take pilot projects to scale. In this way, TAF uses a lab-like process to research, design, facilitate and implement the most effective solutions for emissions reductions.

TAF was established with a $23M endowment championed by then councilor, Tony O’Donohue with broad council support.

Tony O’Donohue was the true pioneer of environmental issues in municipal politics in Canada. He made it a key issue many years before the public considered it important. Canadians owe him a true debt of gratitude.

— Paul V. Godfrey, Former Chairman, Municipality of Metropolitan Toronto

O’Donohue convinced city council to set aside a portion of the profits from a sale of a surplus city property to endow the Toronto Atmospheric Fund, enhancing the City’s ability to address climate and air quality issues over the long term.

With its endowment income, TAF provided grants to the community for emission reduction programs and projects but soon realized that many of the impediments to scaling solutions lay in leveraging capital. TAF subsequently started a lending program that was an early example of the growing impact investing movement. Read the Green Condo Loan Case Study below to learn more.

As its expertise grew, TAF refined its granting and lending to devise a more sophisticated methodology to generate more effective emission reduction innovations. TAF’s process begins with identifying key opportunities and the right partners. Using a variety of technical, policy, financial, and social approaches, TAF works to test and then scale up successful solutions city-wide, across the Greater Toronto Area and even nationally.

While their endowment is restricted to funding activities in Toronto, TAF successfully fundraises to extend their geographic scope while improving local impacts. While they work within the City of Toronto offices, they are a 100% self-reliant program, operating entirely on endowment income and raised funds.

In the course of meeting their mission for carbon reduction TAF has supported change to policies, laws, and regulations, and has partnered with unlikely bedfellows to achieve greater impact. They have also found that while the application of a program may be a technology or financing play, public perceptions and behaviours are also challenged as well. That’s why TAF measures its cumulative impact using key performance indicators relating to financial and social capital mobilization, as well as greenhouse gas emission reductions.

As the first municipal agency dedicated to innovation around local climate solutions, TAF represents an embedded innovation unit that contributes and tests new ideas. While other cities have more recently created innovation assets (like Chief Innovation Officers), Toronto was decades ahead in seeding an innovation lab that embedded strategic innovation capacity in the city’s DNA.

Impact Case: Green Condo Loan

Partner: Tridel Condominiums asked TAF: “Can we improve building efficiency without raising the market price of new condo units?”

Evaluation: TAF found building codes for energy performance in Toronto were extremely low making it easy for developers to comply with the regulations.

Prototype: Tridel built 2 buildings side by side – one with a TAF-informed redesign and one to existing code.

Outcome: TAF funded a Tower Labs@MaRS research project that proved that Tridel’s redesigned building could outperform the code by 41%.

Further Actions: The incremental cost of building to the higher standard was loaned to the condominium corporation by TAF. The building’s reduced energy use is bringing annual energy savings of $163K. The building’s annual payment on the Green Condo Loan is 88K, leaving net annual savings of 75K. After the green condo loan is repaid, the building will benefit from the full 163K in annual savings, which will escalate annually as utility prices increase.

Supporting Policy Change: TAF’s Green Condo Loan program influenced the development of the City of Toronto’s Green Standard, which required all buildings to outperform the Model National Energy Code by 25%

Scale: The energy requirements of the Toronto Green Standard were adopted in the Ontario Code in 2012.

Next Up: Toronto is working with TAF to design the next stage of the Toronto Green Standard to raise the bar even further.

Impact by the numbers

  • Supported 100Mt of carbon reduction opportunities x $55M energy savings for Toronto
  • Invested $51M in innovation
  • Zero tax dollars spent 

Impact Case: LED Street & Area Lighting

Partners: Facilities managers within GTA municipalities asked: “How do we build confidence that LED and advanced lighting controls function well in our facilities, and deliver the savings they claim?”

Evaluation: TAF conducted an examination of different LED and adaptive lighting technologies in 5 cities, from garage lighting to building illumination and pathway lighting.

Barriers:

  1. New technologies are significantly more expensive and have little track record to prove the business case. 
  2. No common protocol existed to measure effectiveness of the lights and compare findings. 
  3. Municipal codes and standards needed to be adjusted to address the emerging technology.
  4. The public was unfamiliar with the new technologies.

Outcomes:

  1. Pilot testing proved claims and helped establish the business case and outcomes were presented at a national lighting summit.
  2. TAF created new protocols for common measurement
  3. TAF assisted with changes to Toronto’s property standards code to allow use of adaptive lighting, providing a model for other Canadian cities.
  4. TAF’s public perception studies dispelled common concerns. 

Scale: The LightSavers program continued beyond the incubation phase in the hands of the Canadian Urban Institute, who took the program national with funding from the Ontario Power Authority and Natural Resources Canada.

Barriers to development

Electoral Change: TAF has survived 6 mayoral changes and city amalgamation

Market Volatility: TAF’s reliance on investment income makes them, like many others, vulnerable to market swings.

Innovator’s Dilemma: TAF must manage the tension between operating within a municipal government setting while maintaining flexibility as an innovation incubator and accelerator program.

Embeddedness: It continues to be a struggle to establish the credibility of renewable energy and energy efficiency as viable energy alternatives and profitable investment vehicles.

Assumptions challenged

Strange bedfellows: TAF has developed partnerships with some of the biggest developers in the city as well as many banks, especially in the area of impact investment.

Breaking down silos: TAF works to bring together multi- sectoral groups, cut through jargon and translate technical and policy reports into understandable decision-support information.

Public sector inertia: With a focused mandate and removed from the day-to-day service pressures of the city, TAF has the space to undertake the trial and error of cutting edge innovation without being trapped by a risk-averse culture. TAF’s model could be applied to other sectors like public health or education.

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