WHY COMMUNITIES NEED TO LEVERAGE CAPITAL FOR GOOD
The finance gap for mitigating climate change is too big for under-resourced governments and charities to shoulder. A new approach is needed which intelligently uses blended finance to incentivise the release of investment capital.
Communities are at risk from unaffordable energy and climate change
There are many SDGs which need our attention: affordable and clean energy (SDG 7), climate action (SDG 13) and sustainable cities and communities (SDG 11) are three of the most pressing and complex.
The UK needs to invest £100 billion in local clean energy schemes to hit its decarbonisation targets. A significant part of this needs to be delivered through action by households and SMEs across cities.
This won’t succeed unless efficient and effective pathways are in place to deliver finance to those in the front line – property owners and managers, developers, councils, housing associations and landlords.
The PyTerra Xchange is a response to this significant and complex challenge.
PyTerra is developing a platform to go live in 2022 which delivers targeted finance to local low carbon projects.
THE PYTERRA XCHANGE CONCEPT
The PyTerra solution is to connect multiple finance deals through a single decentralised system. Blended finance is accessed and delivered more simply, faster and more effectively.
- … future savings in energy bills can now be used to help pay for retrofits
- … Government grants can be blended with other finance to more rapidly deliver Net Zero
- … non-financial returns (e.g. carbon offsets) can be offered in return for funding (e.g. from corporate sponsors)
HOW DO INVESTORS AND FUNDERS TRADE FINANCE?
THE FINANCE PORTAL
The platform uses impact tokens to distribute urgently needed ‘sponsored finance’ to property owners, managers and developers – more simply, faster and more effectively.
It is not enough to offer investment to low carbon developers. Many of their customers (householders and SMEs) can’t afford to sign up to new low carbon installations. PyTerra’s ‘sponsored finance’ uses funding from corporate sponsors, grant givers and donors to incentivise end users to commit to these installations. This gives developers the income they need to support project investment.
HOW DO DEVELOPERS APPLY FOR INVESTMENT AND FUNDING?
THE PROJECT PORTAL
The PyTerra Xchange’s Discount Voucher Scheme provides a way for developers to engage target customers.
Sponsors can brand vouchers associated with their tokens, and these are allocated to designated end users by developers.
End users receive a voucher offer through the post with an explanation from the developer as to what is being offered. It could, for example, be a retrofit by a landlord for its social housing tenants where a large proportion of the cost is covered by vouchers and the remainder is covered by future reductions in fuel bills.
The PyTerra Xchange’s Promotion Programme gives corporate sponsors positive exposure using digital media which they otherwise would not get.
Developers, with the assistance of local media companies, are required to create media stories about the impact of their projects on people and local communities. The media is branded.
Not only do these stories provide a very transparent means of feedback to all stakeholders, but it also provides sponsors a direct form of evidence which they can blend into their own CSR narratives.
These stories also sit in front of a raft of connections across local communities which can then act as a springboard with which sponsors can engage, not just with communities but also with all their connections, well beyond their city limits.
Distributed Ledger Technology (DLT) is used by the PyTerra Xchange to create and manage impact tokens. Each token represents a unit of value (e.g. £50). A token, once allocated to a project, contractually ties the owner to undertake specific services to one or more other parties also engaged in the project.
Users buy however many tokens they want and these are placed in their individual digital wallets through the PyTerra Wallet App. Management of tokens, the balance of each user’s account and the history of transactions is made available to users through their digital wallets.
Each purchased token creates a smart contract which details token value, ownership, usage criteria and application trigger points.
Users pay for tokens using crypto currency Distributed Ledger Technology (DLT) which they buy online through a platform such as Binance.
The PyTerra Xchange provides a market where its impact tokens can be traded.
The price of tokens is set by the market and is based partially on supply and demand, and partially on the performance of the Xchange.
The performance of the Xchange is based on its ability to create real world impact from projects. To measure this, the overall impact of the Xchange is represented by a PyTerra Growth ESG Impact Index over time. If the Xchange is delivering more impact per pound invested, then tokens are worth more. Impact is measured using industry standard methodologies. Holders of tokens can therefore benefit from a rising Index. During this time, the Index creates an underlying value to the spot price, which can rise and fall depending on demand and supply at the time.