The conversation on unlisted infrastructure and private markets continues to heat up within the UK DC pension space, but is there more to the assets than just returns? Matt Deane, Business Development Manager with First Sentier discusses enfinium and energy from waste.
Who is enfinium?
When waste cannot be reduced, reused or recycled, energy from waste (EfW) provides the most sustainable solution. enfinium is one of the UK’s leading EfW operators, diverting 2.3 million tonnes of unrecyclable waste each year from climate-damaging landfill by transforming it into home grown energy, that has the capacity to empower an impressive 500,000 UK homes. The portfolio includes four operational sites in the UK situated in West Yorkshire, Kent and Flintshire, with a further two currently under construction.
Carbon Capture and Storage
The EfW sector has an important role to play in the decarbonisation journey and has already halved greenhouse gas (GHG) emissions from landfill over the last 30 years. enfinium has an ambitious net zero transition plan. It aims to see the company achieve net zero in its operations by 2033 and deliver the net removal of up to 1.2 million tonnes of carbon. This includes 600,000 tonnes of ‘carbon removals’, from the atmosphere per year by 2039. To put it into perspective, this is equivalent to eliminating the carbon emissions of every household in Manchester. It plans to do this by installing carbon capture and storage (CCS) technology at the Ferrybridge 1 and 2 facilities in West Yorkshire, transforming enfinium into a carbon removals business powered by unrecyclable waste.
Carbon removal is when the CO2 comes from bio-based processes or directly from the atmosphere. enfinium’s EfW facilities have the potential to capture and remove carbon from both the fossil and the biogenic content of the waste they process. Since the biogenic CO2 is considered carbon neutral, this means enfinium would be generating net carbon removals from the atmosphere, allowing production of high-quality carbon removal credits, and forming the foundation of ‘decarbonisation hubs’ across the UK.
These ‘decarbonisation hubs’ will serve as centres for generating low carbon heat, electrolytic hydrogen, and reliable homegrown carbon negative power for the electricity system. The project would rapidly accelerate green economic growth and decarbonisation of West Yorkshire in line with the region’s ambition to achieve net zero by 2038, whilst creating more jobs for the local community as each site develops.
“Nationally Significant”
This ambition was highlighted by the UK Government’s Secretary of State for Energy Security & Net Zero in February 2024, when designating enfinium’s CCS project as ‘Nationally Significant’. The direction from the Secretary of State offers support for the project in its proposal, noting that this would equate to 6.5% of the government’s annual carbon capture and storage ambition.
Why unlisted infrastructure?
Infrastructure assets are typically long-duration in nature, and characterised by predictable, sustainable returns, often with inflation-linkage. This return profile is attractive and offers the prospect of both income yield and capital appreciation. Investment in providers of essential services such as power, transport or communications infrastructure, offer a low correlation with other asset classes, further providing diversification benefits to investors. enfinium, an asset in the mid-market sector of unlisted infrastructure, operates under the ownership of Igneo Infrastructure Partners and by implementing an effective net zero transition plan and powering homes, can be a trailblazer for decarbonisation in the UK.
Sources:
Disclaimer: Important Information
This document is directed at professional investors only and is not intended for, and should not be relied upon by, other investors. The information included within this document and any supplemental documentation provided is confidential and should not be copied, reproduced or redistributed without the prior written consent of Igneo Infrastructure Partners. Any investment with Igneo Infrastructure Partners should form part of a diversified portfolio and be considered a long term investment. Prospective investors should be aware that returns over the short term may not match potential long term returns. Investors should always seek independent financial advice before making any investment decision. Past performance should not be used as a guide to future performance, which is not guaranteed. The value of an investment and any income from it may go down as well as up. An investor may not get back the amount invested. Currency movements may affect both the income received and the capital value of investments in overseas markets. Where a fund or strategy invests in fast growing economies or limited or specialist sectors it may be subject to greater risk and above average market volatility than an investment in a broader range of securities covering different economic sectors.
European Diversified Infrastructure Fund FCP-SIF (“EDIF I”), European Diversified Infrastructure Fund II SCSp (“EDIF II”) and European Diversified Infrastructure Fund III SCSp (“EDIF III”) are domiciled in Luxembourg. They are alternative investment funds for the purposes of the EU Alternative Investment Fund Managers Directive (“AIFMD”). The alternative investment fund manager is First Sentier Investors (Ireland) Limited (the “AIFM”) which is authorised and regulated in Ireland by the Central Bank of Ireland. Details about the relevant fund are contained within the fund’s Private Placement Memorandum. The distribution or purchase of interests in the Funds (“units”) or entering into an investment agreement with Igneo Infrastructure Partners may be restricted in certain jurisdictions. No person in any such jurisdiction should treat this document as constituting an offer, invitation or inducement to distribute or purchase shares or enter into an investment agreement unless in the relevant jurisdiction such an offer, invitation or inducement could lawfully be made to them. This document does not therefore constitute any offer, invitation or inducement to distribute or purchase units or to enter into an investment agreement by Igneo Infrastructure Partners in any jurisdiction in which such offer, invitation or inducement is not lawful or in which Igneo Infrastructure Partners is not qualified to do so or to anyone to whom it is unlawful to make such offer, invitation or inducement.
In relation to each member state of the EEA (each a “Member State”) which has implemented AIFMD this document may only be distributed and units in the fund may only be offered or placed in a Member State to the extent that the fund is permitted to be marketed to professional investors in the relevant Member State in accordance with AIFMD (as implemented into the local law/regulation of the relevant Member State).
In the UK, this document is issued by First Sentier Investors International IM Limited which is authorised and regulated in the UK by the Financial Conduct Authority (registration number 122512). Registered office 23 St. Andrew Square, Edinburgh, Midlothian EH2 1BB number SC079063. In the EEA, issued by First Sentier Investors (Ireland) Limited which is authorised and regulated in Ireland by the Central Bank of Ireland (registered number C182306). Registered office: 70 Sir John Rogerson’s Quay, Dublin 2, Ireland number 629188. Igneo Infrastructure Partners is a UK trading name of First Sentier Investors International IM Limited.Investors who invest in Luxembourg-based or other non UK funds will generally have no rights of cancellation under the rules of the UK Financial Conduct Authority and will not benefit from the rules and regulations under the UK Financial Services and Markets Act 2000 for the protection of investors including the UK Financial Services Compensation Scheme. Telephone calls with Igneo Infrastructure Partners may be recorded.
First Sentier Investors entities referred to in this document are part of First Sentier Investors a member of MUFG, a global financial group. First Sentier Investors includes a number of entities in different jurisdictions. MUFG and its subsidiaries do not guarantee the performance of any investment or entity referred to in this document or the repayment of capital. Any investments referred to are not deposits or other liabilities of MUFG or its subsidiaries, and are subject to investment risk including loss of income and capital invested. For more information please visit www.firstsentierinvestors.com. Telephone calls with FSI may be recorded.