The Green Bank will have £3bn of government money which it will invest in renewable energy, including carbon capture and storage and energy efficiency measures.
Officially opening the Bank for business, Dr Cable revealed that the first investment has already been made through the commitment of an initial £8 million to a project in the north-east of England.
The scheme, which will generate energy from waste, has been predicted to attract an additional £8 million of private sector funding, which Dr Cable says highlights the attractiveness of the Green Bank. The second scheme will see the Bank invest £5 million in the retrofitting of Kingspan’s UK industrial facilities; an operation that is set to cut its energy consumption by almost a fifth.
“The Green Investment Bank – a key coalition pledge – is now a reality. It will place the green economy at the heart of our recovery and position the UK in the forefront of the drive to develop clean energy,” Dr Cable commented.
“Three billion pounds of government money will leverage private sector capital to fund projects in priority sectors from offshore wind to waste and non domestic energy efficiency, helping to deliver our commitment to create jobs and growth right across the UK.”
Economy in bloom
Dr Cable’s Lib Dem cohort, the Energy Secretary Ed Davey, is a major supporter of the Bank and said it will help attract the capital required to allow the green economy to “blossom”. This, in turn, will encourage investors to market and kick-start low-carbon and energy efficiency projects, he noted.
“In combination with our electricity market reforms, there will be lasting economic benefit as a result, with new expertise and jobs created, that will give the UK a competitive edge,” Dr Davey added.
The Green Bank has been on the agenda even before the last election, with both the Conservatives and the Labour party backing the idea, and the Lib Dems instead supporting a broader infrastructure bank, elements of which remain in the Green Bank.
The key influence appears to have been Germany’s KfW state development bank, which has increasingly played a major role in funding green projects; a memorandum of understanding was signed between the two banks to share information in April this year, cementing the relationship.
Not enough done
Though the creation of the Green Bank has been welcomed by many, some campaigners have been angered by the fact that it will lack borrowing powers, initially at least, and be unable to borrow until at least May 2015.
This was highlighted by Matthew Spencer, director of the Green Alliance, who described the bank as “a great new tool for British policy makers” to the FT, but bemoaned its overall efficacy. “It is underpowered and could be doing so much more for British investment if given borrowing powers,” he added.
Joss Garman, policy director at Greenpeace, went a step further, comparing the Bank to a “poor cousin”: “The bank should be able to borrow now, rather than waiting until after the next election.
“Given full borrowing powers, the bank could be a key vehicle to help tackle climate change and get us out of these tough economic times. Such procrastination is hurting investment, jeopardising jobs and stymieing growth.”
A different approach has been adopted by businesses, with praise emanating from EEF, the manufacturers’ organisation. Roger Salomone, head of business environment at EEF, said the Bank has an important role to play in an “increasingly credit constrained world”:
“Shifting to a low-carbon economy will require significant and sustained investment. The challenge now is to start getting funding out more quickly to projects that will both cut emissions and generate jobs,” he added.
Changing the landscape
While only time will tell whether the Green Bank can have the effect on both business and the environment that the coalition has predicted, its launch indicates that the government is at least partially sticking to its promises regarding the environmental agenda.
Lord Smith, Chair of the UK Green Investment Bank, said it has the potential to be a “game-changing component” of the country’s low carbon economy, and a profitable centre of excellence in specialist and renewable investment.
“Over the coming months and years, I am confident that our excellent team will put its many years of expertise to work on building the foundations of that sustainable economy, and facilitating the important investments that will ensure its long-term good health.”
It is the strongest suggestion yet that the future is green.
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