Green Investment Bank will start lending next AprilMay 27th, 2011 by Simon Haddock
Nick Clegg laid down the coalition’s plans to become the greenest government during his speech at Climate Change Capital in London at the beginning of this week.
After detailing the government’s achievements so far, such as supporting green apprenticeships and ultra low emissions vehicles, he went on to explain more about the Green Investment Bank.
The Green Investment Bank will be a world first. A lot of countries have a development bank but this will be the first dedicated solely to the green economy.
The government has guaranteed £3 billion for the Bank’s initial capitalisation and this money will be generated through selling existing assets. However, the funding is not dependant on these sales and has been underwritten by the Treasury to ensure it will be available. The Bank will start making investments as from next April and offshore wind, waste and non-domestic energy efficiencies are possible priority projects.
As soon as state aid clearance has been approved, the Bank will be under the leadership of a new board so that it operates independently. It will be able to deal in a wide range of transactions including debt, equity and risk mitigation products. With the initial £3 billion of government capital the Bank should be able to invest an extra £15 billion into green infrastructure within the next 4 years.
From April 2015, the Bank will have borrowing powers provided government targets for debt to fall as a percentage of GDP are met.
The government is understandably proud that it can create a Bank from an idea to a flow of investment in less than two years, and then see it grow into an independent institution for investing and borrowing soon afterwards.
Mr Clegg finished his speech by pointing out that the government cannot do everything themselves. Businesses and investors need to embrace the changes and seize the opportunities.
It’s a step in the right direction, but is the government going far enough? And what type of projects do you think the Bank should be funding?