Green investment bank unveiled
Chancellor Alastair Darling has unveiled a new £2 billion green investment fund in an effort to put the UK on course to becoming a low-carbon economy.
The chancellor says the launch of the new green investment bank, which will focus on both green energy and cleaner transport, will help “unlock billions more” from the private sector in the development of a greener economy.
The cost will be split between government asset sales such as the channel tunnel rail network, and private investment.
Nick Chism, head of KPMG’s global infrastructure practice, praised the announcement as a “welcome move.”
“The idea of a single government body responsible for evaluating, assessing and backing infrastructure investments can only be a good thing and we welcome the announcement in the budget,” Chism adds.
The offshore wind power sector is to come under particular focus as the UK strives to remain a world leader within the industry, the chancellor says.
The government will offer up to £60 million to develop ports, which will house manufacturers of offshore wind turbines and said the measures would “support thousands of extra jobs in these sectors”.
Juliet Davenport, chief executive of UK renewable energy electricity supplier Good Energy, says: “The government’s announcement is welcome news and it is good to see the environment making a return to the election campaign.”
However, Davenport warns that the money must not be swallowed by large projects and companies and said instead, the environmental SME sector requires greater support and could become a major force in the UK.
“A small injection of capital to support these independent projects would then help them secure the relevant private investment to bring their projects to fruition,” Davenport adds.
Friends of the Earth also welcomed the move, hailing it as a step in the right direction and paving the way for future growth.
Executive director Andy Atkins says: “This bank will provide crucial funds for major green developments, such as off-shore wind projects, which will slash emissions, increase our energy security and create thousands of new jobs.
“We must do much more to build a low carbon economy but today’s announcement is a massive stride in the right direction.”
The introduction of a new green investment bank was lobbied by various groups in the run-up to the Budget, not least the British Private Equity and Venture Capital Association. The group argued that a well-designed and implemented fund was vital to facilitating and accelerating private sector investment in support of the UK’s 2020 and 2050 low carbon targets.
At present, the UK requires around £400 billion of investment in infrastructure over the next decade, which far outstrips the investment seen in recent times.
The announcement follows the Conservative Party comments that it would seek to expand the role of green energy if it wins the election.
Ben Caldecott, head of UK/EU energy policy at Climate Change Capital, says it is reassuring to see some cross-over between the opposing parties - but warns the Labour Party needs to move quickly or risks stalling.
“Any reforms must be completed quickly and investors that have committed capital under existing market arrangements should be protected, otherwise investment could dry up at exactly the moment it is desperately needed to ramp up."
"The proposed green investment bank could help to get important projects off the drawing board. However, as the cash for it is dependent on selling off strategic assets in difficult market conditions, it will take many months or even years before the fund is able to make a meaningful difference. Unfortunately, this simply doesn’t fit with the urgency of the task at hand,” Caldecott says.
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