The Budget announcement of a £2 billion Green Investment Bank has been welcomed by a wide range of organisations with an interest in the development of a low carbon economy.
Friends of the Earth described the
Green Investment Bank as a “victory” for it’s campaigning efforts on the issue, while others, including the Aldersgate Group, UK Green Building Council (UK-GBC) and the Renewable Energy Association (REA) – expressed their support.
However, many have also voiced concerns about the limits the Chancellor has placed on the scope of the new bank – and in particular, whether
small to medium-sized enterprises (SMEs) will have sufficient opportunities to access its funding.
The bone of contention is the Government’s decision to focus the bank’s activities on green
transport and sustainable energy, and in particular offshore wind (which, almost by definition, tends to be large scale).
The REA, which, like Friends of the Earth, has been campaigning for a Green Investment Bank, welcomed the Chancellor’s announcement today. However, ceo Gaynor Hartnell was clearly disappointed by the narrowness of the bank’s remit: “It’s important the green bank is sufficiently capitalised and supports
renewable energy in all forms and at all scales,” she said.
“The bank could help to optimise
manufacturing and job creation opportunities across the full range of renewable
technologies.”
Green Investment Bank is a "missed opportunity"Joel Hagan, chief executive of Onzo, which provides utility companies with customer intelligence solutions, expressed similar concerns: “By only investing in large environmental projects such as offshore wind farms, the Government is missing out on a major opportunity for the UK plc to benefit from British companies’ innovativeness.
“It is crucial that the bank considers smaller scale investments as well as the huge ones needed for major infrastructure projects such as generation. The UK has, after all, traditionally been strong in innovation but we have already lost leadership in some sectors to other countries.”
This point was echoed by Juliet Davenport, ceo and founder of renewable electricity supplier Good Energy. “The environmental SME sector could be a major force in the UK and needs support more than the bigger players,” she said.
“We have a willing army of energy entrepreneurs in this country with projects ready to go. 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.
“If we are to have an environmental revolution in this country we need to let a thousand flowers bloom."
Paul King, chief executive of UK-GBC likewise expressed disappointment at the focus on what he described as “high-profile issues”, like offshore wind and high-speed rail –
energy efficiency must not be a poor relation, he said.
Not enough to address growing green skills gapAccording to the REA’s Hartnell, the Budget was generally big on green investment – having also announced a £60 million fund for the development of port sites to support offshore wind turbine manufacturers. However, “we expected more to address the growing
skills gap right across the renewables industry,” she said.
Half of the Green Investment Bank’s equity will come from the sale of existing state assets, such as the Channel Tunnel Rail Link, and the other half will come from private investors.
This funding model is also giving some cause for concern.
Ben Caldecott, head of UK/EU energy and environment policy at environmental investment and advisory group Climate Change Capital, was among those expressing disquiet today.
Green equity won't be raised in time for urgency of the job"The proposed Green Investment Bank could help to get important projects off the drawing board,” he said. “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.”
Even if the Government is able to raise the equity in a timely manner, the prevailing view is that the £2 billion announced by the Government today will have to be scaled-up quite quickly.
Peter Young, chairman of the Aldersgate Group (a coalition of big businesses, NGOs, MPs and others promoting the economic case for high environmental standards) welcomed the announcement of the Green Investment Bank, saying it will “help leverage private sector funds at sufficient scale to deliver a swift and competitive transition to a low carbon economy."
However, he added: "The initial £2 billion of equity is a good start but must be rapidly scaled up over the next Parliament. The total low carbon investment needed by 2020 is at least £250 billion, leading to more secure jobs and a more prosperous future."
Dr Gordon Edge, director of economics and markets at RenewableUK, added that, while there is a lot of industry and environmental sector support for the idea of a green bank, is it important to see it as a catalyst for wider investment.
“We need to attract substantial capital into the sector, from a wide base of potential lenders and investors. This bank needs to be one piece of the funding package, without taking away responsibility from other finance institutions,” he said.
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