Green Investment Bank to address market failures of Green Deal

It had been expected that offshore wind, non-domestic energy efficiency and waste would be priority areas for the GIB while Prime Deputy Minister Nick Clegg said in May that the GIB may deliver "the first stages" of the Green Deal. But today’s announcement by Cable is the first to confirm the GIB will play such a critical role in the delivery of the Green Deal, although exactly how much and which way the investment will be delivered remains to be seen. The multi-billion pound Green Deal scheme will enable householders and businesses to invest in energy efficiency measures such as insulation and draft proofing by taking out loans with no upfront costs and is set to launch in autumn 2012.

"The Green Deal and the Green Investment Bank will together help to reduce energy use and promote energy diversity, helping with resource security and reducing emissions," Cable told a conference hosted by the CBI and the Green Alliance think tank in London today. 

Underlining the difficulties the Government faces in getting GIB approved for State Aid by the EU, Cable said BIS will have to establish the UK Green Investment (UKGI), a new team of project finance professionals, to speed up investment in green infrastructure. Up to £775 billion worth of funding is due to be released during Phase One of the GIB, between 2012 and 2013. Out of that pot, UKGI will have access to £100 million to invest in smaller waste infrastructure projects and a further £100 million for the non-domestic energy efficiency sector from April 2012, BIS said. UKGI will also be able to co-invest in offshore wind projects, it has been confirmed.

"I want to set up the bank as soon as possible, so it can start accelerating investments in these key sectors and help British companies take advantage of these opportunities. Setting out the priorities for the Bank and establishing UK Green Investments for April 2012 are a major step forward," said Cable.

The Government sees the GIB as a catalyst for the UK’s transition to a green economy. The £3 billion it has set aside for it, will it says attract a further £15 billion from the private sector. However, the GIB will not have any borrowing powers until at least 2015, which have led to concerns within the green business community that will not be able to accelerate the transition to a green economy effectively enough.

Cable said he would begin the formal recruitment process for the GIB board and senior management team early next year, with a view to making the first appointments, including that of the chair, in Spring 2012. 

Cable also published criteria today for deciding on a location for the bank, which he said he expected would employ between fifty and seventy staff over the first four years of its existence. A decision on its location is expected made by March 2012.

The 20 locations that have expressed an interest in headquartering the bank are Angus, Bournemouth, Brighton, Bristol, Cardiff, Chester, Derby, Edinburgh, Gloucester, Leeds, Liverpool, London, Manchester, Newcastle, Nottingham, Paisley, Peterborough, Sheffield, Stoke on Trent, Wales, Warrington and Yorkshire.

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