Should the Green Investment Bank support SMEs?
Louise Bateman, Editor, GreenWise
15th June 2011
We are told small to medium-sized enterprises (SMEs) hold the key to our economic recovery, yet lack of credit continues to be a major barrier to small business growth.
It’s also clear
green innovation isn’t the silver bullet for meeting tough carbon emission reduction targets in the UK. Indeed, much of our success in moving to a low carbon economy will depend on adoption of existing green technologies. So should the
Green Investment Bank (GIB), which is being established to address "market failures" in the green sector, tackle these ones?
The Aldersgate Group held a summit on the GIB on Monday. The overwhelming message from the floor – and from some of the speakers – was that the GIB should support small projects, not just big ones.
Among the panel of speakers at the summit was Lord Green, Secretary for Trade and
Investment, who wanted to make clear that everything concerning the GIB is still "up for grabs". Deputy Prime Minister Nick Clegg’s announcement last month that the bank may deliver
the "first stages" of the Green Deal, the Coalition’s flagship
energy efficiency scheme for homes and businesses, would suggest this is the case.
Big players
But if so, will it be just the big players, such as B&Q and British Gas, who will be able to draw on GIB funds to help roll out the Government’s plan to insulate millions of UK homes and businesses, or will the army of small, local firms looking to deliver the Green Deal also benefit?
The same question applies, of course, to those numerous starts-ups with innovative cleantech projects; will the GIB support these SMEs, or should it just intervene when companies such as Vestas tell us they are ready to invest in offshore wind manufacturing in the UK if the conditions are right?
A GIB
progress report released by BIS last month would suggest the latter is more likely than the former.
There is still much to sort out before the GIB opens its doors for business in April 2012 and many are concerned its £3 billion budget and lack of borrowing power are major obstacles to its success anyway. What it invests in will, of course, depend very much on the team running the GIB led by Sir Adrian Montague.
We know it will be guided by a "double bottom line" of both achieving significant environmental impact and making a financial return, but what projects it will pick for that, we have yet to find out. To lock out SMEs, though, could prove to be a costly mistake.
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