EAC Inquiry: Green Investment Bank
- The new Coalition Government should make a clear and early statement that it remains committed to the creation of a Green Investment Bank (GIB) with a full range of powers. Although this was promised in the Coalition Agreement, no concrete proposals have subsequently been forthcoming. Furthermore, at the time of the Queen’s Speech on 25 May, the Government stated that the forthcoming Energy Security and Green Economy Bill might be used as the legislative vehicle “to set up a Green Investment Bank”. We are concerned that the latest pronouncements from the Department of Energy & Climate Change make no mention of the Bill being used for this purpose.
- The GIB should have a clear mandate to tackle the low carbon investment needs of the UK. The scale of the required investment is such that traditional sources of capital will fall well short of the sums required. Without such intervention, the UK’s low carbon targets will not be achieved. Adequate levels of initial capitalisation – around £4-6 billion – will be required to ensure the Bank’s success.
- Investment in energy efficiency should be a key feature of the Bank’s activities. In particular, energy efficiency should be given the highest priority in the Bank’s initial phase, as investment in demand reduction measures will reduce the level of total infrastructure required and enable the scaling-up of existing, proven technologies. Approximately £225 billion will be required to finance the requisite energy efficiency improvements until 2025 – this represents around half of the total low carbon investment required.
- Retrofitting the UK’s building stock is a vital component in the delivery of our low carbon future. However, this involves large numbers of individual investments and small scale projects. The GIB can play a key role in aggregating these investment opportunities and providing upfront finance to householders and SMEs.
- Part of the GIB’s remit should be to support the proposed Green Deal financing scheme. This will be especially important in the Green Deal’s early market stage before significant scale of demand has been achieved. The support should take the form of upfront loans to able-to-pay householders, complemented by subsidies for households unable to pay.
Tags: Green Investment Bank
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