Calls for GIB to have ‘greater ambition’
A group of businesses, non-governmental organisations and politicians are calling on those responsible for the next government to raise ambition for the Green Investment Bank (GIB).
The calls come in a new report launched by the Aldersgate Group yesterday (28 October) to mark the government-owned bank’s two-year anniversary.
First set up in October 2012, the bank was given £3.8 billion of capital to support environmentally-friendly projects that cannot obtain sufficient funding from the markets. To date, it has provided £1.6 billion of investment to 36 ‘renewable and low-carbon technology’ projects, including energy from waste, biomass power, anaerobic digestion, marine energy and renewable heat projects.
Although the ‘Two Years of the Green Investment Bank: What next?’ report praises the bank’s ‘impressive achievements’, it urges the next government (which will come into power following the elections in May 2015) to increase the power and remit of the GIB to ‘ensure it provides the necessary support to the UK’s growing green economy’.
Writing in the foreword to the report, Peter Young, Chair of the Aldersgate Group, and Nick Molho, Executive Director of the group, write: ‘[T]he GIB has leveraged more than £5bn into the UK green economy across more than 30 green infrastructure projects, as well as launching five small project funds; helping create a new asset class in green infrastructure worth £1.3bn; and accelerated market entry for new green technologies. Born in a storm, when European green investment was falling sharply especially in renewable energy, the GIB has helped stabilise the UK market and contributed to our international attractivesness for private sector green investment.
‘While the GIB can celebrate many achievements in its first two years, there are significant opportunities to go further at the beginning of the next Parliament with major policy reforms. Many of these reforms are crucial to delivering some of the government’s existing commitments such as the implementation of the first four carbon budgets.’
As such, the group recommends that the future government give GIB:
- borrowing powers, which the report states is needed ‘urgently, especially given the low interest rates in the market’. (The current government has said it would give the bank borrowing powers from 2015-16 (if voted back into power) once the target for debt to be falling as a percentage of GDP has been met);
- the power to issue green bonds and green individual savings accounts (ISAs) and bring new investors into the market;
- a broader remit (as two-thirds of the UK’s green economy reportedly falls outside of GIB’s remit).
A 'green industrial revolution is essential to secure our future wealth and wellbeing'
Speaking ahead of the official launch event of the report (which was held yesterday evening at the offices of Bank of America Merrill Lynch), Young said: “The GIB’s achievements are all the more remarkable considering the restrictions within which it has operated. The government must now broaden the bank’s remit into new sectors and grant it the ability to borrow, by issuing new products such as green bonds and ISAs. This will widen its impact, increase its leverage and allow the general public to invest in the clean, green industrial revolution that is essential to secure our future wealth and wellbeing.”
However, Green Party MP Caroline Lucas, added that although borrowing powers and extending the bank's remit was needed, the GIB would not be able to ‘fill the multi-billion pound green investment gap’.
Stating that a ‘successful GIB’ would not counteract the ‘harm from ongoing support for major new roads, unconventional fossil fuels, new airports and other high carbon infrastructure’, Lucas stated that the UK also needs a ‘comprehensive and consistent re-prioritisation of fiscal, monetary and infrastructure priorities to secure, within a generation, a shift to a zero-carbon economy’.
Lucas’s comments follow on from protests from environmental groups about the GIBs investments, who have criticised the bank for investing almost £200 million in ‘dirty’ energy projects in 2014, including large-scale biomass power stations and waste incinerators.
Read the ‘Two Years of the Green Investment Bank: What next?’ report.