The UK is to set up the world’s first Green Investment Bank. The plan is the responsibility of the Rt Hon Dr Vince Cable MP, Secretary of State for Business, Innovation and Skills and has been in development since 2010. Early calls from business included initial capitalisation of a minimum of £4-6 billion over the first four years to create a Bank which could ‘re-power the economy and create jobs.’ A powerful group of big businesses, NGOs and cross-party MPs urged the government to ‘deliver a bold vision for the Government’s Green Investment Bank.’
Peter Young (Aldersgate Group)
The project has had the backing of a wide range of influencial international corporations right from the start, including: Bank of America Merrill Lynch, BT, F&C Investments, HgCapital, Jaguar Land Rover, PepsiCo, AXA Investment Managers, Climate Change Capital, Microsoft, City of London, The Co-operative, WWF, Friends of the Earth, Greenpeace, The Institution of Civil Engineers and The British Private Equity & Venture Capital Association.
On October 16th 2012, the Aldersgate Group, which has been a co-organiser from the start, hosted a panel discussion with Minister Cable and other experts. This was the same day on which the legislation was being finalized in the House of Commons. The plans for this, the world’s first, dedicated Green Investment Bank met with general approval. The bank begins with £3 billion to invest and hopes to raise a further £15 billion in private finance. Early priorities will be renewable power, mainly offshore wind energy, recycling and support for Green Deal. Green Deal is set to begin in January 2013 and will include loans for green domestic projects and small businesses. The new bank will also give consideration to other worthy green initiatives.
The main area of doubt rests on the fact that the new bank will not yet be able to borrow on the markets. Dr Cable believes that this will become possible once the bank establishes itself. Other worries arose about the stability of political will and a potential lack of future-proofing. Peter Young, Chairman of the Aldersgate Group, pointed out that the CBI (Confederation of British Industry) had recently said that Green Growth was worth £20 billion ($32 billion) to the British economy. The scale of growth in the green economy should hopefully be sufficient to overcome any political squeamishness which might arise.
The panel were asked whether climate change or global financial instability were more dangerous! Who wants to take that one then? General agreement was reached that they are so interconnected as to require a common approach. All very good, but here the devil will be in the detail. Can a Green Investment Bank resist the demands of short-term economics in favor the long-term affects on future generations any better than any other bank? Well you would have to think so and certainly hope so. That it will come into existence early in 2013 so that we can begin to find out is something to applaud and watch.