A national green investment bank could help smaller low-carbon demonstration projects reach the marketplace
Call for publicly-owned green bank in UK
23rd October, 2009
National green bank would help finance major renewable projects like offshore wind that might not otherwise get off the ground
The UK's transition to a low-carbon economy is being held up by a lack of finance, says a respected think tank, which has called for a publicly-owned Green Bank to be set up.
Green Alliance say a Green Investment Bank would provide capital and guarantees exclusively to low-carbon projects.
It said the recession had left a 'succession of major renewable projects' struggling to raise the necessary finance to get off the ground.
Offshore wind in particular is known to have difficulties in getting finance from banks which are wary of investing in the sector because of construction risks and the challenges of maintenance and operation.
Green Alliance said in such cases the Bank could step in and provide the initial capital or guarantees as part of a multi-bank investment.
'One significant advantage of a Green Investment Bank would be to give the market greater confidence in the long-term future of low carbon investments and encourage private capital into the market far quicker than would otherwise happen,' said Green Alliance associate and report author Chris Hewett.
Green Alliance said the bank could also help take proven low-carbon technology from a demonstration to commercial scale.
Hewett said the transition to a low carbon economy would require massive private investment over the next generation.
'There is an emerging convergence of thinking between NGOs, businesses and the financial industry that a new form of Government action is needed to reduce the short-term risks for private investors to finance this transformation,' he said.
The call for a national green investment bank comes as environmental campaigners have been attempting to force the Government to change investment policies of the publicly-owned Royal Bank of Scotland (RBS).
The High Court blocked the attempted legal action earlier this week by Platform, People & Planet and World Development Movement against the Treasury and RBS, of which the UK Government is the majority shareholder.
The coalition, which is appealing against the verdict, say the Government is failing to properly consider the environmental impact of RBS investments.
Hewett, from Green Alliance said a 'high-street retail' bank like RBS was not a suitable alternative to a national green investment bank.
However, he said the Government should use its shareholdings in RBS to expand the Bank's low-carbon fund with a view to this becoming 100 per cent publicly-owned further down the line.
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