The Chancellor announced that an investment bank controlling £2bn of equity will be set up to fund green transport and energy initiatives, which would help move the UK towards a low carbon economy. Additionally £60m will be spent helping ports develop in order to be able to manufacture wind turbines, ultimately boosting the country's offshore wind power.
The Guardian reported yesterday
on the views of various environmental experts on the subject. The main issues raised in the article relate to what shape this investment bank would take: would it be run at arms length from the government/Treasury, would it be set up quickly enough, how will its capital be raised, will it be funded at a levels that adequately correspond to the financial challenge faced and what will it fund?
The experts will be happy to learn, that at least some of their ideas have been heard. Yes, funding will go towards a greener infrastructure. And yes it will go towards low carbon projects in desperate need of support such as offshore wind farms. Will it be adequately funded? Well, as Ian Parrett an analyst at the one of the UK's longest established energy and utility consultancies Inenco put it: “The required figure we are looking at is more than £200 billion – meaning that £2billion equates to less than one per cent – and could be as high as £400 billion. £2billion will only buy two-thirds of a nuclear power station and we cannot rely on private sector investment at a time when the economics of nuclear, wind and clean coal do not add up and the financial markets are still fragile. The Government really needs to drive this – as nobody else is in a position to do it.” No good news there then.
Little was revealed about the shape of the bank itself. Whether the experts will get their independent agency, or one model on either the KfW Bank
in Germany or the European Investment Bank
is still anyone's guess, or maybe I just missed it? I hope that there will be a competition to design the building, a challenge to design a government institution that is actually environmentally friendly. Shouldn't be too hard really seeing many of them are still in poorly insulated old buildings, and the Home Office often leave their lights on overnight.