Chancellor Pledges £1bn For Green Investment Bank

Chancellor George Osborne has announced £1 billion in funding for a Green Investment Bank, as part of efforts to make the UK a leader in the low-carbon economy.

In its Comprehensive Spending Review, announced today, the government said this will aim to provide financial interventions to unlock significant new private investment in green infrastructure projects, such as offshore wind farms.

Speaking today in the House of Commons, Chancellor George Osborne said it was necessary to “ruthlessly prioritise” areas of the economy which would support economic growth, including low-carbon infrastructure. He mentioned that protesters had on Tuesday scaled the walls of the Treasury urging ministers to go ahead with the Green Investment Bank – joking that this was the first time anyone had protested in favour of a bank.

Private investment needed

Earlier this month, the Aldersgate Group recommended rapid action to establish a Green Investment Bank in statute by 2011, as a fully independent, accountable and enduring institution with a clear low-carbon investment mandate. The Group estimated that at least £4 billion to £6 billion capitalisation would be needed during the coming four years.

“With the intention to build on the £1 billion of direct funding through other sources, the bank’s capitalisation could reach the £4 to £6 billion recommended by business leaders and independent analysis,” said Andrew Raingold, deputy director of the Aldersgate Group, responding to the Spending Review announcement. “If the institution has a remit to issue bonds and leverage capital at scale from the private sector, it can significantly reduce the massive financing gaps for green technologies over the next decade, stimulating growth and jobs.”

John Sauven, chief executive of Greenpeace, whose protesters climbed up the Treasury to protest over the bank, also commented on the news: “Billions of pounds for such a bank could provide thousands of new jobs and make Britain a world leader in cutting-edge low-carbon technologies. But the green bank has to be a bank. A poorly financed fund is not a green bank. It doesn’t have the financial clout, or the independence to do the job, and will end up as nothing more than an ill-equipped quango.”

Other green announcements in today’s spending review include £1 billion for a carbon capture and demonstration project and £200 million to support offshore wind technology.