Thumbs up for acceleration of UK’s Green Investment Bank

The British Government is to commit an extra £2 billion to its Green Investment Bank which will begin operations a year earlier than previously announced.

Chancellor George Osborne confirmed in his Budget speech in London today (Wednesday March 23) that the previous funding of £1 billion will be upped to £3 billion and it will be up and running by 2012/13.

The bank should start raising its own funds from 2015/2016 when the national debt starts to fall, through issuing bonds and should leverage an additional £15 billion of investment from the private sector, he revealed.

Britain needs to invest around £200 billion by 2020 in greener technologies so it meets ambitious emissions cut targets.

The move will help in setting the economy on the path to a low carbon future, according to Sarah Whitney, managing director of Government, CB Richard Ellis. ‘However, with assessments of more than £200 million, and potentially as much as £1 trillion, needed to achieve our emissions reduction and renewable energy targets over the next 20 years, these remain small interventions. The challenge is now on for the Bank to leverage the private finance needed to build the platform for these targets to be met,’ she explained.

Maggie Craig, acting director general of the Association of British Insurer, said members fully support the Green Investment Bank and are uniquely placed to help as they invest for decades rather than years.

‘We would have liked the Bank to have been able to access money markets from day one rather than wait until 2015, but we understand the reasons for a delay and welcome the additional funding,’ she added.

David Goatman, head of sustainability at real estate consultancy Knight Frank, described it as the most important of a number of key environmental policies that were outlined in the Budget.

Giving the green investment bank the ability to raise capital, rather than just act as a finite fund, allows for much greater financial fire power and flexibility in the investment decisions the bank can make,’ he said.

In the current fiscal environment committing £3 billion is an achievement, pointed out James Cameron, vice chairman of Climate Change Capital. ‘And by allowing the GIB to borrow mid-decade, its lending can ramp up quickly when the country's low carbon capital requirements reach a critical point,’ he explained.