A government-commissioned report has called for a green investment bank to be set up to raise funds for transitioning the UK to a low-carbon economy.
The report, which was produced by a panel chaired by former investment banker Bob Wigley, stated that the bank could consolidate £185m a year spent on green initiatives via government-backed organisations.
This could mean dissolving the not-for-profit Carbon Trust and directing its £100m of annual funds to the bank. Approximately £55m a year would be steered away from the Energy Technologies Institute and the Technology Strategy Board would be stripped of its £30m annual remit for low-carbon technology programmes.
The report also suggested that the bank could raise money through public funding strategies by, for example, offering tax-free savings accounts. It was estimated that these ‘green individual savings accounts’ could raise about £2bn a year if they capture 10 per cent of the market.
This would raise some of the investment required to meet UK climate change and renewable energy targets, which the report estimates will reach to £550bn between now and 2020.
As stated in the report summary, a main focus for the commission involved ‘rationalising government quangos’.
Some in the green-tech community were particularly concerned by the suggestion that the Carbon Trust may be dissolved, as some of the non-for-profit organisation’s more subtle duties may go wayward if funds are directed by a larger financial institution.
The Carbon Trust has, for example, been noted as particularly adept in its advisory role to businesses that want to reduce utility bills and greenhouse gas emissions.
‘I don’t see the Carbon Trust as broken,’ said Robert Hokin, chief executive of green energy trade association ecoConnect. ‘I question why someone would want to scrap it.
‘While I encourage and support anything that provides impetus for the green- and clean-tech industry, I have yet to see anything that substantiates the direction this is actually going into,’ he added. ‘We hope for the best and to see…how it’s going to happen, how one qualifies, what is the process for setting it up, how organisations engage with it.
‘We haven’t seen any of that so far so I’m hoping for the best, but I’m preparing for a lot of rhetoric before it becomes a reality.’
Matt Goodman, head of policy for the Forum of Private Business, added that combining the Carbon Trust and other funding mechanisms into one funding body could limit focus onto only large-scale infrastructure projects and overlook small business interests.
‘The big risk with lumping everything together is you tend to focus on high-volume delivery mechanisms,’ he said.
At the same time, added Goodman, the massive scale of the green investment bank may raise more awareness about funding mechanisms for businesses that might not otherwise realise their cash options.
Although chancellor of the exchequer George Osborne had raised the idea for a green investment bank as a shadow minister last year, the report has not been confirmed as official government policy.
In order to the ensure rapid mobilisation, the commission has called on the government to appoint a ‘shadow board’ to lay the groundwork for the new bank while the details are being prepared and the green investment bank bill is drafted and taken through parliament.