In a speech given at Climate Change Capital in London, Clegg revealed how the world’s first Green Investment Bank (GIB) would be protected by legislation to ensure its operational independence and that it would be capitalised with an initial £3bn.
According to Clegg, the market for low-carbon and environmental goods and services was worth £3.2tn globally in 2008–09, and is forecast to continue to show strong growth.
He added that the UK’s green sector is currently the sixth largest in the world and would play a vital part in rebalancing the UK economy.
‘The bank is intended to bridge the gap between venture capital and the green economy, provide the finance for low-carbon infrastructure and lay the foundation for long-term, balanced growth,’ he said.
Possible early priorities for the bank are offshore wind, waste and non-domestic energy efficiency. Clegg added that the bank could be used to help deliver the first stages of the Green Deal, a scheme to help householders carry out energy-efficient modifications to their properties via loans.
The bank is expected to have independence under the leadership of a new board, once state aid clearance has been approved.
‘The bank will then be able to undertake a wide range of transactions, including equity, debt and risk-mitigation products,’ said Clegg. ‘The initial £3bn capital by 2014–15 should enable the bank to catalyse an additional £15bn of investment in green infrastructure.’
Commenting on today’s announcement, Tom Foulkes, director general of Institution of Civil Engineers, said: ‘The National Infrastructure Plan set out the need for £200bn to be invested in the nation’s infrastructure over the next five years and for more than 70 per cent to come from private investment.
‘The structure of the GIB was always a real test of the government’s commitment to securing this investment and despite its inability to borrow until 2015 and the relatively small start-up fund, today’s announcement finally brings the idea of an independent, permanent institution to reality.
‘It is vital that momentum is now not lost and that industry and investors alike have confidence in the bank. Government should appoint a figure with real credibility across the infrastructure and finance communities to drive forward progress and ensure the bank can grow and deliver as one of the core funding streams for our future infrastructure.’