There is a huge focus on the green economy throughout the world with energy from waste schemes and wind farms being encouraged on a regular basis. However, such projects can sometimes fail to get off the ground due to problems with the companies being unable to arrange finance.
That is all about to change with the UK launching the first investment bank anywhere in the world set up specifically to provide financial support to certain types of businesses involved in thegreen economy but, at the same time, achieve reasonable returns.
It is estimated that the UK will need to invest £200 million in green sectors in the period leading up to 2020 and this latest initiative in setting up the UK Green Investment Bank (GIB) is seen as one part of the Government’s support for the green economy.
UK Green Investment Bank plc is to be launched towards the end of November 2012 as a public company and will “keep its distance” from the Government. Its Head Office is situated in Edinburgh but the main operations will be run from its London office.
Its Chairman is Lord Smith of Kelvin and Shaun Kingsbury is the Chief Executive Officer. There are six new non-executive directors – Tessa Tennant, Tom Murley, Professor Isobel Sharp CBE, Fred Maroudas, Professor Julia King and David Nish.
In October 2012 the bank was approved by the European Commission, paving the way for the Government to provide £3 billionin addition to further monies expected to be provided from private capital. This will enable the UK Green Investment Bank to make commercial investments in a broad range of sectors of the growing green economy. From 2015 further borrowing is expected to be via the financial marketplace.
Prior to state aid approval being given commercial investments to the value of £180 million were made by the Department for Business Innovation and Skills UK Green Investments team to a number of specialist fund managers with a view to co-investing equity in smaller energy from waste, non domestic energy efficiency and waste infrastructure projects.
Specifically with regard to this £180 million, four investment funds have been created -£80 million has been provided to two fund managers with a view to co-investing in smaller energy from waste and waste projects. The other £100 million has been provided to a further two fund managers with a view to investing the monies in smaller non-domestic energy efficient projects.
The small-scale projects tend to involve an investment below £30 million. A fund manager has quite recently utilised £2 million with this figure being matched by private capital investment in the building of a green and food waste processing plant in Essex costing £21 million.Any assets accumulated will be transferred to the new bank.
The European Commission has agreed that the bank can make commercial investments in the following sectors: –
Priority sectors:
- Non domestic energy efficiency
- Waste (recycling and treatment and energy from waste)
- Offshore wind
Other sectors:
- Renewable heat
- Carbon capture and storage
- Biomass power
- Biofuels for transport
- Marine energy
It will be interesting to monitor the progress of this new bank as it looks to support certain businesses involved in the green economy.