“Rapid mobilisation” of a Green Investment Bank is needed within the next six months to unlock the £550 billion of public and private sector money required for the UK to move to a low carbon economy, according to a report published today (June 29) by the government-backed Green Investment Bank Commission.
And, the report said waste should be one of the sectors to benefit from the finance, with waste-derived biofuels identified as an area in which new businesses could receive a mix of public and private funds to get off the ground.
However, investment in waste infrastructure was not identified as one of the top priorities for support in the independent working group's report, ‘Unlocking investment to deliver Britain's low carbon future', with energy efficiency, smart grids and offshore wind instead seen as the areas “where maximum impact and speed to implementation can be achieved”.
The Green Investment Bank (GIB) Commission was established by the Conservatives when in opposition, in February 2010, to help develop proposals for the body, and, in his Budget speech last week, Chancellor George Osborne said he would bring forward detailed proposals for the institution after the autumn spending review, which is scheduled for October 20 2010 (see letsrecycle.com story).
And, in its report today the Commission, which is chaired by Bob Wigley, the chairman of Yell Group, set a target for the bank to be established and active within the next six months, claiming that “rapid mobilisation will avoid the potential for investors to take a wait-and-see approach”.
As such, the report calls for a non-executive chairman of the Bank to be selected by August 2010 and the board – or shadow board – by October 2010 – and, while it says that eventually the Bank should be created as a statutory body through an Act of Parliament, the “initial establishment” of the institution should rest on this or overall government policy.
Quangos
Claiming that £550 billion of investment would be needed between now and 2020 if the UK was to meet its renewable energy and climate change goals, the report also said that the Bank's funds could benefit from government plans to “rationalise” quangos and their funds.
“The GIB should use the potential rationalisation of quangos and their funds to radically improve Government support for low carbon investment and the commercialisation of new technologies,” it said.
It added: “The process of bringing together and rationalising these quangos and funds should happen quickly, with the savings secured being reinvested in the new institutions.”
The report identifies a range of products which the bank could developer overtime to support projects, such as co-investment with the private sector and early stage grants for projects, and suggests that waste-to-biofuel could particularly benefit from a form of “pre-commercial investment” known as an “accelerator mechanism”.
It explains that this would involve running a public competition which would aim to identify the best solution for the technology and would then create a commercial company capable of delivering it.
“The company is then capitalised through tranched investments of £5-10 million of public funding over approximately five years, with private sector investors participating in later round,” it said.
“If the company is successful, returns are realised through sale to the private sector, which is then able to provide the remaining capital to take the new technology to market,” it added, claiming that, the five technologies it identified as priorities including waste-to-biofuel would together require between £150 and £200 investment but would generate £100 million in returns.
DECC
Support for the report came from the department of energy and climate change, with energy and climate change minister Greg Barker describing it as an “important piece of work” and thanking the Commission for their efforts.
“Low carbon investment is a vital part of our economic recovery and the Green Investment Bank is part of ensuring that UK PLC can lead the world and reap full advantage from the transition to a genuinely competitive low carbon economy,” he said.
The importance of establishing the Bank was stressed by James Cameron, a member of the GIB Commission and executive director and vice-chairman of investment management company, Climate Change Capital.
He said: “The Green Investment Bank can work over the long term in the national interest and will help to build the new clean economy around us. It is a tremendous opportunity to rapidly scale up the investment we need to tackle climate change, while simultaneously creating the jobs and industries of the future.”
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