Posted by: Dr Churchill | July 3, 2010

Green Bank UK on the road…

 

 The UK’s Green Bank is on the last lap to the finish.

Well Done. And with the New coalition government of Conservatives and liberal Democrats both being a huge proponent, due to Nick Clegg’s efforts,  the dream now becomes reality.

Once George Osborne came onboard it was a done deal…  

With some more details needing ironing, we are close to the threshold and it’s inevitable fruition.

Bob Wigley, wrote a report calling for the UK’s Green Bank. He is the former European chairman of now defunct Merrill Lynch, and he said that selling green ISAs could raise up to £2bn a year, which would be invested in projects including offshore wind farms.

Details of the new “green investment bank”, replacing several government quangos and with powers to raise billions from green Individual Saving Accounts and other financial instruments, will be unveiled as soon as next week.

Putting the UK’s economy on a low-carbon footing will cost about £550bn by 2020, according to a commission set up to examine how a green investment bank could work.

The commission’s work shows we should not be put off by the investment required, as models used successfully in other countries and even locally, indicate how the UK could create a productive partnership between government and the private sector. 

The bank would also absorb the funding from other quangos, with those likely to be targeted including the Carbon Trust, which provides environmental advice to businesses, the Energy Saving Trust, which provides similar services to consumers, and the Marine Renewables Deployment Fund.

The green investment bank would roll up the relevant quangos, whose spending today is at least £185m per year, and public funds, which today total around £2bn, so that it can improve the efficiency with which the money is invested…. Although a mosaic doesn’t make a bank – it will still be a far more effective mechanism as others have shown:

The Brazilian Development Bank is one example, while the Marguerite fund, initiated by the European Investment Bank is another. There are many others in Germany, France, Spain, Japan and Switzerland, from which one can draw inspiration.

A core part of the GIB’s mission would be to make existing government support for low-carbon innovation more cost-effective. Ad hoc government initiatives over the preceding decade have resulted in a large number of quangos and funds with similar objectives. The GIB would roll up the relevant quangos, which today spend at least £185m per year and funds, which total about £2bn, so that it can make the investment more efficient.

Obviously, the main test for the bank would be whether private sector institutions viewed it as a “serious player” that could leverage their investments to improve returns and if it helped reduce emissions on any meaningful scale…

Existing government funding for green investments is highly fragmented and almost intractable. With various pools of money, yet none of them of a sufficient scale to be effective and make meaningful change…

However, there is a lot of work still to be done before the green investment bank will be real.

George Osborne, the chancellor, floated the idea of a green investment bank last year. Mr Osborne also reinforced his green message, notably lacking from last week’s Budget, when he told a business audience on Monday that he wanted to find a way to stabilise the price of carbon.

“We want to provide a price for carbon, an affordable price for carbon, it is the volatility of the price of carbon that makes investment decisions very problematic,” he said.

Both the Conservatives and the Liberal Democrats entered the general election calling for a floor in the carbon price. However, the UK cannot achieve this independently, as carbon is traded across the European Union.

Instead, the coalition will focus on reforming the climate change levy on businesses in a way that would in effect set a floor price for carbon. However, the government has not yet said what level of carbon price it would like to see.

The government is pushing Europe to raise its target for emissions cuts from 20 per cent to 30 per cent by 2020. This would raise the price of carbon but looks unlikely to be adopted by the European Commission in the short term, owing to objections from business.

Yours,

Pano

PS:

In the US the plans for a Green Bank are behind the 8 ball. 

Sadly the US regulators and the Treasury do not have the same urgency for this as their UK counterparts.

That leaves our friend Reid, duking it out with windmills.

But rest assured He will prevail.

Sooner or later…


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