The UK government has given a push to the establishment of its Green Investment Bank (GIB) by setting a deadline of April 2012 for the bank to start investing and by appointing Sir Adrian Montague, chairman of 3i Group, to lead an advisory group that will help set up the bank.
“Most countries have a development bank, but the UK will be the first country to have a national bank dedicated to the green economy,” deputy prime minister Nick Clegg said in a speech on Monday.
Sir Adrian Montague
The GIB will start investing in April 2012, since it will take the better part of a year for the European Commission to certify that the new institution is compliant with state aid rules, Vince Cable, secretary of state for business, innovation and skills, told the House of Commons yesterday. He explained investments could take the form of equity, subordinated debt and senior debt on a pari passu, or equal footing, basis with other investors.
“This initial £3 billion capital by 2014-15 should enable the bank to catalyse an additional £15 billion of investment in green infrastructure,” Clegg said. The bank will target relatively high-risk projects and will prioritise certain sectors, with Cable highlighting offshore wind, industrial energy, efficiency and waste as “early contenders to be priority sectors for the bank”.
From 2015 or 2016 onwards, “and once debt is falling as a percentage of GDP [gross domestic product]”, the GIB will “have borrowing powers which will allow it to scale up its operations significantly at a time when the financing need is greatest,” explained Cable.
Cable also told Parliament that the bank will have a staff of between 50 and 100 people in the early stages of its life and could be located in London, Edinburgh or Bristol.
The UK has set itself the legally binding target of reducing its carbon emissions by 50 percent by 2025.