Green Investment Bank to help Green Deal

Industry leaders have hailed the government’s decision to consider offering Green Deal finance through the £3bn Green Investment Bank.

Deputy prime minister Nick Clegg this week said the potential of the bank to kick-start the retrofitting scheme would be examined.

The Green Deal - which aims to create a workforce of 250,000 people to fit energy efficiency measures into properties - will be launched next year.
Questions have been raised over the Green Deal’s planned reliance, thus far, on finding willing private sector funders for the work.

But the government said the bank would initially prioritise major infrastructure projects such as offshore wind, waste and non-domestic energy efficiency.
Paul King, chief executive of the UK Green Building Council, said the move to use the bank to finance the Green Deal was vital.

“The Green Deal needs the Green Investment Bank,” he said. “It’s a shift by government, but it’s a very welcome one. The Bank can lend money at a lower rate than would otherwise be possible, which is essential to make the Green Deal attractive to millions of people.”

This week it was also announced that former energy mogul Sir Adrian Montague will chair the advisory group responsible for setting up the bank, putting him in pole position to lead the bank when it is set up.

Montague was chairman of nuclear operator British Energy and is currently chairman of private equity group 3i.

The government said the bank will be established under primary legislation, which will ensure it has full operational independence under the leadership of a new board. The bank will begin lending within the next 11 months, from April 2012.

Clegg confirmed it won’t be able to raise money itself to lend until 2015.

“The bank will then be able to able to undertake a wide range of transactions,” he Clegg. “The initial £3bn by 2014/15 should enable the bank to catalyse an additional £15bn of investment in green infrastructure.”

Clegg called on investors to get involved and said uncertainty around the government’s commitment to sustainability was ending.

The government defended its April 2015 target to introduce borrowing powers because it expects government debt to be falling as a percentage of GDP at that point.