One of the major stumbling blocks to all sorts of technological innovation is finance. The UK is about to launch a Green Investment Bank to help get green projects financed. TheAldersgate Group of green businesses hosted a packed-out event on Tuesday in central London where the British government's Business Secretary Dr. Vince Cable outlined how the bank will create sustainable growth, when the legislation goes through early next year.
The bank will finance green infrastructure projects. Initially the independent bank will have £3 billion ($4.8 billion) to invest. He hopes that the GIB will attract private sector finance, perhaps as much as £15 billion ($25 billion). Initially the bank is not going to be able to borrow money from commercial markets, and this was seen as a real problem by some of the panel, but Cable believes that as the bank establishes itself it will be able to do so.
Its initial priority areas are: power generation from offshore wind, waste processing and recycling, non-domestic energy efficiency measures, and support for the Green Deal (which will activate in January 2013 and will give out low-interest loans for small green projects such as home solar panels or small business renewable generation). The bank will be able to support other types of green projects where it feels they are viable.
Dr Cable said, "This is just part of a package of green policies which are going through the pipeline or already in force, for example we are setting up technological innovation centres, to promote renewable technology such as tidal or offshore wind." He concluded by saying that environmental efficiency was fully compatible with economic growth and that had been his position for 25 years as he was a believer in the sustainable economy.
There was a lively panel discussion, and what emerged was wide support for the GIB, particularly with borrowing powers, and the misgivings that it might be weakened in future. Ed Matthew of Transform UK/E3G - the group that campaigned for the bank over four years - wanted the legislation made more explicit so the world's first Green Investment Bank could not be limited by future governments.
The major worry that emerged was of governments changing their minds, so that international investors were scared off by sudden lurches in policy - the recent changes to the Feed-in Tariff for energy being a prime example, where cutbacks have caused huge difficulties for micro-generators. Peter Young, Chairman of the Aldersgate Group, pointed out that the CBI (Confederation of British Industry) had recently said that Green Growth was worth £20 billion ($32 billion) to the British economy.
In response to a question about whether climate change or global financial instability were more dangerous, Peter Young supported the panel Chair, Caroline Lucas MP's view that they were both interconnected and a serious danger but that the effects of climate change would be long term and were going to adversely affect the well-being of future generations and both would have to be tackled together. The Green Investment Bank was an important institution that would have continuity in dealing with the long-term problems that society faces, rather than short-term fixes. The UK has been leading the way on climate change policies and the GIB could pave the way for competitive advantage for the UK in green innovations.
Vince Cable concluded by saying that the British Offshore wind industry was probably the most developed in the world, with some very big projects like the London Array. He noted that dealing with the problem of global warming would need long-term strategic thinking. The GIB is part of that process of avoiding the short-termism of the markets which precipitated the present economic crisis, saying, "In the long-term the Green Investment Bank will have a massive impact."