Offshore wind projects are set for a windfall from GIB (Source: Vestas)
By John Parnell
The UK’s Green Investment Bank (GIB) was touted to play a huge role in moving the country toward a low-carbon future while boosting the economy at the same time.
However, those involved in the scheme say a delay in the public-owned bank’s ability to borrow from other institutions to top up its initial pot of £3 billion, could delay and downscale its achievements.
“The treasury has effectively turned round and said it will allow the GIB to borrow, once the economy has recovered,” says Ed Matthew, programme director of Transform UK, which lobbied for the creation of the GIB and has is involved in consultations during its development. “We think they have got it badly wrong. This is exactly the kind of borrowing that should be prioritised.”
Matthew cites the bank’s ability to create jobs and cut emissions simultaneously, by funding small loans to enable homeowners to improve energy efficiency. A similar scheme in Germany created almost 300,000 jobs.
The delay in borrowing limits the GIB’s finances to £3bn until 2015 or until the deficit ahs been cut by a percentage point of GDP.
“There has been some resistance from the treasury. They have been trying to set up a fund instead, which would have been a time-limited pot of money. In our view that just would not have done the job,” says Matthew. “The idea is we create an enduring institution that is there to provide the best financial advice to government on how to support the shift to a low carbon economy. We have had a big fight with the treasury. It’s been very difficult for them. They are locked in this ideological dungeon where they have never countenanced the creation of a public bank in this country before.”
Edinburgh-based wave energy firm Aquamarine is developing near shore technologies for power generation. The technology has passed though initial trial and is in the middle stages of its development. Precisely the point at which the GIB looks to provide stimulus.
“If you look at the paper by BIS on the design of the GIB it doesn’t see marine energy as an investment prospect until at post 2015,” says Neil Davidson, public affairs manager, Aquamarine. “Our point of view is post-2015, the sector will probably be in a position to get money from a private bank anyway, so why would it then want to go to the green investment bank?”
Aquamarine has already become the first marine energy firm to secure private sector debt via a £3.4million loan from Barclays Capital. The company has also received backing from the utility firm SSE and technology manufacturer ABB.
Davidson believes the sector is perfectly placed to receive support from the GIB from its launch and that the investment from Barclays represents a seal of approval.
“Every pound of UK grant money, has leveraged more than £5 of private sector investment,” says Davidson.
“We recognise that the UK government is extremely stressed in terms of its finances but on the other side if the coin it is also looking for opportunities for growth. Here’s a sector that is aching to expand. We believe this is a real opportunity for the GIB to get its feet wet, and make a big difference.”