The Green Investment Bank

The announcement by the UK Government that the Green Investment Bank will be established with its HQ in Edinburgh has been generally welcomed.  

However what is the Green Investment Bank and what will it do?
The website www.bis.gov.uk/greeninvestmentbank tells us that it will be the world’s first investment bank dedicated to greening the economy; and that it will raise £3 billion to invest in green projects.  The bank has been set up to fill a gap in the market identified by the Environmental Audit Committee of the House of Commons in 2011.  The committee reported that the UK could not meet its climate change commitments without huge investments in low carbon businesses, amounting to at least £200 billion in the next decade alone and that traditional sources of finance were not likely to meet this need.

What will it invest in? 
The UK Government has identified energy projects including new sources of renewable energy, energy efficiency and support for the ‘Green Deal’ as priorities.  The investments will be in the business sector rather than the domestic sector.

Is this a good thing?
There is increasing awareness that we need to change how we manage the economy and natural resources to reduce our carbon footprint and to use natural resources in a less profligate manner.  Churches including the Church of Scotland have called for a reduction in carbon emissions and the Scottish Government has set a target of an 80% reduction in the emission of greenhouse gases by 2050. The Green Investment Bank could help deliver on these objectives by investing in new low carbon (renewable) technologies.

Is there a downside?
The renewable energy industry in Scotland is now big business.  The large energy companies including Scottish Power and Scottish and Southern dominate electricity generation.  However in many parts of rural Scotland communities struggling with depopulation and economic decline find it difficult to take advantage of the renewable resources that surround them.  Wind farms, hydro schemes and biomass proposals are planned, funded and developed by large energy businesses outwith the local area.  Will the new bank help rural communities profit from the development of locally owned renewables?  This is not certain, but the initial signs suggest are that the bank may well target large projects developed by big businesses rather than for community business projects.  

Adrian Shaw