Clean Investor conference: Minister sees ‘big appetite’ for Green Bank from institutional investors

Greg Barker, UK Minister of State for Energy and Climate Change, tells conference he is “hopeful” for 2012 start despite legislative hurdles.

The UK government says it is hopeful that its proposed Green Investment Bank could start lending from next year, although it is still waiting for the European Commission to approve the project under state aid rules. Speaking at Responsible Investor’s Clean Investor 2011 conference in London yesterday (June 30), Greg Barker, UK Minister of State for Energy and Climate Change, was less committed than recent statements by Deputy Prime Minister, Nick Clegg, that the Green Investment Bank would begin financing commitments of £3bn – initially into offshore wind, waste and energy efficiency – by next April. He suggested that the political timetable could delay its creation. “After the EU hurdle, it will then need an Act of Parliament. We’re discussing the best way of delivering that legislative schedule. However, I think the Green Investment Bank can start to grow organically before every piece is in place.” He said discussions with financing partners were advancing well for a 2012 start. The government expects to attract an additional £15bn in private capital to invest alongside the £3bn in public money. Minister Barker said the government was in conversation with institutional asset owners and managers in the UK about what part they could play in joining this financing: “I think there’s a very big appetite amongst institutional investors. I’ve no doubt about that. All the conversations I’ve had have been positive”.Barker said the bank would provide debt financing to green projects and be involved in possible syndication of green deal debt, but he said he also wanted it to drive innovation.
The UK is the first country in the world to have a national bank dedicated to the green economy.
 But the conference heard that the Dutch government is also developing a similar Dutch Green Investment Fund under the guidance of Holland Financial Centre, a public/private partnership that promotes the Dutch financial sector. Ruud Nijs, Program Director, Dutch Green Investment Fund, said the fund was in planning but had been inspired by the UK’s plans. Under the UK plans, the government will use the Green Investment Bank to help deliver the first stages of its “Green Deal”, a programme to refit British buildings through energy efficiency improvements. The Green Deal is part of an energy bill expected to be passed shortly into law. From next year, people will be able to access up to £10,000 upfront to pay for energy efficiency work, repaying the costs through savings on their energy bills. Similar support will be available for businesses. The government says the proposals will create a new market in energy efficiency products such as heat exchangers, wall insulation, and air-source heat pumps, and that the number of people employed in insulation alone could rise from 27,000 to 100,000 by 2015.