The Commission estimates that £550 billion could be required for investment in supply chains and infrastructure to meet the UK’s climate and renewable energy targets by 2020.
It recommends that the Green Investment Bank should be established to act in the public interest to identify and address the market challenges and investment barriers over the long term.
Advisory role?
The Green Investment Bank should sit alongside the Committee on Climate Change, which advises the UK Government on legally binding climate change targets, and provide financial advice on climate change-related investment issues.
The Commission also recommends that the Green Investment Bank should rationalise the plethora of existing Government-funded agencies, funds and initiatives that aim to support climate change objectives and by doing so significantly improve the cost-effectiveness of such efforts.
The Bank should have a statute with a clear mandate, and should have a ‘shadow board’ while the Green Investment Bank Bill is taken through Parliament.
Lowering green investment risk
The Commission has proposed that the primary focus of the Green Investment Bank should be on lowering risk for investors, rather than simply providing capital.
This could be done by:
- Unlocking project finance through equity co-investment, first loss debt and insurance products for low carbon technologies and infrastructure;
- Creating green bonds to access to the very large pools of capital held by institutional investors. Such products would fit with the long-term investment horizons of pension funds and life insurance companies and would provide the scale of capital needed to fund the low carbon transformation;
- Selling green ISAs, which would be an important and visible way for retail investors to make a contribution to the funding of green infrastructure; and
- In light of the recent National Audit Office report entitled, Government funding for developing renewable energy technologies, the GIB should use the potential rationalisation of quangos and their funds to radically improve Government support for low carbon innovation and commercialisation.
The members of the Green Investment Bank Commission are:
- Bob Wigley (Chair), Chairman, Yell Group plc
- James Cameron, Executive Director and Vice-Chairman, Climate Change Capital
- Mark Ferguson, Chief Investment Officer, Generation Investment Management
- Katherine Garrett-Cox, Chief Executive, Alliance Trust plc
- Seamus Keating, Chief Financial Officer, Logica plc
- Nick Mabey, Chief Executive, E3G
The members of the Advisory Panel are:
- Ben Caldecott, Climate Change Capital
- Sean Hanafin, Citibank
- Ingrid Holmes, E3G
- Abyd Karmali, Bank of America Merrill Lynch
- Miriam Maes, Foresee Ltd
- Shaun Mercer, Carlyle Group
- Tom Murley, Hg Capital
- Davide Taliente, Oliver Wyman
- James Wardlaw, Goldman Sachs
- Arran Yentob, Oliver Wyman