The new Green Investment Bank recently set up by the government hopes to deal with some of the most pressing problems facing both government and industry as they try to lower carbon emissions and increase energy efficiency.
What Is the Green Investment Bank?
The importance of reducing carbon emissions and stimulating renewable energy are now accepted as vital in order to reduce energy consumption and help prevent climate change. However, although the so-called green economy is generally doing well despite the recession, the reluctance of traditional banks to lend to the sector is hampering growth. As a result, a Green Investment Bank has been funded by the government to attract private investment in order to meet stringent new carbon-cutting targets.
However, the problems in financial markets in recent years have affected the number of investors prepared to put up money for the bank and has also resulted in the bank only being able to offer investment for short-term projects at the moment.
What Kind of Initiatives Will the Bank Fund?
The bank has been awarded 3 billion from government funding and is aiming to attract an additional 15 billion from private investors. It will use this money for initiatives such as a new anaerobic digestion plant which will turn waste into power. Another initial investment has been made to retrofit a panel-making factory with up-to-date energy-efficiency technology.
These are two of the initial projects but to be successful the bank will need to take a more holistic approach towards business energy solutions and look at other environmentally friendly measures, such as those concerned with biomass, geothermal and solar. Preventing waste going to landfill, for example, is a vital cog in a joined-up approach to reducing waste and cutting carbon footprints.
Stimulating offshore wind technology and encouraging domestic energy efficiency are other key aims. In addition, encouraging the use of forestry to fuel power plants, while at the same time insisting that projects include replanting plans to absorb the CO2 emitted by the power stations has been earmarked as a priority.
Solar power is another source of renewable energy with considerable potential that the bank will look to encourage. Because it will be investing public money, all grants and loans will be audited very carefully and all investments will be tested to ensure the initiative meets carbon-reduction targets. Biomass projects in particular will be checked to make sure that investments are cutting emissions sustainably. This will be carried out by independent external auditors and their findings will be published in annual reports.
Although some in the renewable industries had hoped that the bank would be able to invest in emerging developments, such as marine energy, the establishment of the bank is a big step toward encouraging further development of renewable technologies in particular and the green economy in general. And it is also believed that it will generate further private investment in this sector, helping to give the UK a leading role in preventing disastrous climate change occurring in the future.