Business secretary Vince Cable set out today his vision for the Green Investment Bank (GIB) as a new and enduring institution to complement existing green policies.
Cable has published a progress report on the GIB setting out more detail on its governance and business model.
“This is an opportunity for the UK to lead the way in the transition to a low carbon economy with the world’s first dedicated Green Investment Bank,” said Cable.
Previously the GIB was to focus on green transport but this has changed to support energy and waste.
“The GIB will become a key component of this transition which needs significant investment over the coming decades.”
The business secretary is also setting up an advisory group to provide strategic direction of the GIB, and that Sir Adrian Montague will chair this group of independent finance experts.
“I’m delighted that Sir Adrian Montague has agreed to chair the advisory group. He has a wealth of experience that will help with the strategic direction of the GIB.”
Sir Adrian Montague CBE is currently the non-executive Chairman of 3i, Michael Page International, utility firm Anglian Water and CellMark Investments of Gothenburg, and a non-executive director of construction firm Skanksa. He is well known and respected in the City, and has a great deal of experience of working with the public sector.
“The Green Investment Bank has the potential to play a vital role in helping the UK make a successful transition to a low carbon economy. This will present enormous opportunities for businesses in the UK,” said Montague.
Green Investment Bank
The GIB’s mission will be to accelerate private sector investment in the UK’s transition to a green economy. It will play a vital role in addressing market failures which are holding back private sector investment.
Sectors likely to be eligible for intervention initially include offshore wind, non-domestic energy efficiency and waste. Work is ongoing to explore other sectors which will change over time.
Its initial remit will be to focus on green infrastructure assets, and on the twin objectives of achieving significant green impact and making financial returns.
As the bank will need to be approved by the European Commission before it can be established, there will be a phased approach. Once it has been agreed, the GIB will be enshrined in legislation confirming its independent status as an institution with a key public role.
In order to make rapid progress, the Government will make direct, state-aid compliant investments in green infrastructure projects from April 2012 until these investments can be transferred to the GIB.
The Government committed in the 2011 budget to fund the GIB with £3bn over the period to 2015. The GIB will evolve over three phases: Incubation from 2012 to State Aid approval. Government will make direct investments.
Establishment as a stand-alone institution following approval.
Full borrowing powers from 2015, subject to public sector net debt falling as a percentage of GDP.