Shadow energy minister Greg Barker has promised a small number of bodies to fund trillions to make a green ‘transformation’ of the economy to low Carbon.
Barker said: “If we are to have any chance of making the 80% reduction in CO2 by 2050 we will have to transform our economy.
“This time it is for real - to transform to a low Carbon paradigm we will need levels of investment in the trillions of pounds and we cannot understand this even in the context of the next two parliaments.”
However, Barker said that Labour had left green industries in a difficult position, and government intervention was needed to rectify this rather than take the traditional Conservative route of relying on the free market.
“There is a clear role for government. Here there is a market failure and government leadership is needed. There has been a failure to turn rhetoric into policy.
“There is a role for government investment but there is a strong Conservative philosophical case for spending the trillions needed will only come from green private sector stimulus.
Barker said currently: “There are too many small disparate investments. Many schemes are good but it is confusing. We need fewer investments and more long-term investments. Without you will not See investment.
“We have to buck the cycle of consultation and be prepared to take risks.
“With a robust strategy we can take business with us. We will have fewer investments but robust with carbon taxes and market incentives,” he said.
According to policy director at The Business Council for Sustainable Energy, Ingrid Holmes: “The proposition of the Green Investment Bank will be needed to fund the hundreds of billion of pounds, because there is a contraction of debt capital because of the Credit Crunch.
“Renewables have lost billions of pounds of investment as a result. Policy has been learning by doing - invest and then tweak. Financiers do not like this as it means re-pricing risk, which hikes the price. With a green investment bank investments can be aligned and returns improved bringing money back.”
Holmes said infrastructure funds, bonds, environmental taxes or receipts from emissions trading could all be used to fund the bank.
Barker said to announce a Green Infrastructure Bank was: “Above his pay-scale,” but he could see a vehicle to pump-prime green industries working well.
“We could give lumps of money to existing venture capitalists to invest higher up the curve where returns are less [to generate new technologies].”
Barker also said the plan to invest up to £6,500 to retrofit improvements to homes was going to be government policy and plans to make regulatory changes would be made before Christmas, which would include an: “Altruistic feed-in tariff.”