The £1bn pledged by the government for a new green investment bank will on its own be “too low” to have an impact on efforts to boost the low carbon economy, MPs have been told.
Green industry experts also warned that the institution proposed by ministers needed to be an independent bank – not simply a fund – in order to raise billions of pounds from private investors to channel into areas such as offshore wind.
Last week in the Comprehensive Spending Review, chancellor George Osborne confirmed there would be £1bn in government funding for the green investment bank.
He said he hoped further funding would be raised by the future sale of state assets and from private investment.
Analysis for the Aldersgate Group of companies and green organisations has estimated that £4bn to £6bn in public and private funding is needed over the first four years of the bank to allow it to do its job.
Aldersgate Group director Philip Wolfe said: “£1bn alone without being topped up from any additional proceeds is in danger of being at a level where it can scarcely make enough difference to have the impact that is intended.”
If it is not followed by billions from the proceeds of asset sales or other sources of revenue, he said, then “£1bn alone is, in my personal view, too low”.
Appearing before the Environmental Audit Committee, Wolfe also warned that the current timetable for setting up the bank by 2013 was excessively slow, and that the Aldersgate Group wanted to see it up and running by 2011.
The announcement of the bank’s formation followed by a long hiatus could stall investment in the sector, he added.