“Green” ISAs and bonds could be sold to help finance renewable energy projects as part of proposals for a green investment bank.
The Green Investment Bank Commission, convened by the chancellor George Osborne, said there was an urgent need to unlock the finance the UK requires to move to a low-carbon economy.
The commission estimates that £550bn is needed for infrastructure and supply chains to allow the UK to meet its climate targets to cut greenhouse gas emissions and boost renewable energy by 2020.
But problems raising capital, uncertainty over policies, risks around new technologies being rolled out and difficulties with financing large numbers of smaller projects means the targets will be unachievable without government help, the commission said.
It said a green investment bank, promised in the coalition agreement, should be established to lower risks for investors and stimulate finance for shifting the UK to a low-carbon economy.
The commission, led by Yell Group chairman Bob Wigley, recommended the bank should rationalise the “plethora” of quangos, funds and initiatives which already exist to promote the development of renewables and green technology.
ICE director general, Tom Foulkes, said: “The commission’s report into how a GIB could help to unlock infrastructure investment is a positive step and the commission clearly recognises the scale of the funding challenge and the need for intervention. The recommendation that such a bank should work in tandem with other government initiatives and be a permanent institution is also welcome - a long term strategic remit will be vital in creating a stable environment for private investors.
“The report also includes a number of fund raising ideas with real merit - including selling ‘green ISAs’ and recycling cash from infrastructure asset sales such as High Speed 1, which went up for sale last week.
“We now look forward to the next steps towards establishing a GIB that is ambitious enough and can operate in a way that reflects the scale of the task at hand. Many billions of pounds will need to be channeled into our infrastructure to secure the UK’s future competitiveness and make the transition to a low carbon economy.”