Call for green bank mounts amid UK recovery plans
Business groups, economists and local leaders have urged ministers to create a "Green Infrastructure Bank" as part of Boris Johnson's state- led recovery from coronavirus to ensure that efforts to stimulate the economy do not overlook the UK's climate targets.
The push comes after green groups criticised the prime minister's £5b in new infrastructure spending announced earlier this week for being too light on green measures.
"We really need a national investment bank," said Nicholas Stern, chair of the Grantham Research Institute at the London School of Economics. "It can have a very powerful effect, help bring down the cost of capital, and allow the private sector to come in."
The rationale is to have a dedicated institution that could help finance climaterelated projects that might otherwise struggle to access affordable capital, such as early-stage tech projects.
Lord Stern, who authored the UK's official report on the economics of climate change a decade ago, estimated that about £20bn would be needed to capitalise the bank, which would in turn attract private funding into the projects.
A group of more than 100 UK mayors and local officials have also written to the government to ask for a new development bank that would fund projects that reduce emissions, particularly local projects like electric vehicle charging stations and greener home heating systems.
Brexit has catalysed the push for a new institution to back infrastructure projects after the UK was shut out of funding from the European Investment Bank, which lent €31.3bn to British projects between 2012 and 2016.
"There is a sense of urgency about delivering bigger infrastructure projects, to assist growth and help with unemployment," said Julia Prescot, commissioner on the National Infrastructure Commission, which advocates for a new infrastructure bank.
The concept was last tried out with the formation of the Green Investment Bank in 2012, which was launched with £3bn in public funding and was a key backer to the UK's offshore wind industry. It was sold to Macquarie in 2017, in a move that drew criticism from environmental groups and opposition MPs.
Last year the UK adopted a target of net-zero emissions by 2050, which requires cutting greenhouse gases close to zero and mopping up any remaining emissions with carbon-absorbing projects. The government has still to detail how it plans to achieve that target.
The cost of making the shift to a net-zero economy is expected to be between 1 per cent and 2 per cent of gross domestic product annually until 2050, according to the Committee on Climate Change. That means between an estimated £39bn and £78bn a year by 2050. The issue of financing will be a key part of the government's national infrastructure strategy, which is expected to be published this autumn after many delays.
Advocates say that a new infrastructure bank focused on green goals could help projects in some of the most difficult-to-reach sectors, such as heavy industry and home heating, where there is as yet no viable alternative to gas boilers.