Investment support for decarbinisation

The Scottish National Investment Bank (SNIB) was created to plug funding gaps where the private sector isn’t providing sufficient investment to businesses or projects that support economic development.

One of its three “missions” is supporting Scotland’s just transition to net-zero (the balance between the amount of greenhouse gas produced and the amount removed from the atmosphere) by 2045 – five years ahead of the UK Government target.

SNIB’S Eddie Mcavinchey, pictured above, told the Decarbonising the Built Environment webinar that the bank has to deploy investment wisely from a total capital pot of £2 billion over ten years, to support decarbonisation.

He said: “We’re investing directly into the development of new homes, which will have to have very strong EPC [Energy Performance Certificate] ratings. Typically, that’s been done on a ‘fabric first’ approach, to ensure the best-quality insulation.”

SNIB has made investments into supply chain companies such as Indinature, which makes insulation products, and Sunamp, which manufactures heat batteries.

“Investment in supply chains is a critical part of what we will do in heat, and other sectors,” said Mcavinchey. “The bank also provides longterm ‘patient’ capital that will be needed for many of the solutions in Scotland – particularly heat.”

He said the estimated £33 billion of total capital investment needed by 2045 put the role of SNIB in perspective, as it has £2bn to invest over ten years.

“The task is to find novel ways of bringing in private finance as a multiple of the money we make available directly into the market,” he explained. “And it’s about impact in terms of the emissions reductions that result from our investments. We have some of the answers but not all of them.”

Graeme Hannah agreed, telling the webinar: “The public sector won’t have the resources to be able to fund this, so we need to bring in private investment – and get the models right.”

Mcavinchey said he thought there was a private appetite to invest, but added: “More of a nudge is needed in terms of policy and incentives to open up the decarbonisation of heat to the private capital waiting to be invested.

“Scotland has been relatively proactive in trying to stimulate activity, but there’s only so much it can do itself. Some activity must be at UK level.”

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