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UK government planning new green investment bank

16 July 2020 | Markets

 

The UK government is poised to reveal plans for a new state-backed green bank to help finance Britain’s climate ambitions, three years after ministers agreed to sell the UK’s Green Investment Bank.

Kwasi Kwarteng, the energy minister, said that he expects the government to set out how it plans to create a successor to the Green Investment Bank “in the not-too-distant future”.

The move to rebuild a new green lender comes amid growing calls from climate campaigners, economists and academics to invest in green infrastructure to help revive the UK’s struggling economy and help meet its climate targets.

At a digital event hosted by climate campaign group UK100 on Monday, the minister said it is “no secret” that there is “an ongoing debate within government about how we can in effect create the Green Investment Bank 2.0”.

“I fully expect there may well be announcements in that regard in the not-too-distant future,” Kwarteng added.

The minister said that the UK’s commitment to build a “net zero carbon” economy within 30 years, and the “huge amount of investment” needed to reach this goal, “suggests that there may well be scope” for a new green development bank.

Researchers at the Grantham Institute, part of the London School of Economics (LSE), have called for ministers to plough £20bn in paid cash towards a new national investment bank to establish a pipeline of clean infrastructure projects including carbon capture and hydrogen.

The new report proposed the state-backed bank alongside a string of near-term public investments and long-term, low-carbon strategies.

The recommendations include funding for energy efficiency upgrades, tree planting and wetland restoration to boost Britain’s green recovery and help create new jobs and training opportunities.

The report’s four-prong approach also set out a “low carbon skills” strategy to level-up workers who might be left underemployed or unemployed following the pandemic, and a long-term framework for low-carbon investment using a rising carbon market price to incentivise private investments.

Dimitri Zenghelis, a senior visiting fellow at the LSE and the co-author of the report, said: “The government has made a good start with the summer statement and early stimulus measures will help shore up a more resilient economy over the next two years. But the government must now turn its rhetoric on green recovery into predictable and credible commitments to build a sustainable economy over next decade and beyond.”

 

Source: The Guardian