Business leaders urge Coalition to establish Green Investment Bank quickly

Online, September 30, 2010 (Newswire.com) - A group of almost 50 business leaders backed by MPs from all the major parties has called on the government to produce an "ambitious and effective vision" for its proposed Green Investment Bank (GIB) without delay, while it voiced concern that the ongoing Comprehensive Spending Review could "starve" the Green Investment Bank of the £4-6bn it regards as the minimum funding requirement for the bank over the next four years.

The Green Investment Bank Position Statement was signed by some of the UK's biggest businesses, including British Airways, BT and Microsoft, as well environmental campaigners Friends of the Earth, Greenpeace and WWF, the TUC, and Tim Yeo, MP and chairman of the Energy and Climate Change Committee.

The group of business leaders urged the coalition to build on the vision set out by the Green Investment Bank Commission's report in June, which lamented poor access to capital as one of the main barriers blocking the development of low-carbon projects. They recommended the government to legislate quickly to ensure the Green Investment Bank is up and running within six month.

The current statement demands that a "fully independent, accountable and enduring institution must be established in statute in 2011, with a clear low-carbon investment mandate", and it warns that a delay would hinder investment and damage confidence in the proposed bank.

The business leaders said that to contribute to a low-carbon economy, the Green Investment Bank should release investment in energy efficiency and renewable energy infrastructure as a priority, although it also sees room for a wider command supporting the development of low-carbon R&D, manufacturing, services and exports.

The group of business leaders backs the GIB commission's proposals for the bank to offer green ISAs and green bonds in an attempt to tap the £2 trillion of assets held by UK institutional investors, such as pension funds and life insurance companies.

Over the years the bank could leverage more than £100bn of investment from the private sector, but the group forecasts that the Green Investment Bank will require £4-6bn over the next four years; investment that still would leave the bank short of the commission's estimate of £550bn worth of low-carbon infrastructure and supply chain investment will be required over the next decade.

However, it remains unclear how the Treasury plans to finance the new Green Investment Bank, despite support from both sides of the coalition for its formation. The GIB commission recommended folding a number of green quangos, such as the Carbon Trust, into the Green Investment Bank to help provide it with initial startup funding. But, this is unlikely to deliver the billions of pounds the business community is demanding, and according to Whitehall insiders the Treasury is reluctant to use cash raised through asset sales to fund the bank.