Content Coms Exclusive: Green Investment Bank opens to private capital

In tomorrow’s budget, the Green Investment Bank (GIB) will for the first time allow private money through its doors. Will low carbon businesses benefit?

Tomorrow (July 8th 2015) George Osborne will announce his intention to bring private finance into GIB. The news signals GIB’s growing importance within the Government’s Green Economy.

The news, which could really help low carbon, comes just after GIB’s 2014/15 results. During the year, it backed 22 new green energy projects committing £723 million of its own capital to projects with a total value of £2.5 billion.

Overall, GIB has now committed £2 billion to 50 UK projects worth over £8 billion. Once built, it says these investments will produce enough renewable energy to power the electricity needs of 4.2 million UK homes each year.

GIB’s story is simple; it invests in energy efficiency, waste and bioenergy, plus offshore wind. GIB says to achieve the UK’s legally binding environmental targets, we require an investment of £330 billion in the UK’s green economy by 2020.

GIB exists to leverage that cash for sustainable businesses. It was capitalised with an initial £3.8 billion of public funds.

A typical GIB investment

On June 22, GIB announced £5m for a UK building retrofit programme. The programme’s first energy efficient LED lighting project kicks off at aviation supplier GKN Aerospace’s Falcon Yard facility on the Isle of Wight.

 “The installation of new efficient and resilient lighting systems will help companies cut maintenance and running costs, and contribute to reductions in energy consumption and carbon emissions,” said Bill Rogers, Managing Director, UK Green Investment Bank.

What might private investment mean?

Clearly, scope for wider investors could enable GIB to fund more difficult infrastructure projects. This could derisk new sectors and further lower capital cost for green projects.

But, GIB’s green efforts must work on commercial terms. It’s possible new private investors, potentially from fossil heavy sectors, could hijack the agenda.

Big energy firms, if allowed, could invest in GIB projects, leveraging them to their own advantage.

“Much of the low carbon sector is nascent,” said Joanna Watchman, Founder and Managing Director, Content Coms. “That means it must be carefully stewarded and grown. It must be protected.”

Transparency will be needed on who invests, how and where. Interests must be declared. Due diligence must be seen; more crucially, it must be adhered to.

In a statement to Content Coms today (July 7th 2015 – the day before the Budget) GIB assured us that no further announcement, for it at least, was due on Budget Day itself. But the opening of its doors alone spells change for a lower carbon UK.

GIB must prove it can leverage private cash in the rights ways, to help business and the environment.