In a speech at an environmental finance event in London, Mr Clegg identified the sector as one of three “possible early priorities” for the institution, which he hailed as the “word’s first” national green development bank.
He also confirmed that the Bank would be begin to make investments in projects from April 2012, but will not be able to borrow money to augment its £3 billion pot of government money until 2015. This lag attracted criticism from environmental groups when it was first announced in this year’s Budget (see letsrecycle.com story).
Outlining the Bank’s priorities and schedule for setting it up, Mr Clegg said: “I can announce today that investments will be able to be made from April 2012, just eleven months from now.
“Possible early priorities for the Bank are offshore wind, waste, and non-domestic energy efficiency,” he added, noting that it could also support the government’s energy efficiency-focused drive, the ‘Green Deal’.
Mr Clegg claimed that the Bank’s initial £3 billion of funds to allocate would encourage a total investment of £15 billion in “green infrastructure”. This is because the Bank is expected to encourage private investors to plough money into low-carbon projects.
The Deputy Prime Minister’s announcement is likely to be welcomed by waste industry figures who have regularly stated waste should be a priority sector to receive support from the Bank (see letsrecycle.com story).
In terms of the Bank’s management and decisions on how it allocates money, Mr Clegg said initial investment decisions would be made under yet-to-be-announced interim governance arrangements but stressed that in the longer term it would have full independence.
He said: “The Government will bring forward legislation to ensure both the operational independence and enduring nature of the Bank. We are determined this organisation will be part of the institutional architecture of this country. Legislation will ensure a long shelf-life.”
He added that, once this independence was established, “the bank will then be able to undertake a wide range of transactions, including equity, debt and risk mitigation products”.
While confirming that that the Bank would be able to borrow to increase the amount it can invest from April 2015 Mr Clegg noted that this would only happen if the government’s target for debt to falling as a percentage of gross domestic product (GDP) had been met.
But, he concluded: “The Green Investment Bank will go from an idea to a flow of investment in under two years, and quickly grow into an independent investing, and then borrowing, institution. A real legacy of the Coalition Government’s green commitment.”
Reacting to Mr Clegg’s announcement, the Anaerobic Digestion and Biogas Association (ADBA) welcomed the emphasis given to waste and confirmation of an April 2012 start-date for the Bank.
But, the association’s chair, Liberal Democrat peer Lord Redesdale, sounded a note of caution over the need for it to support small scale projects as well as large-scale developments.
“I am pleased that Nick Clegg has announced that the Green Investment Bank will come online next year, and that waste will be one of the areas prioritised,” he said.
“However, the Government must ensure that the Bank gives proper support for local, AD scale technology as well as large power plants – the GiB could help reduce the perception that AD carries high financial risk for investors and reduce the cost of borrowing.
He added: “As the Government has recognised, AD is the treatment which gets the most from organic waste streams, and the green bank and forthcoming waste review should be coordinated to support it. Failure to do so would endanger the key Coalition Agreement pledge to a ‘huge increase’ in AD.”