A proposed green investment bank to support low-carbon development will benefit from £3 billion in public funding - but will not be able to borrow until 2015
Chancellor George Osborne said that in addition to the £1 billion of funding already announced last year for the bank, which will start operations a year early in 2012, £2 billion would be made available from asset sales.
And £15 billion of private sector investment would be raised during the life of this Parliament, he said.
But, as feared by campaigners who have been calling for the Green Investment Bank, the institution will not be allowed to borrow until 2015, subject to overall financial targets being met.
It is hoped the bank will leverage billions of pounds in private finance to fund clean energy and low-carbon projects.
But the setting up of the Government-backed institution has been dogged by disagreement within Whitehall about whether or not it should be a bank able to raise its own capital, amid concerns its borrowing could undermine efforts to cut the deficit.
Today, the Chancellor said the Green Investment Bank would support low-carbon development where the returns were too long-term or too risky for the market to invest.
He also said he was introducing the world’s first carbon floor price to support investment in green energy.
Campaigners welcomed confirmation of the Green Investment Bank’s establishment but Ingrid Holmes, a low-carbon finance expert from sustainable development campaigners E3G warned that preventing it from borrowing for four years was like ‘buying a powerful car but being forced to drive it around with the hand brake on’.
‘If the Government is really serious about delivering growth then they must take the handbrake off and let the Green Investment Bank borrow from the word go,’ she said.