GIB key to low-carbon transition

Business secretary, Vince Cable, outlines progress on the Green Investment Bank as the Treasury squeezes DECC spending.

The offshore wind and waste sectors are likely to be the first to benefit from investments by the Green Investment Bank (GIB), according to the business secretary, Vince Cable.

Following pledges in the Budget to boost the level of funding available to the GIB from £1 billion to £3 billion, Cable has confirmed plans for the bank to begin investing by April 2012 in a progress report outlining the government’s strategy.

The business secretary also confirmed that the GIB’s main aim is to support the transition to a low-carbon economy by accelerating private sector investment. Its key areas of focus will be mitigating risk for investors, lowering the cost of investment and covering shortages in private capital.

“The GIB’s initial remit will be to focus on green infrastructure assets,” he said. “It will work to a ‘double bottom line’ of achieving significant green impact and making financial returns. It will also operate independently and at arm’s length from government.”

CBI director-general, John Cridland, welcomed the announcement but warned that the GIB must have teeth if it’s going to deliver the £200 billion of investment needed to green the UK’s infrastructure. “The bank won’t work if it needs the Treasury’s permission to blow its nose,” he argued.

His comments echo criticisms of recent moves giving the Treasury control over DECC levy-funded spending. Under a control framework approved in March, DECC climate change policies funded through levies on energy bills, including the feed-in tariff scheme and the Renewables Obligation, are now subject to an overall spending cap of £11.8 billion until 2014−2015. The framework means DECC must now gain Treasury approval for any new policies to be funded from this budget.

“This appears to place unnecessary barriers to delivering sustainable and green projects to reduce carbon emissions. It restricts DECC’s flexibility to innovate and to invest in the green economy,” said Michael Lunn, director of policy at the Environmental Industries Commission.

Greenpeace’s director of policy, Doug Parr, likened the move to “giving accountants control of research and development”.