EDINBURGH has hosted an event that has the potential to play a truly transformative role in the UK’s green energy landscape – the launch of the UK Green Investment Bank.
Business Secretary Vince Cable, Energy Secretary Ed Davey and myself announced that the bank – the world’s first bank dedicated solely to the greening of the economy – is open for business.
I am particularly proud Edinburgh has been chosen as the location for the headquarters for this innovative, cutting-edge institution. The decision to base the bank here, which was taken by Vince Cable after a consortium of public and private bodies led by Scottish Financial Enterprise put together an outstanding bid, reflects the huge strengths of Scotland’s financial and renewable energy sectors.
Edinburgh politicians including Mike Crockart and Mark Lazarowicz and members of the last council administration played a big role lobbying for this result. From the perspective of my party, Liberal Democrats are delighted by the arrival of the bank. We have long championed the cause of green investment to unlock our renewables potential and, in government, I am proud that Vince, Ed and myself have worked to deliver and launch the bank. As Scottish Secretary I have long made the case both for the bank’s establishment and that Scotland is the perfect place to locate it.
By combining the Edinburgh headquarters with a transaction team based in London, we will be able to play to the strengths of both locations and enable a greater commercial reach nationally than could be achieved from one location.
It is also a perfect example of the benefits Scotland and its partners in England, Wales and Northern Ireland gain from working together as the United Kingdom – pooling resources and expertise to ensure the bank is properly resourced and can hit the ground running when it opens.
The UK Green Investment Bank is a key part of the coalition government’s commitment to setting the UK firmly on a course towards a green and growing economy, while also delivering long-term, sustainable growth. This transition to a green economy is vital for the sake of our environment and our energy requirements. It represents significant opportunities for Scottish and UK-based businesses, both at home and abroad. But to achieve it will require unprecedented investment in key green sectors – an estimated £200 billion is needed for the energy system alone over the period to 2020.
At present, the private sector remains wary of investing in technologies that require significant capital sums and lengthy periods to prove themselves. That is where the UK Green Investment Bank comes in. Capitalised with £3bn of UK Government money to 2015, it will play a vital role in addressing market failures affecting green infrastructure projects, in order to stimulate a step-up in private investment. Under the leadership of its chair Lord Smith of Kelvin, its deputy chair Sir Adrian Montague, and its chief executive Shaun Kinsgbury, the bank will build the necessary deep expertise in financial markets and green investments, working towards a “double bottom line” of achieving significant green impact and making financial returns.
It has taken a great deal of hard work to get to where we are today. The Government set up UK Green Investments, a precursor to the bank staffed by experienced finance professionals within the Department for Business, which began making investments earlier this year, committing £180 million to four fund managers to invest in smaller waste, energy from waste, and domestic energy efficiency projects.
We also introduced legislation to enshrine the bank’s green purpose, embed its independence, and make funding provision for the bank, and we successfully secured state aid approval to allow the bank to operate in key sectors such as offshore wind, waste and non-domestic energy efficiency.
Of course, the bank is just one part of the Government’s wider policy programme designed to help meet environmental objectives and promote economic growth. Our other initiatives include the creation of a National Infrastructure Plan, reforms to the electricity market, changes to the climate change levy, the introduction of a renewable heat incentive, the review of waste policy and the reviews of Ofgem and Ofwat.
Scotland, along with the rest of the UK, stands to benefit hugely from the coalition’s commitments in this area. The UK Government has already released £100m from the fossil fuel levy fund to the Scottish Government, allowing it to create a renewable energy investment fund specifically for Scotland. I am confident the presence of the bank in Edinburgh will lead to the development of new green clusters in Scotland, driving forward the Scottish low carbon economy. Scottish projects will no doubt be strong contenders for significant investments by the bank as it begins its operations.
• Michael Moore is the Secretary of State for Scotland and Lib Dem MP for Berwickshire, Roxburgh and Selkirk.