Friday, May 20, 2011 | Posted by: Grant Thornton
Categories: Financing , Environment, Technology sector | Tags: investment, report, survey, Edinburgh, energy, renewable energy, green, Nathan Goode, Charles Yates, low carbon, cleantech, Green Investment Bank, Wigley Report, solar energy, biomass, green energy, GIB, wind farms
Why we are campaigning for Edinburgh to be HQ of the new Green Investment Bank, or GIB, and why funding for small-scale renewable energy projects will bring not just swifter financial gains but a much-needed PR win for the low carbon economy.
There has been a lot of publicity about the Green Investment Bank since the General Election but there is likely to be a whole lot more once the details are announced on 23 May.
The clamour around the new bank, which has a £3 billion mandate to invest in and fund low-carbon transport and renewable energy schemes, has been intense as various groups have lobbied to have their voice heard. Whatever the Government decides about the scope, many will be disappointed.
Arguably, this is not the Government’s fault. Expectations were raised to fever pitch last summer with the publication of the Wigley Report.
In reality, the Government was never going to single-handedly plug the investment gap that exists in the low carbon sector. The most it could ever hope to do is oil the wheels through carefully structured products and interventions – to help the sector move up the commercialisation curve but also to provide leadership to the financing markets to allow money to flow more rapidly.
Grant Thornton and the GIB
Grant Thornton has been closely involved in two Green Investment Bank campaigns.
Firstly, we wrote the business case – on behalf of the Edinburgh Chamber of Commerce and a group of businesses and public sector organisations – to argue that the right location for the bank was Edinburgh. Strong financial services capability, and well-developed cleantech and industrial low carbon capabilities, place Edinburgh ahead of the pack. This has received careful consideration by the government Government team responsible for creating the Green Investment Bank, but whether Edinburgh’s unique set of circumstances outweighs the sheer financial muscle of London remains to be seen.
Secondly, we worked with the Co-operative Bank to put the case for a small, but potentially significant, allocation of finance to the smaller end of the low carbon sector, for example, community-owned wind farms, small solar projects and biomass district heating. This is now available for download: Funding Small Scale Green Energy Projects through the Green Investment Bank.
It is well understood that the Green Investment Bank plans to direct most of its firepower at ‘big ticket’ projects such as offshore wind, industrial energy-efficiency and industrial waste, but we think the Government needs to win hearts and minds as well as divert funds to large low carbon assets – funds which will ultimately be sourced from our tax and utility bills.
Winning over public hearts and minds
The ‘hearts and minds’ argument has two angles:
- Smaller projects are potential quick wins; they are ‘shovel ready’ and quick to add to the GIB’s balance sheet compared with some of the larger projects.
- The smaller end of the market offers much greater potential for individual and community engagement in projects, linking up with the Government’s Big Society agenda, and showing tangible financial benefits, whether in the form of green energy tariffs or energy cost savings.
With the Green Investment Bank team talking in terms of a double bottom line – financial returns and meeting low carbon policy objectives – the smaller end of the market would seem to be an essential part of the mix.
Whatever the fate of these two initiatives, we need to come back to the fact that the like of the Green Investment Bank has never been seen before. It is a ground-breaking contribution to the transition to a low-carbon economy. I don’t know if we are drinking in the Last Chance Saloon, but the glass is definitely half full.
For further information, visit our Waste and Renewable Energy page.
Nathan Goode, Partner, Head of Energy, Environment and Sustainability
Charles Yates, Associate Director, Government Infrastructure Advisory
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