Lord Browne recently complained that not enough private financing was going into the renewables sector, particularly offshore wind farms, and he called for greater government financing, and suggested this could come from some of the newly state-controlled banks.
I suggest the UK sets up a British development bank in order to finance our shift to a zero carbon economy.
At the moment, we have several development institutions which finance clean-tech and renewables projects, such as the EIB, EBRD and World Bank, though they mainly finance them in emerging market countries, or in certain countries ear-marked by the EU as big receivers of renewable subsidies (Spain and Germany).
The UK needs its own institution to drive development of the green economy here. State-owned development banks have worked well in Asian economies, particularly for critical infrastructure projects which require long-term lending.
We could use the remains of RBS for the bank – RBS has proven experience in infrastructure financing projects.
The bank could also take on deposits, allowing individuals to invest in the transformation of the British economy, and to support the future environmental viability of the island.
Retail investment is a large, and yet mainly untapped, source of liquidity for the renewables industry. The bank could sell ‘eco-bonds’ , for example.
And it could provide government-subsidized mortgages for houses that pass energy efficiency and insulation tests.
Finally, it could provide financing and support to research centres in British universities to make them world-leaders in developing new technology for climate change mitigation and adaptation.
