Can the UK’s Green Investment Bank inspire the global community?

Can the UK’s Green Investment Bank inspire the global community?
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The Green Investment Bank (GIB) is leading the world in funding innovative solutions and setting the UK at the forefront of the next generation of energy infrastructure. Can the GIB be used to catalyze investment in green infrastructure projects at a worldwide scale?

Alternative energy — “green power” investments — is the most widely discussed topic regarding the widespread desire to combat global environmental challenges.

To help build a stronger and greener economy, the United Kingdom has become a world leader in the green industry. The UK has more offshore wind turbines than any other country, and the potential to develop technology in the renewables industry.

The Green Investment Bank channels public and private investment into green projects that create new jobs and protect the environment.

How does the GIB function?

Based in Edinburgh and funded by £3 billion ($4.9 billion), the GIB invests public money in green projects that find it difficult to attract funding. It receives a return for its investment and takes on the risk, as any other private investor would.

Since its launch, the GIB has invested in 46 projects across the United Kingdom (UK) and supported £7 billion ($10.7 billion) new investment in UK energy infrastructure. Projects included waste management, energy efficiency, offshore wind and biomass facilities.

In February, GIB announced the creation of a  £100 million ($152 million) fund to boost community-scale renewable energy projects.

In March, GIB and Equitix announced a pledge of £5 million ($7 million) for a sheltered housing boiler replacement project throughout England. This deal marks GIB’s first investment in the UK social housing sector, where new energy efficient systems will deliver affordable and lower carbon heating for the inhabitants.

In May, GIB acquired a £236 million ($361 million) stake in a joint venture with E.ON to construct and own the Rampion offshore wind farm, off the coast of Brighton, to be completed in September 2018. The project is expected to generate 1,333 Gigawatt Hour (GWh) of renewable energy annually, enough to power approximately 300,000 homes, and reduce greenhouse gas emissions, in the equivalent of taking 75,000 cars off the road.

Most importantly, it is projected that 300 jobs will be created during the anticipated three-year construction project and more will be added once the wind farm has been commissioned to a permanent status.

Amber Rudd, the new Secretary of State for Energy and Climate Change states, “This huge investment is a vote of confidence in the UK, creating local jobs, bringing business opportunities and providing clean, home-grown energy.”

For the global community interested in similar ventures, these investments give developers the confidence to take risks, boost their home economy, and generate clean energy supply.

The debate around the cost of clean energies is changing, and more business leaders should begin to acknowledge the benefits of clean energies and payoffs their risks lead from these endeavors.

It is imperative to continue advocating the business aspect for renewable sources, especially in developing countries, where clean technologies is still a new venture.

Currently, the dynamic is shifting for the norm, since solar energy has reached grid parity in several countries. Solar energy growth reflects a simple business rule: the more renewable sources are deployed, the quicker the prices drops, and more will develop.

The tools investors need already exist, yet the global community must answer the call for new financial mechanisms that support their interests in creating renewable sources that reap financial benefits and support humanity.

To sum up, it is clear that demand for renewables is strengthening at a rapid pace. Moreover, the gradual widening of the energy markets will bode well for all global parties and encourage confidence in the industry for the long term.

About Author

Yesenia Lugo

Yesenia Lugo has written and worked on global governance and international financial institutions (IFIs) for a Washington, D.C. NGO. Her interests include economic opportunities, emerging financial markets and fiscal transparency reform. Yesenia holds a Masters in Diplomacy and International Relations from Seton Hall University, where she specialized in economic development and international security.