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Friday, April 16, 2021

The Green Investment Bank – now open for business!

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Heralded as the first bank of its kind, the Green Investment Bank is now open for business.

The Bank has a war chest of £3billion to invest over the next three years in projects which will assist the Government in achieving its sustainability targets.

The Bank is mandated to invest at least 80% of its funds in the following sectors:

  • offshore wind;
  • waste recycling and energy from waste;
  • non-domestic energy efficiency; and
  • support for the Government’s Green deal.

The Bank may invest its remaining funds in ‘non-priority’ areas – biofuels, biomass, carbon capture and storage, marine energy and renewable heat.

The Bank is working towards what it describes as a ‘double bottom line’. First and foremost, the Bank is required to operate as a commercial organisation and to turn a profit. Second, the Bank is required to have a ‘Green Impact’ through the investments it makes. ‘Green Impact’ is at the heart of the Bank’s investment strategy and potential investments will be assessed against the following criteria:

  • the reduction of greenhouse gas emissions;
  • the advancement of efficiency in the use of natural resources;
  • the protection or enhancement of the natural environment;
  • the protection or enhancement of biodiversity; and
  • the promotion of environmental sustainability.

The ‘double bottom line’ is the most interesting facet of the Green Investment Bank. But at the same time, the Bank is unequivocal that it is a commercial organisation and not in the business of funding projects that are otherwise unable to obtain financing in the market. Additionally, the Bank’s clear preference is to invest in projects alongside private sector capital. Its function is not to fund the unbankable, but to support robust projects suffering from a funding shortfall – the final push to get them over the line.

The Green Investment Bank – now open for business!

James Larmour, a specialist in infrastructure projects at law firm Freeth Cartwright said: “Whilst it is easy to be

critical of the Green Investment Bank initiative, the ‘double bottom line’ and the emphasis on the need for the

Bank to be run on commercial lines is encouraging. Given the current difficulties in sourcing long term debt

for projects, the opening of the Green Investment Bank for business is clearly a positive development and

provides much needed additional funding capacity to an under resourced market”.

Catherine Burke, also of Freeth Cartwright, who specialises in the energy sector and particularly renewable

energy projects, added: “Funding for renewable energy projects is still scarce and this, coupled with the UK’s

ambitious greenhouse gas emissions reduction targets and commitment to renewable energy, means that

Green Investment Bank has a critical role to play.”

For further information relating to the Green Investment Bank or Freeth Cartwright’s Energy and

Natural Resources team, please contact:

Contact:

James Larmour

01782 211 863

james.larmour@freethcartwright.co.uk

Catherine Burke

0845 274 6939

catherine.burke@freethcartwright.co.uk

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