AMBITIOUS plans for the green equivalent of 3i, the infrastructure investment behemoth set up by the government after the Second World War, were unveiled yesterday.
A commission led by former Merrill Lynch European chairman Bob Wigley said a green investment bank would quickly be able to plough up to £25bn annually into climate change-related technologies. The institution, which would raise billions of pounds from environmentally friendly Individual Saving Accounts (ISAs) and selling project-backed bonds to the insurance industry, would roll up several quangos including the Carbon Trust.
Announcing the long-awaited report, Wigley said: “We are quite sure that without investment by government the private sector is not going to be able to keep up. Economic theory absolutely supports intervention in the market at this stage in its development.”
Britain will need to spend £50bn every year for the next decade to meet tough climate change and renewable energy targets, the commission said. The green investment bank would provide firepower for half the sum.
The organisation would be split into two parts. A “fund for green growth” would inherit £2.1bn assets and £185m annual income by mopping up a plethora of existing bodies. The other side, a banking division, would be funded through green ISAs, a levy on energy bills and private sector cash. The bulk of its capital would come from bundling up small-scale projects such as wind farms into bonds which would appeal to institutional buyers.
Wigley said the bank would work on a commercial basis. Although it will have an advisory panel comprising politicians, MPs will only steer on strategic ideas and will not interfere with the board of directors’ decisions.
The commission pitched its findings to climate change secretary Chris Huhne and his entourage a fortnight ago. The “ball is now in their court”, one contributor said, adding he hoped the government would get a skeleton team in place before the autumn spending review.
The CBI and Association of British Insurers both welcomed the idea.
CHAIRMAN, GREEN BANK COMMISSION
BOB Wigley freely admits he knew nothing about renewable energy before kicking off the commission’s work in February.
The banking veteran, who left Merrill Lynch in 2008 and now chairs Yell Group, rolled up his sleeves and looked at examples of public-private hybrids focusing on infrastructure around the world. He was joined on the commission by industry figures including James Cameron of Climate Change Capital, Katherine Garrett-Cox of Alliance Trust and Nick Mabey of non-profit consultancy E3G.
Wigley reckons the bank could run on a slim staff of between 200 and 300 people. He has received “reams of CVs” from banking colleagues and believes finding talented people would not be difficult.
Wigley, a judge for the forthcoming City A.M. Awards, says he would be interested in a non-executive role such as chairman. He is keen to get the bank started as soon as possible. “The experience in other countries is while people talk about these things, investors hold off investing,” he says.