BVCA Publishes Considerations for Creating a UK Green Investment Bank

The BVCA's Energy, Environment and Technology Board (EETB) has today published a report on the creation of a green investment bank (GIB) in the UK.

The report argues that a well-designed and implemented GIB can be vital to facilitating and accelerating private sector investment in support of the UK's 2020 and 2050 low carbon, renewable energy and energy security targets, as well as in creating jobs for the British economy. With a GIB garnering increasing political and industry support, the EETB paper is a timely contribution to the debate, and draws on the practical experience of EETB members in low carbon and renewable energy investment and innovation.

Creating a low carbon economy entails vast investment. This ranges from the minimum £200 billion of power generation and grid investment to 2020 estimated by Ofgem, to backing innovative technologies and companies in energy efficiency, smart grid and new forms of transport and power generation.

This paper proposes the primary objectives and operating principles of a GIB, and argues that action is needed quickly as the UK is already falling behind its targets.

Key recommendations of the report:

• A GIB should help attract the private sector capital necessary to deliver the UK's 2020 and 2050 low carbon and renewable energy targets;
• It should facilitate and not compete with the private sector;
• It should provide value to the UK taxpayer by investing on a fully commercial basis;
• It should offer a range of standardised investment products for low carbon projects and companies promoted and vetted by private investors, always investing alongside private capital and targeted to address market failures;
• It should be primarily self-funding and able to draw on the capital markets, including the issuance of Green Bonds;
• It should provide independent advice to the government on delivering the low carbon economy;

Commenting on the report, Simon Walker, Chief Executive of the BVCA, said:

"It is clear that to reach Britain's climate change targets market and government forces must come together. The low carbon and renewable energy sector, along with much of the financial sector has been beleaguered with regulatory uncertainty. Everyone recognises that instability harms investor confidence and drives private capital to other markets. What is certain is that private capital should be favoured over public capital to rebuild the country's economy, create jobs and meet our climate change commitments. As the private sector has a role to play, so does the government in ensuring a stable investment environment. Configured correctly, the Green Investment Bank can achieve this and the work of the EETB outlines the practical considerations needed to do this."

Tom Murley, Chairman of the BVCA's EETB, said:

"This report is the result of continued efforts from EETB members to present what we feel are the right ingredients to create a successful Green Investment Bank. We are in a unique position to marshal private sector capital, identify the roles private capital can play and suggest how the government can catalyse and facilitate investment into the low carbon sector. The opportunity to address short-term market failures is one that cannot be missed, given the global need to meet long-term targets for reduced carbon emissions It is also one that deserves ample consultation, yet urgent action, in order to unlock the potential of Britain's low carbon economy."

FOR FURTHER INFORMATION PLEASE CONTACT

Tom Murley, BVCA EETB Chairman, +44 (0)20 7089 7962

Tom Allchorne, BVCA: +44 (0)20 7420 1807

Kawika Solidum, BVCA: +44 (0)20 7420 1833

Notes to editors:

1. The BVCA's Energy, Environment and Technology Board (EETB) is a consortium of leaders from venture capital and private equity firms who invest across the spectrum of clean technologies, infrastructure and renewable energy projects and are dedicated to the stimulus for clean and sustainable energy jobs and economic development.  The EET Board works to ensure the BVCA's engagement with Government and all other stakeholders accurately represents this segment. Collectively EETB members have over £10bn in funds under management; of which over £700m has been invested in UK companies, saving an estimated 4.2 million tonnes of CO2 p.a. while creating thousands of jobs. They have extensive experience of investing in green businesses and projects around the world and, with that experience, unique insight into the needs of the low carbon sector.

2. The British Private Equity and Venture Capital Association (BVCA) is the industry body for the UK private equity and venture capital industry. The BVCA has over 450 member firms, representing the overwhelming number of UK-based private equity and venture capital firms and their advisers.

3. The EETB is comprised of the following firms: Amadeus Capital, Blackstone, Climate Change Capital, The Carlyle Group, Environmental Technologies Fund, Good Energies, Hudson Clean Energy, Hgcapital, Impax Capital, Riverstone Holdings, Scottish Equity Partners, Virgin Green Fund and Wheb Ventures.

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