UK Government Launches $3 Billion Green Investment Bank
Photo via SLM
There's going to be an interesting addition to the Labour Party's government budget when it's unveiled on Wednesday--a $3 billion dollar green investment bank which will "help Britain's transformation to a low carbon economy," according to the Washington Post. The bank will be half funded by government funds, and half funded by the private sector. And here's what it'll do: According to the Washington Post, the green bank is "designed to help finance projects such as railways, offshore wind power generation and eco-friendly waste management. The WaPo continues:
"The high risk profile of these investments, which are in new and unproven technologies means an initial government investment is needed to draw in investors," [a source close to the government] said. "By providing an initial investment of government capital it will reduce the risk profile for investors and increase the incentive for the private sector to enter the market at the scale and pace needed."Government projections put the cost of modernizing the UK's energy sector at $150 billion. The government is also serious about meeting its carbon reduction pledges (which clock in at cutting CO2 emissions by 30% and achieving a 15% renewable energy standard by 2020).
I think the idea is a good one, and is actually rather similar to Obama's plans for financing high-speed rail with a mix of government and private financing--though with any luck the UK's green bank will grow larger than that venture. The $8 billion allotted for the US high speed rail will allegedly be matched with the same amount from the private sector--in both cases, the idea of course being to use gov financing to provide security and to stimulate investment. The government role will serve to reduce the risk of such green business ventures that are still viewed as unpredictable.