However, government ministers have given no indication that they plan to move quickly, with detailed proposals only likely to emerge after the comprehensive spending review, due in October. 

On Tuesday, the GIB commission – set up by the Conservative Party when it was in opposition – published proposals for a GIB to help overcome market barriers to the estimated £550 billion ($820 billion) of investment required for the UK to reach its climate change targets. The commission was chaired by Bob Wigley, former chairman of Merrill Lynch Europe. 

Among other things, the report says the bank could centralise government funding for low-carbon technology development, mitigate policy and regulatory risk, help aggregate small-scale low-carbon investments and catalyse additional investment capacity to fund the large-scale roll-out of low-carbon technologies, such as offshore wind energy. The GIB could also help project developers manage long-term carbon price risk. 

The report proposes that a GIB could pull together funding available for low-carbon technologies from a number of quangos – ‘quasi-autonomous non-government organisations’ – including the Carbon Trust, the Technology Strategy Board and the Marine Renewables Deployment Fund. 

It could also ra ise funding by issuing £10 billion of green bonds each year to institutional investors, offering tax-efficient products to retail investors, and aggregating revenues from the auction of carbon credits to UK emitters in the EU Emissions Trading Scheme – to the tune of an estimated £40 billion by 2020. 

The report has been broadly welcomed by the finance sector and industry, with the Environmental Industries Commission one of the few dissenting voices, bemoaning its narrow focus on low-carbon technologies. 

However, key among the commission proposals is a call for a GIB to be established within six months, warning that “rapid mobilisation will avoid the potential for investors to take a wait-and-see approach”. The fear is that investors and project developers could hang back from investing in projects, anticipating more favourable terms once a GIB begins operating. 

It suggests that the government should appoint a “shadow board responsible for merging the various quangos and funds … as well as laying the groundwork for the new bank.”   

“It could be quite simple to create a company limited by guarantee to start work straight away,” said Ben Caldecott, head of UK and EU policy at asset manager Climate Change Capital in London, and a member of the GIB commission advisory panel. “It could drill down into the proposed products, look at funding and pull the quangos together.” 

He added that precedent exists for setting up such a body ahead of legislation, citing the creation of the Office for Budget Responsibility by the incoming coalition government earlier this year. 

However, the government has thus far only said that it will respond in the autumn. In response to the report, Energy and Climate Change Minister Greg Barker said: “Bob Wigley and his team have produced an important piece of work and I'd like to thank them for their efforts … Detailed proposals on the creation of a UK Green Investment Bank will be brought forward following the Spending Review.” 

Moreover, a leading renewable energy banker suggested that there are plenty of other reasons for investors to hold fire on investments, in addition to waiting for the creation of a GIB. 

“Investments will probably be delayed, but not only because of the GIB,” said Ed Wilson, head of renewables at Lloyds Banking Group. He mentioned the consultation on support for energy from biomass, whether or not there would be a feed-in tariff for offshore wind farms, and the announcement this week that the Infrastructure Planning Commission is to be abolished.

Mark Nicholls