The United Kingdom Green Investment Bank is now open for business with full commercial lending power after receiving approval from the European Commission earlier this month.
Image courtesy of theprisma.co.uk.
Yesterday, United Kingdom Business Secretary Vince Cable announced to the House of Commons that the bank began full operations earlier this week – on Oct. 29, 2012 to be exact.
Cable explained that beginning the bank’s commercial operations was contingent on state aid approval from the European Commission, which on Oct. 17, 2012, gave approval relating to the bank’s remit, operating model, and initial government funding of £3 billion for the period until March 2015.
The bank is being funded to the extent that it will not need to borrow before 2015. After that, it will be given borrowing powers if its targets for reduction in the national debt are being met.
Under the terms of the state aid approval this month, the bank will be able to make commercial investments across the following green sectors: offshore wind, waste, non-domestic energy efficiency, biofuels for transport, biomass power, carbon capture and storage, marine energy, and renewable heat.
Giving a more specific picture of its plans, the bank says that its initial priority sectors until 2015 will be “offshore wind, commercial and industrial waste, energy from waste, non-domestic energy efficiency, and support for the Green Deal. Subject to state aid clearance, at least 80 percent of the funds committed by the bank over the spending review period will be invested in these priority sectors.”
The bank also says that up to 20 percent of its funds during this time “may be committed outside the priority sectors, including areas such as marine, and carbon capture and storage.” Investments in nuclear power may also be considered, with the bank reminding that “this is all subject to state aid approval.”
Before the state aid approval for the bank occured, green investments were made on commercial terms by the UK Green Investments team (UKGI), which is part of the UK Department of Business, Innovations & Skills (BIS).
To date, the UKGI has committed £180 million to specialist fund managers to co-invest equity in smaller projects in the sectors of waste infrastructure, energy from waste, and non-domestic projects. Assets built up by UKGI will be transferred to the bank, said the bank earlier this month.
The first project investment in the small scal e waste sector occurred in September 2012, with Foresight’s UK Waste Resources and Energy Investments (UKWREI) fund investing £2 million – with a further £2 million of matching private sector funding – in a £21 million project to build a food and green waste processing plant in Dagenham.
“The new facility will process 49,000 tonnes of organic waste a year – saving 16,325 tonnes a year of CO2 emissions over the same period,” the BIS calculates.
“This will be the first joint anaerobic and in-vessel composting plant to be built within the M25 (motorway) and is expected to be operational in late 2013,” the BIS added.
In-vessel composting is an industrial form of composting biodegradable waste such as household food waste. The waste is composted in an enclosed reactor, controlling temperature, moisture, and airflow.
Foresight has appointed to invest £50 million on behalf of UK Green Investments to drive government investment in low carbon infrastructure preparation for the UK Green Investment Bank.
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