The Green Investment Bank must have the capacity to generate revenue and start making investments within 12 months, a panel of MPs insisted last week.
A report produced by the Environmental Audit Committee emphasised the need for the GIB to raise its own finance and bring in banking expertise to offer loans, equity and risk-reduction finance.
In the recently unveiled draft Carbon Plan, the government set a deadline of May 2011 to establish the operating model of the institution, which is expected to be operational by September 2012.
EAC chair Joan Walley MP said: “If the government is serious about being the greenest ever, the Chancellor must ensure the GIB can do what it says on the tin and raise extra capital like a real bank.
“The UK desperately needs a game-changing injection of private sector investment if we are going to meet our climate change targets and move to a green economy.”
Consultants Ernst and Young told the committee that traditional sources of capital for investment in green infrastructure, such as utility companies and infrastructure funds, could only provide up to £80 billion of the £450bn it estimates is needed by 2025.
The report said the GIB should consult the Climate Change Committee and take its recommendations into account to stop the bank straying into more profitable but less green investments.
It added that a fundamental role of the GIB should be to advise the government on low-carbon and green infrastructure policy, and that ambiguity about whether GIB support for new nuclear would constitute a subsidy must be resolved.
Lobby group Transform UK called on the government to give the GIB at least £4bn in next week’s Budget and confirm that it will have the power to borrow and issue bonds with government guarantee.
Director Ed Matthew said: “A proper GIB could leverage hundreds of billions in vital investment. This is the shot in the arm the UK economy needs.”