LONDON (Reuters) - Britain needs a green bank to meet its 2020 goals to slash carbon emissions and curb use of fossil fuels, a report commissioned by the Conservative Party said on Tuesday.
Britain is lagging European Union targets to cut carbon emissions and deploy renewable energy, and it also wants to upgrade its grid infrastructure and help roll out electric cars.
A “green bank” funded by new consumer levies; the sale of emissions permits to industry; and institutional and retail interest in new investment products will help plug the gap, according to the Green Investment Bank Commission.
“The scale of the investment required to meet UK climate change and renewable energy targets is unprecedented,” said the report, called “Unlocking investment to deliver Britain’s low carbon future.”
The report is an independent, not a government, study that was commissioned by the Conservative Party when they were in opposition. They are now the larger party in a coalition government with the Liberal Democrats.
“Low carbon investment is a vital part of our economic recovery, and the Green Investment Bank is part of ensuring that UK PLC (business) can lead the world,” said Energy and Climate Change Minister Greg Barker, responding to the report.
“Detailed proposals on the creation of a UK Green Investment Bank will be brought forward following the Spending Review (on October 20),” he added.
The bank could take control of existing government grants and loans, such as those currently managed by the Carbon Trust, raise up to 10 billion pounds ($15.1 billion) a year in cash by issuing green bonds, the report suggested.
It also could offer tax-free products to retail investors, which would pay a yield based on returns from investments such as in wind farms, which could be underwritten by government cash or assets.
The Commission, chaired by Bob Wigley, chairman of Yell Group, cited estimates that Britain may need up to 550 billion pounds ($828.5 billion) in investment through 2020 to fund a low-carbon shift.
Global investment in clean energy was about $150 billion last year, analysts estimate.
All investment is struggling after a financial crisis weakened utilities, following a dip in electricity demand, while some business lobbies are cautioning against tougher green support policies in the aftermath of recession.
Tuesday’s report suggested that initial funding priorities include proven and large-scale technologies such as energy efficiency, offshore wind and smart grid infrastructure, which would unlock wider technologies.
The bank’s initial capitalization could come from a banking levy or the sale of UK carbon emissions permits under the EU emissions trading scheme, which would raise about 40 billion pounds for the UK from 2012-2020.
The bank could also raise cash through a levy on consumer fuel bills, the authors proposed.
Britain is far behind its target, under a European Union commitment, to obtain 15 percent of all its energy from renewable sources by 2020, compared with 3 percent in 2009.
The country has set itself a target to cut greenhouse gas emissions by 34 percent below 1990 levels by 2020, compared with a 19 percent cut by 2008. [ID:nLDE6441HY].