UK Green Investment Bank

Business, Innovation and Skills written statement – made on 30th October 2012.

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Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

On 24 May 2011, I made an oral statement setting out the Government’s plans for a UK green investment bank which would help lead the United Kingdom’s transition to a green economy. I gave a commitment to update the House on further milestones and am very pleased to tell the House that the bank began full operations on 29 October 2012.

The commencement of commercial operations by the bank has been contingent on state aid approval from the European Commission. On 17 October 2012 the European Commission gave its approval, relating to the bank’s remit, its operating model and Government funding of £3 billion over the period to March 2015. Under the terms of the state aid approval, the bank will be able to make investments, on commercial terms, 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.

The Department for Energy and Climate Change is seeking state aid approval for the financing of the green deal separately. The UK green investment bank would be able to invest in the green deal in accordance with the terms of that approval.

My Department has, in parallel with the state aid application process, been taking the necessary steps to ensure that the company would be ready to begin operations soon after receipt of state aid approval. I have, in particular, given my approval as shareholder to the appointment of Shaun Kingsbury as the company’s chief executive officer, with effect from 29 October 2012. I have also agreed the appointment of six non-executive directors with a wealth of relevant experience in investment and wider green issues.

On 26 October 2012 the board of UK Green Investment Bank plc resolved that the company would be ready to begin full operations on 29 October, having concluded that the necessary personnel, processes and systems would be in place.

In April this year UK Green Investments (UKGI)—a team of finance professionals in my Department—began making investments in green infrastructure on commercial terms, committing £180 million to specialist fund managers to co-invest equity in smaller waste infrastructure, energy from waste, and non-domestic energy efficiency projects. Assets built up by UKGI will transfer to the bank.

The Government will provide funding to the bank under section 228 of the Banking Act 2009, pending parliamentary approval of a bespoke power to fund the bank under clause 4 of the Enterprise and Regulatory Reform Bill.