Plans to launch a £2 billion green investment bank to stimulate wind turbine production and other renewable energy projects have been welcomed by manufacturers in the West Midlands.
Chancellor Alistair Darling said he intended to create the bank in a bid to stimulate billions of pounds of private finance for low-carbon industries such as wind energy – a sector which employs around 8,400 people in the West Midlands.
Investment will focus on offshore wind energy “where Britain is already the world leader” he said, with £60 million going to develop ports which will be the site of turbine manufacturing.
Half the £2 billion would be raised from the sale of assets including the Channel Tunnel rail link, while the other half will come from private investment, he said.
The West Midlands is home to a number of engineering firms who have diversified away from supplying the automotive sector and into the wind sector as there are many overlaps between the technology.
Environmental technology is estimated to contribute around £4.4 billion to the region currently, with around 76,000 people working in the sector.
Martin Wassell, Midlands region director for EEF, the manufacturer’s organisation, gave the green bank a cautious welcome.
“The announcement of a Green Investment Bank shows that the Chancellor has not taken his eye off the medium term needs of the economy.
“The UK needs significant investment in low-carbon energy infrastructure, and the Green Infrastructure Fund will hopefully provide the necessary medium-term finance.
“Any funding, however, is not a substitute for reforms to financing mechanisms for low-carbon energy, or this well intentioned scheme could result in throwing good money after bad.”
Ben Warren, partner in Ernst & Young’s Renewable Energy Team, said the £2 billion plans looked like they could be a “relative drop in the ocean” compared to the £200 billion needed over the next 15 years.
He said: “The government’s announcement to introduce a Green Investment Bank (GIB) serves as a further signal of the government’s commitment to deliver on its promise for a transition to a low carbon economy.
“Whilst the details remain unclear, opinion is likely to remain divided around the likely effectiveness of such an initiative.
“Compared to the US’s $112 billion and China’s $221 billion of green funding as part of their fiscal stimulus, the UK’s public sector contribution through the GIB looks like a relative drop in the ocean.
“At a time where the UK energy market needs to attract £200 billion of funding by 2025, more will need to be done.
“Conversely, should the GIB provide an effective channel for private sector investment (particularly institutional and retail investors, which until now have been struggling to access attractive investments in renewable energy), then it could prove hugely helpful; both in attracting significant levels of capital, and in providing tax payers and rate payers with potentially attractive returns.”
West Midlands Friends of the Earth welcomed government plans to create the green bank, which it had campaigned for since January 2009.
West Midland campaigner Chris Crean said: “The government’s announcement to set up a Green Investment Bank is fantastic news – it should be a crucial building block in the creation of a safe, clean and prosperous future.
“This bank will provide crucial funds for major green developments, such as wind projects, which will slash emissions, increase our energy security and create thousands of new jobs.
“We, here in the West Midlands, must ensure that we can secure our share of these investments through the supply chains that already exist and see progressive green technologies as a growth sector for the region. ”