Out-Law News 1 min. read

African projects set to benefit from UK Green Investment Bank programme


The UK Green Investment Bank (GIB) has announced plans for a government-backed £200 million international 'green investment pilot programme' that will initially target East Africa, South Africa and India.

Bank chief executive officer Shaun Kingsbury said: “This important new pilot programme will see GIB investing outside the UK for the first time. I am confident that our unique business model, tried and tested in the UK, will have a very positive effect in developing countries, helping them to build vital new green energy infrastructure.”

GIB said its approach to the pilot “will match the business model it has developed for the UK... investing in green projects on commercial terms and mobilising additional private sector capital”. A dedicated team will manage the project overseen by a board comprising representatives of the UK Department of Energy & Climate Change and GIB.

GIB said it is now finalising the programme details and “identifying suitable investment opportunities” to be announced later.

The UK government gave the formal go-ahead for the pilot programme last month, as part of its support of investment under the UK’s International Climate Fund (ICF) (16-page / 2.20 MB PDF). Energy secretary Ed Davey said GIB had been “very successful in mobilising private sector investment into the UK’s green infrastructure and economy” since it was launched in 2012.

Davey told the House of Commons that GIB had invested in 42 projects and committed £1.8 billion of capital, “which will deliver £6.6bn of new infrastructure investment”. Developed countries have committed to jointly mobilising $100bn of climate finance a year by 2020 for developing countries, from both public and private sources, Davey said. He said the UK had already allocated £3.87bn to the ICF to finance such projects.

“We intend to commit £200m of UK climate finance in the pilot over three years, to invest in renewable energy and energy efficiency projects in developing countries, supporting economic growth, job creation, and development of reliable energy infrastructure,” Davey said. “In doing so the pilot aims to demonstrate the commercial viability of low carbon investment and crowding-in of private investment in addition to delivering significant emissions reductions.”

However, Davey said the new venture “will have no impact on the resources or capital of £3.8bn” allocated to GIB for investment in the UK.

World Bank Group president Jim Kim told the World Economic Forum in Davos last year that investors should “take a closer look at green bonds (as) a relatively new but growing option for investing in a sustainable and responsible way”.

Green bonds issued by the World Bank’s International Finance Corporation (IFC) are designed for projects in the fields of renewable energy and energy efficiency. Since the bonds were launched in 2010, the IFC said 199 projects have been considered for green bond financing

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