UK announces new green measures to mixed welcome
24 Mar 2011
UK chancellor George Osborne has announced two long-awaited steps towards Britain becoming a low-carbon economy: the creation of a Green Investment Bank (GIB) and the establishment of a "floor price" for carbon.
The measures were generally welcomed, but with less than three cheers. While all parties have endorsed the need for a green-energy revolution, environmentalists and many corporate houses felt the measures did not go far enough.
The objective is to replace the power stations burning coal, gas and oil with renewable energy systems such as wind, solar, wave and tidal power, and also - although Osborne did not mention it, perhaps because of the ongoing Japanese crisis - nuclear.
But business leaders, campaigners and investors slammed Osborne's flagship green policy on Wednesday, mainly overreacting angrily to his decision to severely limit the powers of the new green investment bank.
The bank - to be funded with £1 billion from taxpayers and up to £2 billion from sales of government assets - is the centerpiece of ministers' claims to be "the greenest government ever". It would invest in projects such as renewable energy and the development of new low-carbon technologies, filling the gaps left by private sector investors.
Osborne told parliament in his budget statement that setting up the bank was a "bold step ... to support low-carbon investment where the returns are too long-term or too risky for the market".
But he confirmed that the bank would not be allowed to borrow money until 2015, a constraint that economists warned would hamper its ability to invest. If the government's efforts to cut debt and kickstart the economy falter in the next four years, the bank will not be allowed to borrow at all.
The decision was a victory for the Treasury, which for months has been embroiled in a tussle with green enthusiasts within government, including climate secretary Chris Huhne, over the powers the bank should have.
It was originally intended to act much like a private sector institution, funding its investments by taking on loans and issuing financial products such as green ISAs and bonds. One by one, these powers were whittled away to leave the bank, according to critics, little more than an insignificant pot of money.
