Over the years, “green” has become a ubiquitous and practically meaningless term. We’ve got everything from green dry cleaners to “eco-friendly” plastic water bottles. And now, even banks are jumping on the green bandwagon.
As we’ve reported in the past, self-serving rankings of so-called “green banks” attempt to highlight major banks’ investment in clean energy projects. The problem is that many completely ignore the fact that these same financial institutions bankroll fossil fuel companies at much higher levels.
But what if a powerful bank was really and truly green, existing solely for the purpose of lending to clean energy projects? We’re about to find out.
Britain’s Green Investment Bank (GIB) opened a mere five months ago, but has already made a big splash in that country’s green energy economy. Capitalized with 3 billion pounds of government money, the institution exists only to bankroll renewable energy development and has already allocated 635 million pounds ($988 million) to 11 promising projects.
It’s all part of Britain’s goal to drastically cut its carbon emissions by 2020. The bank is mandated to deploy at least 80 percent of its capital to offshore wind, waste recycling and energy from waste, on-domestic energy efficiency and support for the Government’s Green Deal. The balance of its capital can be deployed to “non-priority” sectors, such as biofuels, biomass power, carbon capture & storage, marine energy and renewable heat. In doing so, the bank is kick-starting an economic re-birth based on clean energy instead of fossil fuels, creating jobs itself and encouraging investment in other companies doing the same.
The GIB employs 74 staff and expects to count 100 by the end of the year, reports Reuters. “The bank said its own investments unlocked an additional 1.7 billion pounds of third-party lending.”
What does this mean? Well, by giving clean energy companies the financial boost they needed to prove viability, private investors are less afraid to add their own money to the pot. “A 100 million pound loan to UK power producer Drax, for example, resulted in another 890 million pounds in lending from other parties for a project to transform half of its coal capacity to burn biomass instead.”
For now, the bank is publicly funded until 2015. The amount of taxpayer money that the GIB will receive in the coming years will be determined at the next government spending review, reports Inhabitat. But bank officials feel encouraged by its five-month track record, and they have confidence that it will be financially credible before that deadline.
From where I’m sitting, it seems like a pretty brilliant idea and, provided they keep it transparent and don’t allow greenwashed projects to creep in, a safe one for taxpayers.
It also sets a great example for countries like the US, which are far behind in clean energy investment. We have so many bloated banks, just think of what they could do if mandated to spend their money on improving the country instead of exploiting it? Although, our government has been in bed with the bankers so long, I’m not sure it has the backbone to mandate them to do anything.
Image via CoreMedia/Flickr
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