Further to the statement made on 11 June 2014 by my right hon. Friend the Secretary of State for Business, Innovation and Skills I would like to inform Parliament that we have agreed, along with the Secretary of State for International Development, to pursue a new pilot joint venture with the UK Green Investment Bank (GIB) to assist in investment of the UK’s International Climate Fund (ICF).
GIB has been very successful in mobilising private sector investment into the UK’s green infrastructure and economy—since its official launch in autumn 2012, GIB has invested in 42 projects and committed £1.8bn of capital, which will deliver £6.6bn of new infrastructure investment. The projects supported by GIB will, when complete, save 3.7m tonnes of CO2 per year. At the same time, the Government has ambitious targets for providing support to projects in developing countries that will mitigate climate change or enable communities to adapt to its effects. Developed countries have committed to jointly mobilising US$100bn of climate finance a year by 2020 for developing countries, from both public and private sources. The UK is playing its part; we have already allocated £3.87bn to the UK’s ICF to finance such projects. This also contributes to the Government’s 0.7% of GNI aid commitment. Unmitigated climate change will hit the poorest first and hardest.
It is vital that we use public climate finance to catalyse private investment into developing countries. By working with the Green Investment Bank, DECC will be able to draw on its unique mix of investment expertise, commercial discipline and close alignment of green policy objectives to maximise the impact and effectiveness of UK climate finance.
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. 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. This will complement the existing portfolio of ICF investments, which work through multilateral development partners, such as the World Bank, as well as direct support to programmes developed and delivered in countries.
This new venture will have no impact on the resources or capital of £3.8bn which we have allocated to GIB for investment in the UK. GIB remains fully committed to helping the UK meet its domestic climate change goals. Indeed, this additional activity should benefit GIB’s core UK operations as GIB further builds its global reputation both as an expert in green finance and as a fund manager.
The UK’s financial services industry is world renowned, as is our leadership in tackling climate change, and this vehicle brings together these two strengths in a partnership that will enhance the UK’s reputation globally.