BVCA Supports Green Investment Bank

by Robin Pilgrim, LawAndTax-News.com, London

26 March 2010

The British Venture Capital Association (BVCA) has called for the government to work closely with the private sector in establishing the new Green Investment Bank (GIB), which was announced in the UK budget after recommendations from the Energy, Environment and Technology Board (EETB).

The EETB is a consortium of investors across the spectrum of clean technologies, infrastructure and renewable energy projects. Collectively EETB members have over GBP10bn in funds under management, of which over GBP700m has been invested in UK companies, saving an estimated 4.2 million tonnes of CO2 per year while creating thousands of jobs.

The EETB had published a report which argued that the GIB could be vital to facilitating and accelerating private sector investment in support of the UK's 2020 and 2050 low carbon, renewable energy and energy security targets, as well as in creating jobs for the British economy.

The report recommended that the GIB should facilitate and not compete with the private sector in:

• Attracting private sector capital necessary to deliver the UK's 2020 and 2050 low carbon and renewable energy targets;
• Providing value to the UK taxpayer by investing on a fully commercial basis;
• Offering a range of standardized investment products for low carbon projects and companies promoted and vetted by private investors, always investing alongside private capital and targeted to address market failures; and
• Providing independent advice to the government on delivering the low carbon economy.

The BVCA envisage that the GIB would be primarily self-funding and able to draw on the capital markets, including through the issuance of Green Bonds.

Simon Walker, Chief Executive of the BVCA, said:

"The low carbon and renewable energy sector, along with much of the financial sector has been beleaguered with regulatory uncertainty.... Private capital should be favoured over public capital to rebuild the country's economy, create jobs and meet our climate change commitments... the government should ensure a stable investment environment and, configured correctly, the Green Investment Bank can achieve this."

Tom Murley, Chairman of the BVCA's EETB, said:

"We are in a unique position to marshal private sector capital, identify the roles private capital can play and suggest how the government can catalyse and facilitate investment into the low carbon sector. The opportunity to address short-term market failures is one that cannot be missed..."

The BVCA also welcomed support for small and medium-sized enterprises in the Budget, especially the doubling of entrepreneurs' relief to the first GBP2m of gains made over a lifetime. This should further encourage entrepreneurship and foster innovation, as would the establishment of the University Enterprise Capital Fund.

The BVCA also thought the creation of a Growth Capital Fund was good news for British businesses, so that small and medium-sized businesses could receive investment to grow. It called for the fund to operate along strictly commercial lines.

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