The UK will set up a bank aimed at investing in green infrastructure, chancellor Rishi Sunak said today during his 2021 budget announcement.
The bank will be able to deploy £12bn of equity and debt capital and issue up to £10bn of guarantees. It should support up to £40bn of total investment, Sunak said.
The institution, which will be based in Leeds, will begin operating in an interim form later in spring 2021, the budget statement said.
Sunak also said the government would aim to position to city of London as the leading market for voluntary carbon offsets. A new working group will be established to this end.
The carbon price support will remain at £18/t of CO2 equivalent until 2022-23. The tax has accelerated the UK power sector's shift from coal to gas, and keeps the UK power market at a wide premium to continental European markets. The government will also set out additional proposals for expanding the scope of the UK emissions trading system scheme over 2021.
And it was confirmed the UK will issue its first sovereign green bond this summer and look to quickly build out a green yield curve. Green gilt issuances will be a minimum of £15bn in 2021-22, to finance projects aimed at tackling climate change and other environmental challenges.
The government's pledge of funding for new port infrastructure in Teeside and Humberside "to support the next generation of offshore wind projects" was welcomed by industry association RenewableUK as a "gamechanger." Teeside and the Humber were also announced as two of eight "freeports" that will have different customs rules and taxes than the rest of the country. This should drive investment in offshore wind manufacturing, RenewableUK said.
The budget included some smaller green initiatives, including the launch of a £20mn programme to support the development of floating offshore wind technology across the UK, the launch of a new £68mn UK-wide competition to implement several first-of-a-kind energy storage prototypes or technology demonstrators, and a £4mn UK-wide competition for the first phase of a biomass feedstocks programme.
Government advisory body the climate change committee's chief executive, Chris Stark, said there was "not much to say about this budget — a comment in itself."
