Greg Barker, the minister of state for energy and climate change, takes a sip of tap water before launching another tirade against his predecessors.
“We have had too much of the preaching, lecturing, hectoring climate change enthusiasts in government operating in a world that is totally divorced from the real economy,” the Conservative said. “We want to marry the interests of the British economy with an ambitious approach to decarbonising the economy to meet our climate change objectives. It’s two sides of the same coin.”
On Tuesday, one of Barker’s first initiatives will come to fruition. A commission he established while in opposition will deliver a report on how to set up a green investment bank, which could help business make that transition — and develop Britain’s role in the global green economy.
The commission, chaired by Bob Wigley, former chairman of Merrill Lynch in Europe, is expected to argue that the bank could be funded with £2 billion of cash currently trapped in green business quangos.
It’s just one of a series of radical ideas that Barker and his colleagues in the Department of Energy and Climate Change are working on.
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He and Chris Huhne, the Liberal Democrat secretary of state, have an evangelical belief that Britain can become the world leader in green technology — and in developing the financing structures to pay for it.
“The green investment bank will be able to take a longer-term view than many funds and banks in the private sector alone can,” said Barker.
“Its role is not to fund the uncommercial — it is not to act simply as a subsidy to lame duck projects — but will be to catalyse private sector investment.”
Barker argues that there are large pots of private capital available to invest in green projects — even in innovative, high-risk areas. But the people who hold the purse strings are reluctant to put the cash to work because of uncertainty about subsidies.
Even if the subsidies were smaller, guaranteeing them well beyond the 2020 deadline for the Kyoto Protocol on climate change would bring much greater investor interest. “I have spoken to a number of our largest insurance companies that could be attracted by the potential to invest at scale in long-term renewable energy projects, for example,” said Barker. “The prospect of a low-risk but far more certain return over a 20- to 25-year time horizon is very attractive.”
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The coalition has already spoken of placing a floor on the price of carbon credits, the tradeable emissions permits, in an attempt to encourage investment in clean energy.
The same long-term thinking lies behind the Green Deal, an initiative to improve the energy efficiency of the housing stock. The plan is to provide loans for the installation of insulation and sustainable energy equipment, which will be repaid over up to 25 years from the savings on the homeowners’ energy bills. If a house is sold, the loan will transfer with the deeds. Barker said: “We have had advanced discussions with finance providers, energy companies and retailers such as Marks & Spencer, Tesco and B&Q, which are all excited by this proposition.”
He said energy efficiency should be viewed in the same way as labour costs were in the 1970s and 1980s; if you can improve energy efficiency, you can improve the competitiveness of the British economy.