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* Additional funding makes it a “credible” proposition
* Enterprise, and planning announcements could be an important link to low carbon development

Additional funding, an earlier start date, and the potential for links to the government’s wider enterprise and manufacturing support packages announced in today’s budget are good news for the proposed Green Investment Bank – but there’s still much to do say commentators from PwC’s energy and climate change teams.

Commenting on the announcement of new additional funding for the Green Investment Bank, and plans to bring forward its launch by a year, Steve Jennings, utilities sector leader, PwC said;

“It’s a helpful funding mechanism to encourage investment in low carbon technologies and energy efficiency, but it’s a drop in the ocean for the £200bn that the industry needs to spend over the next decade.”

John Gibbs, partner, corporate finance, PwC said:

“You have to say that tripling the investment and bringing it forward by twelve months makes it a more credible proposition that could make a real difference.

“The key objective now must be to develop a suite of products that can help industry mitigate the specific risks that otherwise deters private investment. Construction and early stage risks deter investment and currently threaten to undermine progress in developing offshore wind and other major clean energy projects. If the bank does this, it will be able to make a major contribution to leveraging the required finance and establishing the UK as a leader in green energy.

“In the short run, targeted well-focused interventions will be more effective than a wide-ranging approach that seeks to be all to things to all people.
“In the longer term, the chancellor’s commitment to enabling the GIB to borrow and raise funds in its own right offers the opportunity for the bank to maintain its influence as the pace of investment picks up and manufacturing and delivery capacity in the sector becomes well established.
“There’s an important link to the Chancellors enterprise zones announcement too. Increasing the number of areas benefiting from enterprise zone status could offer opportunities to support the development of onshore manufacturing and port facilities critical to our ability to develop and lead the global offshore wind industry.”
“Overall you have to see it as good news and it’s a nod towards the government’s green ambitions, albeit we were starting from a low benchmark.
Ronan O’Regan, director, renewables and clean tech, PwC said

“There are two issues for the GIB. The first is how much money is available. That’s increased - so that's positive. The second is the efficiency of the investment - how we can maximise the units of low carbon per pound of green investment bank funding. The products on offer from the bank will be key here.

“Wider moves in the budget on planning and enterprise reliefs could have a ripple effect on the UK’s low carbon ambitions.

“The planning changes say the default is in favour of sustainable development, and if that translates into making it easier for low carbon energy generators than that is a welcome move.

“The expansion of the Enterprise Investment Scheme, and an increase in entrepreneurial relief could help target investment and funding for low carbon enterprises. Manufacturing reliefs and incentives can also create the right environment for clean technology development in the UK.

"For manufacturers, the constant complaint is one of skills shortages and capabilities, so the expansion of apprenticeships, and support for innovation, could be some welcome relief.”

Notes
1. Speaking soon after coming to power, Energy and Climate Change Secretary, Chris Huhne, stated that he planned to increase Government income from green taxation by 2014/15 to £50 billion, or 10% of current total tax receipts. As environmental tax receipts for 2009/10 were £35.9 billion, or 6.9% of the total tax income, Mr Huhne’s plans will mean approximately £14 billion of additional green taxation during the next five years. According to the Office of Budget Responsibility forecasts, UK total tax receipts for 2014/15 will be £700 billion (in 2009/10 they were £520 billion), meaning that the £14.1 billion increase will only constitute a 0.2% rise in environmental taxes as a percentage of total tax receipts.
2. A recent global survey by PwC, ‘Appetite for Change’, which interviewed over 650 business leaders across all industry sectors in a number of countries, including the UK, asked interviewees whether they thought that there are currently clear policies on environmental instruments coming from governments around the world. Only 36% believed this to be the case.
3. Budget comment and analysis: Rowena Mearley, PwC Media Relations: 0207 213 47 27 / 07841 563 180
Rowena Mearley | Corporate media relations | PwC
Tel: + 44 (0) 20 7213 47 27 | Mob: + 44 (0) 7841 563 180
Email: Rowena.mearley@uk.pwc.com | Web: www.ukmediacentre.pwc.com

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