Green Finance - Environmental Audit Committee Contents

4  A green finance strategy

70. This report has focused primarily on investments in low-carbon energy generation and energy efficiency, which mitigate the impacts of climate change, rather than investments to adapt to climate change or investments in green spaces and natural capital. Increasing the flow of green finance in all these areas is a responsibility divided between different departments and other entities. The Government has a range of ways to help co-ordinate its efforts between departments, including the advice of the independent Committee on Climate Change. The Community Energy Strategy (paragraph 56) is a welcome move towards bringing greater coherence to an important area of green finance. However, the Government needs to do more to accelerate progress and monitor impact.

71. Michael Fallon noted that "the Treasury publishes annually the National Infrastructure Plan and that lists the major projects. It may be we should go perhaps further than that and look at the way the projects there are tabulated just to give everybody a running check on how the green projects are going on."[172] He added that "there may well be merit in having somebody more independent monitor the number of projects that are coming forward".[173] But more is needed. We noted in our Sustainability in BIS report, for example, that there was a need co-ordinate the 11 Industrial Strategies to ensure that as a whole they reflected the wider requirement to decarbonise the economy.[174] The Committee on Climate Change last year recommended that the Government undertake and publish an assessment of capital market conditions.[175]

72. The Government published in 2011 A transition to a Green Economy, which was initially intended to provide a roadmap for investors.[176] In our Green Economy report we expressed disappointment that this had not included the role that UK financial markets could play in helping to finance the green economy, nor any time-bound milestones.[177] A more detailed plan could help ensure a long-term co-ordinated strategy, which reviews achievements and sets out next steps, in a similar way to the National Infrastructure Plan.[178] Stakeholders from a number of departments, including the Treasury, would need to be involved.

73. As we have described in this report, there is an urgent need to address the green investment gap. The Green Investment Bank and some individual programmes and initiatives are making some inroads in filling that gap. But a more co-ordinated approach is needed to accelerate progress. The Government should publish a single overall strategy to refocus and direct all relevant policies towards this essential task of mobilising action on reducing carbon emissions, as it started to do in Enabling the Transition to a Green Economy. It should re-visit that document to evaluate progress and identify areas for improvement, as well as extending it further. It should monitor and report on overall progress across the full range of green energy and infrastructure investment, in the same way as it reports annually on the National Infrastructure Plan. Working to a single strategy would create greater certainty and a more favourable investment outlook by bringing together and aligning:

·  The UK's position in international negotiations on emissions reduction and climate change;

·  Action needed to deliver our carbon budget commitments and Climate Change Act obligations;

·  Industrial Strategies;

·  The National Infrastructure Plan;

·  The Infrastructure Guarantee .programme;

·  The Green Investment Bank's role and the scope of the projects it supports;

·  Opportunities to take advantage of and direct EU funding towards green infrastructure;

·  Green-proofing Government grants, including the Regional Growth Fund and LEPs;

·  Community energy;

·  Funding for adaptation to climate change.

172   Q251 Back

173   Q252 Back

174   Environmental Audit Committee, Seventh Report of Session 2013-14, Sustainability in BIS, HC 613 Back

175   Committee on Climate Change, Next steps on electricity market reform,(May 2013), p56 Back

176   Defra, Business Plan 2011-15, (May 2012) Action 3.5.i. Back

177   Environmental Audit Committee, Twelfth Report of Session 2010-12, A Green Economy, HC 1025 Back

178   Treasury, National Infrastructure plan 2013, (December 2013)  Back

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Prepared 6 March 2014