The UK’s National Infrastructure Bank (NIB) is launching in Leeds today (17 June), with Chancellor Rishi Sunak promising that it will funnel billions of pounds into the UK’s net-zero transition.
The NIB was first announced by Sunak at the 2020 Spending Review. It is designed to support major infrastructure projects, replacing the role that the European Investment Bank (EIB) played before Brexit and assisting with the delivery of the National Infrastructure Strategy. That Strategy was updated in November 2020, with the UK’s 2050 net-zero target and impact of Covid-19 on the economy in mind.
Based in Leeds, the NIB is being launched today on an interim basis. It will have £22bn of financial capacity in the first instance; £10bn of government guarantees, £5bn of equity and £7bn of debt. It has a target to help unlock at least £40bn of investment from the private sector.
Green groups have repeatedly been asking for more information on how, exactly, the NIB will support the UK’s net-zero transition and be prevented from supporting projects that are not aligned with this long-term, legally binding climate vision.
Speaking at the opening of the NIB, Sunak said it will “accelerate” the UK’s “ambitions for tackling climate change and levelling up, while creating new opportunities across the UK as part of our Plan for Jobs”.
Climate change is also mentioned several times in the NIB’s framework document. This document states that the NIB’s core mission is “to partner with the private sector and local government to increase infrastructure investment to help to tackle climate change and promote economic growth across the regions and nations of the UK”. Climate change is also mentioned in the strategic objectives and operating principles but, in the latter, there is little additional detail on which projects will and will not be eligible for funding on climate grounds. The EIB is notably in the process of ending fossil fuel finance.
More detail will likely be released once the Bank is out of its ‘interim’ stage. The UK’s green finance taxonomy, once launched, could also inform the Bank’s remit.
The Aldersgate Group’s executive director Nick Molho said the NIB launch is “a strongly welcomed intervention at a time where the UK economy needs to recover from the disruption brought about by the pandemic and put itself on track for net-zero emissions”.
Molho said: ”The Bank has a key role to play in crowding in much needed private investment towards crucial and complex low-carbon projects and industries, which can drive innovation, supply chain growth and job creation across the country.
“However, with the Climate Change Committee (CCC) highlighting yesterday that the UK is poorly prepared to deal with the impacts from climate change, it is essential that the Bank also has climate adaptation and nature restoration as a key part of its mandate. It is also key that the Bank be set up as an enduring institution, with the flexibility to tackle different market failures over time as market conditions evolve and with a gradual increase to its capitalisation to ensure that it has the right financial firepower to carry out its mission effectively and tackle the significant market barriers ahead.”
Molho referred here to the CCC’s third risk assessment on climate for the UK. Published on Wednesday (16 June), the report warned that climate risks to the UK are increasing in number and magnitude more rapidly than expected, with billions of pounds worth of infrastructure at risk in the coming decades. A certain degree of risk is already ‘baked-in’, meaning that, even if the UK meets its long-term climate targets, weather patterns will continue changing in the coming decades.