British based GIB, or Green Investment Bank, is the first bank in the world that is solely focussing its lending on clean energy projects, and it has just announced that during its first 5 months of operation it allocated £635 in funding.
The bank first opened last November, is backed with £3bn capital from the government, and during its first 5 months has given its support to 11 projects, the majority of which produce or manage energy from waste. With the UK needing to drastically cut its CO2 emissions by 2020 and by setting up GIB in Edinburgh it aims to finance those projects that will reduce the amount of climate damaging greenhouse gases.
The bank, which currently employs 74 staff which it hopes to increase to 100 by the end of 2013, struck its single biggest deal so far by lending £125m to help to finance Green Deal, which is a government programme to improve the insulation of people’s homes. The bank has also said that their own investments have unlocked an extra £1.7bn worth of third party lending.
For example, by lending £100m to Drax, the UK power producer, a further £890m was gained in lending from other parties wanting to invest in a project set to transform half of Drax’ coal capacity by burning biomass instead. Vince Cable, the business secretary, has said that these results show clearly that the bank is doing exactly what is was set up to do; draw in instead of shutting out capital from the private sector.
GIB does have its critics however, with the most common complaint being that it can’t actually borrow money itself. The bank was expected to be granted the powers to raise fund in 2015, but the government recently said that the bank didn’t need to borrow anything in the short to medium term.