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Edward Northam: Financing the UK’s Low Carbon Economy

17 Oct 2018

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Edward Northam, Head of GIG Europe, looks to the future of low carbon finance and outlines the impact of GIG’s investments on the UK’s green economy.

If any of us had any doubts about the urgent need to transition to a low carbon economy, the International Panel on Climate Changes’ recent report on the impacts and benefits of limiting global warming to 1.5°C should put them to bed. Even if the world meets its climate change commitments and keeps global temperature rises below 2°C from pre-industrial levels, we will still experience changes to our planet that will affect our daily lives. From higher sea levels to more frequent and extreme droughts, there’s a new reality that we must adapt to.

Here in the UK, we’ve already made significant progress in our pursuit of a low carbon economy. The UK’s low carbon economy is now worth over £42 billion, directly employs 430,000 people and it keeps growing year on year. In fact, since 1990, the UK has grown its overall economy by 70 percent, while simultaneously cutting its carbon emissions faster than any other G7 nation.

But we can’t be complacent.  There’s a huge amount of work still to be done. The Aldersgate Group suggests the UK needs to invest up to £693 billion in low-carbon infrastructure by 2031, with $US90 trillion needed worldwide over the next 15 years. They warn we’re not seeing that investment coming forward at the scale and pace required, which means there are big opportunities for businesses and investors in the UK.

The Green Investment Group (GIG) is fully committed to playing its role in unlocking the capital required to further the transition to a global green economy. Utilising our expertise from our bases in Edinburgh and London, our mission is to make new green projects happen. To date, we have invested or arranged over £14 billion into green infrastructure projects across the UK, helping to realise over 6 GW of low carbon generation capacity, and generate the equivalent electricity consumption of 6 million homes per year.

That’s why I joined the UK Government’s Green Finance Taskforce. Established in 2017, we were brought together as a broad group of individuals and organisations, to develop recommendations on how the UK could raise the scale of capital needed to deliver the transition to a low carbon economy, while generating the maximum return for UK Plc. 

Our report, published in March this year, highlights the enormous growth potential of the green finance sector. To stimulate this growth, the report makes 30 recommendations across 10 themes, ranging from improving data capture and analysis of climate risk, to issuing a sovereign green bond to help fund large scale, national green projects.

It also recommends continued investment in green technologies. As technologies mature, we’re seeing a growing number of investors show an appetite for low-carbon assets, and a greater willingness to invest at the construction stage. GIG is responding to this by moving earlier into the development cycle, building in-house development capability and delivering a sustainable pipeline of high-quality investment opportunities for later-stage investors.

GIG’s investment approach is constantly evolving to meet the rapid and fundamental changes underway in the market place, ensuring we remain a driving force behind the global energy transition. We’re proud to support Green GB Week and reaffirm our commitment to supporting the transition to a low carbon economy in the UK, and from the UK.