Hayden Morgan, a former director of sustainable finance at the UK Green Investment Bank, which was originally set up to accelerate private sector investment into the UK green economy, highlighted the need for the NWF to establish robust green investment principles.
Morgan, now of Pinsent Masons, said: “Having transparent investment and monitoring criteria, using scientific best practice, is critical in measuring outcomes needed. Private sector investors and lenders are using their own sustainable and transition finance frameworks, using such criteria, for decision-making. This will support an increase in industrial decarbonation, and access other energy transition opportunities. The NWF should be aiming to demonstrate leading science-based sustainability practice, to support market confidence.”
The taskforce report highlighted some barriers to private investment in green industries and technologies, which were the rationale for intervention. The main barriers are investment viability, demand certainty, and value chain readiness.
It said that a combination of high capital requirement, first-of-a-kind technology risk, and volatility in the price of production inputs and outputs means that, for financial institutions, the level of risk posed for certain green investment is beyond their appetite. The taskforce, therefore, suggested that the fund “will likely be most additive” by investing in nascent technologies or projects at the initial stages of market development, to address risk and reduce private sector barriers to investment.
“The net zero and green transition is said to present the biggest private sector investment opportunity since the industrial revolution, but turning that into reality is the challenge,” said Watson. “This requires intervention in markets and transition technologies, projects, and the industrial base. Without such intervention, ‘market forces’ won’t be sufficient.”
“The involvement of key private sector investors in the NWF taskforce brings weight and impact to its recommendations, which are focused on five key areas for the UK,” he added.
Alongside the launch of the NWF, the government has further ramped up green transition focus by appointing former chief executive of the Climate Change Committee Chris Stark to lead a new “mission” control centre tasked with delivering cheaper and clean power mission by 2030. This is the first of its kind in government. It will bring together a team of industry experts and officials, working with key energy companies, grid operators and regulators, to break down barriers and accelerate progress for clean energy projects.