What role is Green investment Bank playing in green financial institution?

In the UK, the GIB, Green investment Bank was established to keep the green part of UK government investment to be activated thereby solving the constraints related to greenfield investment.

The main purpose of GIB (Green Investment Bank) is an efficiency increase in public and private investment model. The burden is to minimize the market failures, energy consumers and taxpayers.

Green investments needed to be vitalized with the operational efficiency of the fund, supporting the government policy and global cooperation.

The Green investment bank planned an investment strategy to invite venture capital funds where the uncertainty of the future profit is reduced through the assurance of technology risk and commercialization. Join investment was sought out by the Green Investment Bank for green projects with the private capital market.

Small and medium business projects were tried by the Green Investment Bank so that energy efficiency can be improved for existing houses and the development of technology is possible. The investment was planned in particular with the development field for wind power generation technology by £60 million each year when private investor’s funds can be attracted.

The initial capital of £3 billion was used to establish the Green Investment Bank. The capital for the existing establishment has been raised by using an existing tax system and state-owned asset sales, auction revenue of carbon credits, student loan debt, radio frequency licences, and service charges for the receivable account.

The GIB is provided with various support plans-

  • Green projects are provided with subsidies.
  • Private capital investment with joint investments has been used in the green area.
  • Loans and structured products are used for a funding plan.  
  • The partnership between GIB with private banks was established.
  • Renewable energy generation projects were supported by mezzanine financing.
  • Macquarie of Australia bought the GIB.

Source: — Handbook of Green finance by Jeffrey D. Sachs et al.

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