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Green finance experts unveil blueprint for mobilising net zero investment

Green finance experts unveil blueprint for mobilising net zero investment

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A new report by the Green Finance Institute (GFI) and the Institute for Public Policy Research (IPPR) calls for deeper collaboration between public and private sectors, alongside clear sector-specific transition pathways, to accelerate green investment in the UK’s net-zero economy.

The report highlights the growing need for private finance to meet the UK’s net-zero goals, estimating an annual requirement of £50bn to £60bn by 2030. To attract this investment, the report recommends:

  • Deeper public-private collaboration: Similar to calls from the Association of British Insurers (ABI), the report advocates for closer cooperation between public and private sectors to unlock investment.
  • Investable transition pathways: Developing clear and sector-specific pathways would provide investors with greater certainty and encourage them to participate in the net-zero transition.
  • Catalytic public finance: The report urges the government to provide “catalytic public finance” to attract private capital into priority sectors.
  • Addressing policy and regulatory barriers: Removing policy and regulatory obstacles that hinder green investment is crucial for progress.

The report further proposes establishing a new publicly-backed institution aimed at financing the transformation of key industrial sectors. This institution would focus on mobilizing private capital rather than being constrained by traditional return targets.

The report emphasizes the need for diverse public finance interventions tailored to different sectors, recognizing that each has unique risk-return characteristics.

Sam Alvis, associate fellow at IPPR, stresses the urgency of establishing a clear industrial strategy to guide the private sector. “We are far behind on our climate targets, and the UK economy is in recession,” he says. “Investment from both government and private finance is central to solving both those challenges.

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The report’s release comes amid ongoing debate about green spending. The Labour Party’s recent reduction in its green spending plan has raised concerns about the public sector’s role in financing the net-zero transition. Last week’s confirmation of the UK’s recession further complicates the investment landscape.

George Dibb, associate director for economic policy at IPPR, emphasizes the need for a multi-pronged approach to attract private finance. “Neither firms nor regulators are currently set up to confront this challenge,” he says. “This report sets out a mix of policies, developed with investors themselves, to provide much-needed finance for an ambitious green industrial strategy.

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