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Bankers Banking On £3 Billion Green Subsidies

DECC has persuaded 88 big financial names to back the Capital Markets Climate Initiative (CMCI). Critics fear the initiative is a way for the private sector to make a killing while taxpayers’ money is put at risk.

ON a flight over the North Sea, Greg Barker sketched out an idea on a napkin.

The climate change minister was returning from a conference in Norway, where he had been frustrated at western governments’ inability to agree how to meet the target of putting $100 billion (£64 billion) a year into developing countries by 2030 to help them prevent climate change.

Two years on, the Department of Energy and Climate Change (Decc) is ready to launch an investment club that will try to fill some of the gap by tapping private sector funds.

Barker has persuaded 88 big financial names — including Black Rock, Goldman Sachs and the London Stock Exchange — to back the Capital Markets Climate Initiative (CMCI).

Decc officials will use their contacts all over the world to source green infrastructure deals in countries whose governments cannot afford the upfront cost.

Members of the CMCI will decide whether they want to invest on a deal-by-deal basis. Whitehall will sometimes invest alongside the institutions, using the £2.9 billion International Climate Fund, a pool of taxpayer cash set up to invest in green projects.

The aim is to match banks and insurers with projects they would not have been aware of. At the same time, Barker hopes to create British jobs by taking trade missions — with, say, solar panel manufacturers and installers — to countries where deals have been arranged.

The CMCI is loosely organised. There is a steering group responsible for strategy, whose members include ministers at Decc, the Treasury and the Department for International Development, plus companies and organisations such as Alliance Trust, Deutsche Bank, KPMG and the World Bank.

“The public and private sectors weren’t really talking before this,” said Tom Kerr, the head of climate change initiatives at the World Bank. “Making this attractive to the banks is something the government has a strong interest in.”

There are also two working groups with a shifting cast drawn from the CMCI’s wider membership. The first, chaired by Anglia Ruskin University, will look at how to decide which projects can be called “investment grade”. The second will consider the obstacles faced by governments of developing countries when they come to financing green infrastructure.

The CMCI is working on its first investment — helping India towards its target of installing 22,000MW of solar power by 2022.

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