A 'Green' Budget, but is it green enough?

A new Green Investment Bank aimed at funding low carbon transport and energy schemes, such as wind farms, has been trailed in the press for a few weeks. And now it has appeared in Alistair Darling's pre-election Budget.

To boost a low carbon economy, the Government intends to set up a new Green Investment Bank. Key points to note are:

• The bank will initially control £2 billion of equity
• It will be funded with £1 billion from the sale of public assets, such as the Channel Tunnel Rail Link and the Student Loans book, plus another £1 billion in private capital
• Money is to be channelled into low interest loans and other financial help for companies building green energy projects

Mr Darling also announced measures to support offshore wind energy, providing £60 million in funding to upgrade ports to make them better able to handle offshore wind turbines.

The Chancellor's ambition is to be able to "unlock billions more from the private sector" to fund clean energy projects.

However, is £2 billion enough to kick-start the low-carbon economy? Many analysts think not, citing that the initial investment is far too little and will merely scratch the surface of the problem.

Will the Green Investment Bank have the desired impact on Britain's economy? Much will depend, of course, on the outcome of the upcoming general election, but the Conservatives' green policy paper, Rebuilding Security, contains similar proposals, including:

• Promoting nuclear and renewable power through streamlined planning, a floor price for carbon and improved infrastructure
• Creating a capacity guarantee in electricity and a security guarantee in gas supply
• Making Britain more energy efficient, through a "Green Deal" and a new "energy internet", that puts consumers in control of their energy usage

Watch this space for further developments in this area.