Bethan Evans, a partner and banking & finance expert at national law firm Clarke Willmott LLP, shares her thoughts on the recent announcement by Chancellor of the Exchequer Rishi Sunak on financial support for the green industrial revolution.
Ever since some fellow European countries had either issued or announced plans to issue green bonds to help rejuvenate their economies because of Covid-19, it was inevitable that the British Government would respond.
Pressure had been mounting from several quarters, including over 30 asset owners and high-profile institutional investors responsible for a reported £10 trillion worth of assets under management. Additionally, Andrew Bailey, Governor of the Bank of England, also commented that climate change poses a greater challenge than Covid-19 in the long term and tackling it is vital.
Therefore, it was no great surprise that Rishi Sunak, Chancellor of the Exchequer, announced at the Green Horizon Summit that the UK will issue its first sovereign green bonds as part of the Covid-19 recovery plan.
These bonds, which are also referred to as gilts, will be launched in 2021. Uniquely, they can only be used for green or clean energy projects. A new UK Green Technical Advisory Group is being set up by the Treasury, implementing a green finance taxonomy, which will define what green projects and activities will be permissible, which must be compatible to achieving NetZero.
It is likely that there will be considerable demand for the green bonds, particularly from pension funds who are increasingly being mandated to invest in low carbon activity and sustainable industry, and is an important further step to building a UK-wide greener economy. This announcement follows the Prime Minister’s speech at the Conservative Party conference, committing to a green industrial revolution, with a 10-point plan to achieve NetZero. His first promise centred around increasing offshore wind energy generation.
In North Wales, this could see various projects progress including the extension of the existing 578MW RWE Gwynt y Môr offshore wind development, where exploratory geophysical work has been completed at Awel y Môr.
The Chancellor’s speech, which also included the introduction of more stringent rules on exposure to climate risk reporting by publicly listed companies, is another important step on the road to achieving NetZero. I will be looking out for details from the UK Green Technical Advisory Group on what green projects will be permissible. Additionally, I await with interest the launch of the Government’s Energy White Paper and further announcements of the 10-point green industrial revolution plan.
With over 20 years of experience in green energy, Clarke Willmott’s cross disciplinary team of solicitors deal with everything from scheme inception through to planning, set-up, site operations, build, finance, regulation, commissioning and subsequent operation of plants and facilities, to support clients achieving their commercial and sustainability goals.