The UK Infrastructure Bank’s new £22bn plan to tackle climate change and boost regional growth will make clean energy the largest sector for investment.
Launching its first Strategic Plan, the Bank’s CEO John Flint said that improving energy security and supply is a top priority which will help deliver the UK’s Net Zero commitments and tackle regional economic inequality.
As it celebrates its first birthday, the Bank sets out its ambition to invest in other key sectors for the UK’s economic future across transport, digital, water and waste, financing the scale up of existing infrastructure and accelerating the deployment of new technologies.
John Flint, CEO of the UK Infrastructure Bank said: "We want our investments to shape the future and, for the first time, we’re highlighting where we expect the biggest investment opportunities will be to deliver on our mission to tackle climate change and regional inequalities.
"The war in Ukraine is an economic earthquake that underlines our mission and the strategic importance of energy security to the UK’s economic future. Rising energy bills also show how in the long-term we need to increase our domestic supply of energy.
"We cannot achieve this alone. Across the breadth of our mission we want to work with partners in the public and private sector to identify where our investment can make the most impact."
The publication is the first occasion that the Bank sets out, independently, where it plans to focus investments in its urgent mission to tackle climate change and boost regional and local economic growth across the UK.
The Bank has £22 billion of financing capacity to deploy: £8bn in debt and equity, £10bn in guarantees and £4bn for Local Authority lending. Partnering with the private sector and local government, it aims to fully commit its £22bn balance sheet over the next five to eight years. To do so, it is identifying a pipeline of investable infrastructure projects for corporate and project finance and aiming to invest across the capital structure including senior debt, mezzanine, guarantees and equity.
The Bank sets out a triple bottom line which applies to all its investments: achieving policy objectives, crowding-in private capital and generating a positive financial return on equity of between 2.5% to 4%.
The Bank identifies a number of investment opportunities where it could lead the market in tackling specific infrastructure challenges such as the roll out of electric vehicle charging, retrofit of buildings and the roll out of zero emission buses by Local Authorities.
The Bank will finance the scale-up of existing green infrastructure and accelerate the deployment of new technologies such as Carbon Capture, Usage and Storage and hydrogen.
The Strategic Plan highlights the importance of nature-based solutions and recognises that the green infrastructure market is still developing. The Bank will actively monitor the opportunities for investment in nature-based solutions and the role which its investments might play over time.
The Bank will also partner with Local Authorities across the UK by providing £4 billion of lending at preferential rates and supporting them to deliver ambitious and innovative infrastructure projects through its local authority advisory function. The Bank’s advisory function will launch this summer, with targeted pilot projects developed over the next 6 months to test how it can best add value.
Chris Grigg CBE, Chair of the UK Infrastructure Bank said: "Over the last year I am proud to say that the Bank has grown hugely in capability and maturity. We have also made significant progress both in terms of transactions, closing 7 deals worth £610 million, and in terms of defining our role. It is already clear that we can have a real impact on infrastructure across the UK."
"Needless to say, however, there is much still to be done. As our excellent group of new non-executive directors and executives arrive over the summer, they have a real opportunity and indeed responsibility to drive the continued roll out of the Bank’s strategy and to help it deliver on its core mission."
Economic Secretary to the Treasury, John Glen said: "A year after its launch, it's great to see the bank delivering on its mandate to accelerate investment in infrastructure, helping to level up across the UK and tackle climate change.
"This new strategic plan sets out how the bank will deploy £22 billion of investment into the UK economy over the coming years, boosting growth and supporting jobs."
Since it opened in June 2022 the Bank has closed 7 deals worth £610 million in projects located across the UK from Tees Valley and the West Midland to Northern Ireland. It has recently announced its new top team and non-executive directors.
The bank is now launching a new recruitment campaign. It expects to recruit over 80 roles across banking, legal, risk, corporate and local authority functions in the next 6 months. It aims to attract the best and brightest from across the public and private sector and offers a unique opportunity to have a real influence on the Bank’s critically important mission.
UKGBC’s Director of Communications, Policy & Places, Simon McWhirter said: “UKGBC warmly welcomes UKIB’s Strategic Plan and the recognition that reducing emissions from buildings is critical to achieving net zero and improving our national energy and climate resilience. This is in line with our feedback to the UKIB on its Strategic Plan Discussion Document. The focus on energy efficiency, retrofit and the essential role of local authorities are particularly welcome at this time and UKGBC will continue engaging with the Bank on our shared mission to decarbonise our buildings.”
