Delivering net-zero will only be possible with a sustained, multi-decade national retrofit drive to decarbonise homes and buildings. The National Infrastructure Commission and Climate Change Committee have identified domestic energy efficiency and low carbon heat as a UK infrastructure priority.
However, to date, mobilising capital has been one of the greatest challenges. The UK Infrastructure Bank (UKIB) could be mission-critical for making progress. Specifically, by supporting local authorities, businesses and financial institutions, the UK Infrastructure Bank (UKIB) could unlock healthier homes, lower energy bills, green jobs and significant carbon reductions.
This briefing outlines the market-making role the UK Infrastructure Bank could play through supporting transformative, strategic projects. Furthermore, it provides national and global examples that the Bank could support in the short and medium-term.
Key recommendations for the market-making role of the UK Infrastructure Bank
- Recognise and communicate the decarbonisation of the built environment as a strategic priority, aligned with investment principles and supporting the overall mission.
- Explore and promote financing options and tools through which the UK Infrastructure Bank can support place-based transitions. Over time, this could include:
- Support for innovative green businesses to invest and scale supply chains, and energy companies to broaden their services
- Provide patient low-cost capital and co-invest alongside new forms of local authority financing to help councils access and crowd-in affordable capital and aggregate demand.
- Provide concessional finance or guarantees to retail banks and therefore, underpin attractive financial products made available across the sector and to households.
- Support the private and social rented sector to decarbonise building stock.
- Support local authorities and others to identify project pipelines and aggregate demand to build economies of scale and reduce costs.
- Connect transformational deals with private finance actors to deliver blended finance.
- Support digitalisation and smart, data-driven solutions which could help crowd-in further private finance, monitoring efficient use of capital and longterm benefits.
- Work with Government departments to consider future options to channel additional subsidies and incentives through the UK Infrastructure Bank’s operations, as seen in Germany, helping unlock further environmental additionality and private investments.