Financing environmentally sustainable projects
2012 was the second most successful year in history when it came to worldwide green investment projects and the policies of UK governments and those worldwide are likely to see future years improving at a similar rate. According to figures from Bloomberg New Energy Finance, a total of $268bn was invested during the year on projects ranging from off-shore wind turbines to biofuels and anaerobic digesters.
Getting in on this ever expanding investment opportunity should be high on every investor’s priority list. The market can only improve and with the UK government vowing to reduce carbon emissions significantly by 2020, now may be the best time to test the waters.
Climate change has become an undeniable truth in recent years. It is certainly true that human impact on the Earth is causing weather disturbances and natural disasters. It is also a fact that we face ever increasing prices for our energy needs due to political unrest and a lack of supply. Recent talk of fracking for natural gas in the UK has not put that concern to rest. It is clear that green investment is not only a wise choice, it may actually be the only ethical and sensible option.
The green investment market is made up of a number of sectors. These include investments in forestry and farming projects to support biofuels and biomass generation, investments in wind farms both on and off-shore, geothermal, solar farms and hydro-electricity.
While there are a number of ways for investors to become involved in these types of projects, one of the hardest steps is gaining the correct finance for the initial set-up and ongoing costs. This is where the Green Investment Bank comes in. The government has recognised the need for a new banking structure designed to meet the needs of the green investor. With this area being so new and somewhat untested, the regular banking environment was not always the best place to gain investment.
The Green Investment Bank is meeting the need for reasonably priced investment capital in a market where money is hard to come by and where utility companies are often too stretched or unwilling to step in and contribute. It will lend money to projects which meet the criteria of being low carbon and sustainable and will be funded by a combination of private investment and government funds.
With government policies working towards providing a good investment solution for those willing to put their money towards green projects, the future certainly looks rosy for the green investment sector. Add to this the fact that the price of oil is increasing, the environmental and societal costs of gas and coal are unlikely to improve, it does seem that the only option for an ethical investor is to take advantage of the increasing green investment sector.
At Maxxia, we are involved in the financing for a number of interesting green investment projects. If you have a renewable energy project and would like to discuss financing options, we’d be pleased to hear from you.