London gets a warning on Green financing

Nowhere’s too far from having to think about financing, and investment in low-carbon energy and cleantech is no exception. That’s why a piece the Financial Times ran yesterday by Fiona Harvey, all about green funding, makes for interesting reading. I’ve reproduced it below.


London risks losing its pivotal position as a centre of green finance and missing out on a growing market worth many billions of pounds a year, according to Greg Barker, energy and climate change minister.

“The vital role of capital markets in tackling climate change has been overlooked for far too long,” said Mr Barker, who is holding a meeting of City financiers, government officials and policymakers from overseas on Tuesday to discuss ways of using private-sector capital to tackle climate change.

Last year, global investment in low-carbon energy topped $160bn (£104bn), and by 2020 the amount invested in helping developing economies alone to cut their emissions and adapt to the effects of climate change is projected to reach $100bn a year, according to the international accord signed in Copenhagen last December.

Mr Barker said these fledgling markets presented an obvious opportunity for City institutions.

London already has a strong position in green finance – being a leading centre of carbon trading, with a large number of investors focused on “clean technology”.

However, Mr Barker pointed out that many of the UK’s experts in green finance were in “boutique” or small-scale institutions, and that if Britain wanted to expand in this area, mainstream financial institutions, including banks, pension funds and other big investors, would have to be encouraged to take part.

“The market is in such infancy that London could easily be overtaken by New York or one of the Asian capitals,” he said. “We want to make sure that we plant the Union Jack firmly in the middle of this agenda.”

He pledged government help in the form of forging links with the developing economies likely to provide much of the green-finance growth in the next decade, and in ensuring that the market was well-regulated and not dogged by fraud.

Mr Barker said many developing economies were “sceptical” of the involvement of the private sector in green finance, and would require persuasion before they were willing to provide the framework needed for big institutions to invest.

Copyright The Financial Times Limited 2010.