The UK’s environmental sector has been waiting a long time for the government to establish a Green Investment Bank (GIB). This wait has seemed like an eternity but the news that state aid clearance has now been granted from Brussels means that the GIB can properly open its doors for business.
And there could well be a lot of business when it comes to waste infrastructure - waste, of course, being one of the bank’s priority sectors.
Economies on both sides of the Atlantic have recently been through an extraordinary financial crisis, which remains ongoing. There are competing views of the reasons behind the difficulties, but it is certainly clear that there has been a massive over-allocation of debt in these economies which is now forcing banks to retrench.
Banks play an important role in financing new investment. A lack of investment is now holding back the real economy and contributing to the ongoing economic slump. New capital regulations are being introduced to constrain banks’ ability to lend excessively again in the future. These may perversely prolong the slump by continuing to dampen banks’ ability to finance new investment.
What does all this mean for the waste sector?
We are on the cusp of a major boom in residual waste infrastructure to meet Landfill Directive requirements. There is around 15 million tonnes of residual waste infrastructure in the UK which has secured planning permission but is yet to be developed.
The key constraint preventing the uptake of this development is likely to be finance. With the banking sector being forced into retreat by financial regulators, it is going to be crucial for the GIB to step up to the plate and help bring forward the infrastructure investment we need.
Jacob Hayler, Environment Services Association economist