The UK will suffer an energy crisis by 2020 if investment is not released by commercial banks for renewable projects, according to a sustainable finance expert.
And key to bringing this about is helping the banks better understand and overcome the risks in financing renewable energy projects.
Aniko Dobi-Rozsa told a conference that a change of mindset was needed among high street banks to get renewable projects off the ground.
She explained that most banks think in the short-term over lending, while sustainable finance relies on long-term goals and in turn, long-term funding.
She said: “The banking sector needs to learn how to reduce its exposure to climate change. Risk mitigation tools are needed for commercial banks to be able to understand the risks in financing climate change projects.”
Dobi-Rozsa, managing director of Global Environmental Social Business, a private company specializing in financing energy efficiency and renewable energy projects, said that the government’s plans for a Green Investment Bank were “very good”, but it must ensure that small finance projects were included.
This was echoed by Andrew Lee, chief executive of the Sustainable Development Commission, who said that the Green Bank would focus on “green mega-renewable energy projects”.
“There is a neighbourhood level that needs to come into the bank.”