Government action is necessary to give a jump start to the challenge of promoting green technologies and projects that may not deliver an immediate payback for investors, but have long-term potential for commercial success.
The Green Investment Bank (GIB), launched two years ago, is part of my department's response. The first project of its kind in the world, £1.6billion of government investment has leveraged £3.6billion from private investors like Marubeni corporation, Siemens and KFW in getting 37 green projects off the ground. It means the Bank has now passed an impressive milestone - helping finance a total of over £5billion of investment in the UK's green infrastructure.
GIB's expertise in assessing risk and developing new technologies and ways of working has given investors the confidence to back offshore wind, energy efficiency, waste recycling and waste to energy projects that otherwise would not have been realised.
In offshore wind GIB specialists are driving forward investment in new commercial technologies, encouraging the private sector to invest alongside. £2billion of capital invested to date includes a £888million project to refinance the Westermost Rough offshore wind farm, where we are seeing the first use of larger, more efficient 6MW turbines.
£350million has gone to large waste management and bioenergy projects - mobilising around £1.3billion of capital to modernise the UK's recycling infrastructure and greatly reduce the amount of waste going to landfill. In Birmingham a £47million waste project uses an innovative gasification technology which had not been used in the UK before, making private investors hesitant. GIB carried out detailed analysis of the technology; its endorsement, along with a £12million investment gave the project the credibility they sought.
I recently opened a new anaerobic digestion facility in Dagenham that is now processing over 850 tonnes per week of co-mingled food and green waste. In Wakefield, GIB's commitment of £30.4million enabled a £121.7million local authority waste project to go ahead.
I have not confined GIB's remit to the private sector. GIB is financing the shift to low energy street lighting through Green Loans which means that participating local authorities like Glasgow do not need to find capital up-front. Instead, repayments are made out of savings on energy costs.
Looking further ahead, I want to explore new ways in which the GIB can accelerate the decarbonisation of heat-intensive sectors, like steel, chemicals and paper.
These partnerships mirror a wider philosophy of long term investment that I've been implementing with some success in government. Through the industrial strategy, we are neither standing aloof from commerce, nor clumsily attempting to pick winners. Neither approach is viable in today's world. Instead we are working, sector by sector, to direct public and business support to areas in which intelligent intervention is needed - through joint investment in skills, research and development or infrastructure to name but three - to correct market failures that are restricting real growth potential. Thus, we can stimulate growth - be it in automotive, energy or aerospace - that is evenly spread, sustainable and environmentally responsible.