UK Needs £57bn More for Green Energy Investment by 2030

The UK may require an additional £57 billion ($73 billion) in investment by 2030 to develop crucial green industries, according to a report advising the incoming Labour government led by Prime Minister Keir Starmer. These industries are expected to support green job growth and reduce carbon reliance.

The Labour party has already allocated £7.3 billion in public funds to a National Wealth Fund aimed at investing in sectors like ports, green hydrogen and gigafactories for electric vehicles and grid-scale batteries. However, even with current private capital flows, a funding gap of £35.9 billion to £56.9 billion remains.

“The challenge is clear,” stated the National Wealth Fund Taskforce, led by Green Finance Institute CEO Rhian-Mari Thomas. “Even with clear policy direction offering investor certainty, some projects will remain unfunded due to high investment risk thresholds.”

To address this, the UK Infrastructure Bank and the British Business Bank will align under the new National Wealth Fund, as announced by the Treasury. New legislation to make the wealth fund a permanent UK institution will be introduced, with more details expected before an international investment summit later this year.

“This new government is committed to delivering economic growth,” said Chancellor of the Exchequer Rachel Reeves. “We need to go further and faster to rebuild Britain and improve every part of our country.”

For years, UK lawmakers have debated the creation of a sovereign wealth fund, with contributions from figures like Barclays CEO C.S. Venkatakrishnan and former Bank of England Governor Mark Carney, who is also the chair of Bloomberg Inc.’s board. “We have to scale up,” Carney told the BBC, emphasising the importance of the initial fund allocation.

The taskforce recommends that the wealth fund use a variety of financial instruments, including equity, concessional debt, guarantees and price assurance products, avoiding pure grants to ensure a return on investment. “The NWF will reshape public-private risk-sharing, providing private investors with the confidence to fund the necessary technologies and infrastructure for growth and job creation across the UK,” said Thomas.

Reeves hopes the NWF will attract billions in private investment to boost Britain’s economic growth rate. This week, she announced planning reforms, including ending the ban on onshore wind farms and creating a task force to accelerate housing projects.

Starmer believes rapid growth will help avoid tough choices between raising taxes or cutting spending. However, economists are sceptical that growth will be sufficient, with Bloomberg Economics forecasting a potential £20 billion fiscal shortfall in Reeves’ first budget this autumn.