The legislation that will set out the working principles of the Green Investment Bank has been published by the Department for Business, Innovation and Skills.
The principles are contained in the Enterprise and Regulatory Reform Bill, which will now begin its passage through both Houses of Parliament.
Business secretary Vince Cable said the Bill will help grow our economy out of a period of acute crisis and “make Britain one of the most enterprise-friendly countries in the world”.
Apart from setting out changes to the employment tribunal system, introducing a new Competition and Markets Authority and giving a binding shareholder vote on executive pay, it also sets out the Bank’s terms of operation.
Its remit is that investments, loans, guarantees and so on may only be granted if a project satisfies at least one of the following purposes:
the reduction of greenhouse gas emissions
the advancement of efficiency in the use of natural resources
the protection or enhancement of the natural environment
the protection or enhancement of biodiversity
the promotion of environmental sustainability.
“We want to make sure the right conditions are in place to encourage investment and exports, boost enterprise, support green growth and build a responsible business culture,” said Cable.
The bank is intended to accelerate long-term private sector investment in the UK’s transition to a green economy.
Its launch is being led by financier Sir Adrian Montague. It will be wholly-owned by the Crown but will have operational independence. Initially it will be funded by government to the tune of £3 billion up to March 2015.
One week ago the bank, which will be based in both London and Edinburgh, was officially formed as a plc.
However, it is still awaiting state aid approval from the EU, which is expected at the end of the year, and for the first senior appointments to be made, which will be done shortly.
Louise Hutchins, senior energy campaigner for Greenpeace, welcomed the news, calling the bank: "A clever way to tackle climate change while giving a much needed boost to cutting edge, clean, home-grown technologies".
However, she sounded a note of caution. "Banks need money, but the Chancellor seems to be applying the same approach to the green economy which has failed the wider economy, hoping that the private sector will step in and do what the government has left undone.
"If it’s going to be more than an empty gesture, the bank’s got to have the borrowing powers necessary to support the green shoots of the UK’s renewables industry."
Currently, the Treasury position is that the bank will not be able to borrow until the UK's books are balanced. That timetable has already slipped from 2015/16 to 2016/17. With the economic outlook showing absolutely no signs of brightening, doubts will be raised about when this might be. What will happen after March 2015, is therefore currently anyone's guess.
A spokesman for Oliver Griffiths, deputy director of the Green Investment Bank Team, has previously said that a "decision [on borrowing] will be taken by the Government when it is known whether or not the test has been met".
Unless it can borrow, it will lack the financial muscle required to supply more than just a fraction of the estimated £200 billion infrastructure investment required by the end of the decade.