A ┬ú2 billion ÔÇÿgreen bankÔÇÖ that finances environmentally friendly transport and energy projects will be at the heart of the UKÔÇÖs 2010 Budget, which is being unveiled on Wednesday.
The establishment of a Green Investment Bank will be set up with £1 billion from the Treasury, funded by the sale of government assets such as the Tote, the Dartford River Crossing, the High Speed One rail link, Urenco and the Student Loans book.
Private industry will also contribute £1 billion to the bank.
The money will go towards new nuclear power stations, renewable energy schemes such as wind farms and solar power and developing new rail routes.
The UK Government believes an extra 400,000 jobs could be created by growth within the green sector over the next five years. There has already been a vast increase in the use of renewable energy as the country works towards cutting its CO2 emissions.
The UKÔÇÖs current reduction target is 34 per cent from CO2 emissions measured in 1990, by the year 2020. It is also committed to raising the proportion of UK energy generated by renewables to 15 per cent by the same year.
It has been estimated that it would cost the UK £165 billion to replace and expand its ageing energy infrastructure.
The ┬ú1 billion input into the new bank by the Government is designed to encourage private-sector investmentÔÇöa strategy ministers are convinced will work following the success of the car-scrappage scheme. Under that scheme, motorists were given ┬ú2,000 off the price of a new model, of which ┬ú1,000 came from the Government and ┬ú1,000 from motor manufacturers.
The Treasury has yet to decide on the structure and management of the new bank; however, it does know that it will be a separate body with a remit to help finance projects that private investors would otherwise be reluctant to back.
It is thought that the move will help to ease concerns that companies are still struggling to secure finance for investing in innovation, despite the fact that the worst of the recession is over and the banking system has begun to stabilise.
The bank is part of a wider strategy to build growth and investment in the UK over the next 10 years.
Similar schemes offering assistance are run by state enterprise institutions in Germany and France.
