In response to the recent surge in energy prices caused by Russia's invasion of Ukraine, the UK Infrastructure Bank (UKIB) has received a directive to allocate additional funds towards green energy initiatives. The heavy reliance of European Union countries on Russian oil and gas supplies has resulted in a significant increase in energy costs in recent weeks. Chancellor Rishi Sunak has addressed this issue by writing a letter to UKIB CEO John Flint, emphasizing the importance of reducing the UK's dependence on fossil fuels and fostering prosperity across the nation.
Sunak's correspondence highlights the urgent need to enhance energy resilience and protect against future market shocks and volatility. While recognising the Bank's existing mission, he stresses the necessity for expeditious progress in achieving the Bank's net zero goals, particularly where they align with the government's renewed focus on energy security. The establishment of the UK Infrastructure Bank was previously announced by Sunak during the autumn 2020 Budget announcement. Headquartered in Leeds, the Bank has an initial capitalization of £12 billion and aims to invest in public and private projects throughout the country.
The UKIB Policy Design document outlines the Bank's primary focus on economic infrastructure, with specific emphasis on clean energy, transportation, digital solutions, water management, and waste management. Sunak's letter urges the Bank to prioritise opportunities that align with the government's renewed energy security agenda. He cites examples such as supporting low-carbon energy projects that expedite the UK's transition to clean energy and improve the energy efficiency of buildings and homes.
The letter clarifies that the Bank should generally refrain from supporting projects primarily focused on social or cultural infrastructure, including housing, schools, health facilities, courts, prisons, sports venues, theatres, libraries, and museums. However, projects or technologies that promote energy efficiency, such as retrofitting existing homes and buildings, as well as initiatives in line with the government's Heat and Buildings Strategy, fall within the Bank's scope.
The letter emphasises the strategic significance of the net-zero transition and the pressing need to enhance the energy efficiency of buildings, especially in the context of high energy prices and the government's energy security priorities. It also states that projects involving greenhouse gas removal, including engineering-based approaches like direct air carbon capture and storage, as well as nature-based approaches like afforestation and soil carbon sequestration, are within the UKIB's scope, as detailed in the net-zero strategy.
In light of the escalating energy prices resulting from Russia's invasion of Ukraine, the government is currently exploring various energy options. These include large-scale nuclear projects, small modular reactors (SMRs), and renewable energy sources. Prime Minister Boris Johnson has announced that a new national energy strategy will be unveiled this week. Johnson is taking the lead in a meeting with leaders from the nuclear industry to discuss increasing the UK's nuclear power output. Additionally, he has scheduled a meeting with executives from the wind sector during the same week to address related matters.