Sadiq Khan to create £90m City Hall green bond programme
Sadiq Khan will issue City Hall green bonds as a part of a £90m programme intended to boost the UK’s investment in green infrastructure.
The new programme, which will be in the mayor of London’s £16bn+ 2021-22 Budget, will see £86m spent on the green bond programme and a further £4m spent on developing “high-impact green investment opportunities for the public and private sector”.
City Hall said this would unlock £500m of investment into green projects, such as making “social housing and public buildings energy efficient, as well as clean, local energy projects providing solar [Photovoltaics] and heat pumps”.
Issuers of green bonds promise to invest funds into projects that are environmentally friendly and contribute to reducing the UK’s carbon emissions.
They are a pillar of Rishi Sunak’s plan to de-carbonise the City, with the chancellor issuing £16bn of the green gilts last year.
Sunak said at the time that green bonds “give all UK savers the chance to support green projects”.
Julian Jessop, economics fellow at the free market Institute of Economic Affairs (IEA) think tank, said green bonds were a “gimmick with no clear benefits” and that the “sums involved [in Khan’s proposal] are also small in the context of the vast amounts of investment required to achieve net-zero”.
“It only makes economic sense for the mayor to back them if the interest rate is lower than on conventional borrowing, or if they guarantee funding for sound projects that otherwise would not happen – neither seems likely,” he said.
“Some investors might be willing to accept a lower return for what they see as a good cause but, in general, this form of borrowing is less liquid and more expensive.”