Siemens and the U.K.’s Carbon Trust have announced a finance program to cover the upfront costs that businesses face when switching to the use of energy efficient technologies.
Through the initiative, Siemens Financial Services Ltd. – the electronics giant’s financial arm – will provide £550 million ($890 million) in loans over the next three years to UK businesses wishing to change old inefficient equipment to newer low-carbon technologies, such as low-energy lighting or biomass heating.
The Carbon Trust will use its experience of managing energy efficient projects to assess the carbon, energy and cost savings of proposed projects being put forward, so that any interest on loans given by Siemens will be offset by future cost savings, such as reduced energy bills.
The energy saving finance program will officially be open for applications on April 4, and will run alongside another joint venture between Siemens and the Carbon Trust to be launched later this year. The other venture will offer firms procurement support to help ensure purchases made under the initiative are energy efficient and from accredited suppliers.
“A missing ingredient at present is access to affordable finance to enable business to make green investments,” Carbon Trust chief executive Tom Delay said. “This new major finance facility will improve business competitiveness, cut carbon and boost green growth.”
Greenpeace has welcomed the announcement. Executive director John Sauven said: “This green finance deal is exactly the sort of initiative that we need to see happening more frequently in the future. Deals like this, alongside the development of a green infrastructure bank, could be a tipping point that the UK economy needs to get out of the current doldrums.”
The green investment bank is a £1 billion government project focused on unlocking private investment in green infrastructure projects such as offshore wind farms. The government has revealed few details about the bank since announcing the size of the investment last October.
But according to The Guardian, Liberal Democrats in the U.K.’s coalition government are seizing hold of the recent spike in oil prices, caused by unrest in the Middle East and North Africa, to push through their clean energy agenda.
They appear to have persuaded Prime Minister David Cameron, the newspaper said, and firm deadlines will be set soon for the bank’s launch.
In addition, the government has said that all departments will have to adhere to a new “Carbon Plan” and the Department for Transport will create a national strategy for installing electric car infrastructure. The government will also set firm deadlines for the crystallization of zero-carbon building rules.
The government will also ask non-profit groups such as Greenpeace to monitor its progress against environmental targets, the Guardian reported.
The Siemens announcement is a boost to the Trust’s finances following the announcement last month that it faces a 40 percent cut in its budget next year as the U.K. government’s austerity drive kicks into gear.
As a result of the cuts, 35 jobs are being slashed from the government-supported company and a number of services will be scaled back. Delay said the body would be looking toward the private sector to supplement its finances.
The loans program appears to provide a blueprint for how the Carbon Trust can continue to operate with a lower level of government funding.
The Carbon Trust is a not-for-profit company owned by the UK government but run independently of it. The Trust is charged with providing support to help businesses and public sector organizations find financial incentives for being environmentally friendly.