What is a "Green Investment Bank"?

Later this month, the UK government will be giving details of the so-called Green Investment Bank (GIB). It should end up being a cornerstone of Britain's drive to halve it's carbon emissions by 2027. But, what exactly is a GIB and why is it so important to the UK?

Basically, the idea is for it to provide investment for any low carbon, private sector project that needs it. The aim is to kick-start a 'green' revolution that will not only help halve the emissions, but add billions to the economy, and generate thousands of jobs.

However, it will need cash to do this. In fact, a House of Commons committee estimated that such an economy would require between £200 billion to £1 trillion of investment.

So where will the money come from? Well, the government has promised £3 billion, and the Treasury has calculated that this will attract another £15bn of private finance to green projects. Hmmm...that's less than 1% of the minimum required isn't it? Where's shortfall going to come from then?

Funny story that one: The bank will begin life in 2012 but won't be allowed to borrow (A major source of any bank's funds) until.....2015! Why? Because the Treasury don't want the debt to appear against the nation's liabilities until after the election. Okaaay. How about the bank raising cash through green ISAs (where individuals invest in green stocks and shares, tax-free)? Nope, the Treasury says that would be competing with private sector bank offerings. And so it goes, on and on.

Based on what we know so far, the bank will be nothing more than the custodians and distributors of an inadequate pot of money.

Let's hope the government's announcement later this month will reveal that it's going to be so much more.