Chancellor Rishi Sunak is set to announce plans for £15 billion of green savings bonds, which will enable people to invest in renewable energy projects such as wind and solar power.
Details of the scheme – expected to be one of the biggest issues of green bonds in the world – are expected to be revealed by Sunak this week in his speech at Mansion House in the City of London.
The bonds will be available through NS&I, the Treasury-backed savings organisation that also offers Premium Bonds.
The move is part of the government’s efforts to boost its green credentials ahead of the crucial COP26 climate summit in Glasgow in November. The UK has committed to hitting net-zero emissions by 2050.
Two tranches of green bonds are expected to be issued in 2021-22, with the first likely to be issued in September and worth about £7 billion.
The money raised from the bonds will be used to fund environmentally-friendly projects such as investments in wind and hydrogen power, which Prime Minister Boris Johnson has committed to in his climate plan.
UK savers will be able to buy bonds in the knowledge they are contributing towards projects that will accelerate the transition to a low carbon economy, create green jobs, and support the collective effort to tackle climate change.
Interest rates for the bonds have yet to be decided, but the fact they are government-backed could make them more attractive than banks for savers because they will be fully guaranteed. Savings in banks offer 100 per cent protection up to £85,000, and ministers are hoping to attract investment from people who have built up significant savings during the pandemic. According to official figures, Britons have put away an estimated £180 billion extra, the majority of which they are expected to hold on to rather than spend.
Ahead of the Spring Budget, Sunak said: “The UK is a global leader on tackling climate change, with a clear target to reach net zero by 2050 and a Ten Point Plan to create green jobs as we transition to a greener future.
“In a world first, we’re launching a new green savings bond which will give people across the UK the opportunity to contribute to the collective effort to tackle climate change.
“And we’re also launching new competitions that will unlock innovation in renewable energy and help us develop the cutting-edge technology we need to reach net zero.”
The government has, however, faced criticism for not doing enough to hit its net-zero target. The Climate Change Committee (CCC), a government advisory body, has warned that Boris Johnson is failing to match his promises with action.
The lack of progress risks undermining Britain’s credibility as host of COP26 and “puts the whole process into jeopardy”, the CCC said last week.