Edinburgh an ideal base for new 'green' bank, says Huhne

A NEW taxpayer-funded bank focused on environmental projects could be based in Edinburgh, Energy Secretary Chris Huhne has told MSPs.

The UK government has proposed the creation of a green investment bank (GIB), a financial institution that raises money in a similar fashion to regular banks and uses the profits to fund clean energy and low-carbon projects.

On a visit to Edinburgh yesterday, Mr Huhne raised the possibility of a Scottish base while addressing Holyrood's energy committee.

The bank would initially be financed with 1 billion of public investment.

The Liberal Democrat minister said First Minister Alex Salmond was "one of Britain's best energy economists", but pointed out that other areas, particularly London, would be vying to secure the bank's headquarters.

He said: "To digress slightly, one of the reasons that Edinburgh has a particular claim as the potential site for the GIB is precisely because of the substantial expertise in Edinburgh on the energy financing side.

"Other places in the UK will be bidding for it as well as the financial locus, indeed London.

"But, certainly, when I was working in the financial sector and when I was a financial journalist, I first became acquainted with the expertise of one of Britain's best energy economists, now doubling up as the First Minister."

He also said that bankers' bonuses and salaries might be a feature of any new institution if it was to be able to attract top banking talent.

"The institution will need to make sure it has the expertise, particularly in the energy area, to perform and it will need to take a view on what it needs to pay in terms of its contractual arrangements," he said.

Mr Huhne added that the bank would not be immune to the financial storms that recently forced some of the UK's biggest financial institutions to be refinanced with public money.

Mr Huhne was responding to West of Scotland MSP Stuart McMillan's call for a guarantee that the GIB would not need to go to the government for additional funds if it hits financial problems, and an assurance that bankers' bonuses would be either limited or non-existent.

In addition to meeting with MSPs, Mr Huhne, accompanied by Scottish Lib Dem leader Tavish Scott, visited the Pelamis Wave Power project in Leith and the carbon capture and storage (CCS) test facility at Longannet Power Station in Fife.

He paid tribute to researchers at Edinburgh University for producing much of the science behind his department's success in securing 1bn from the Treasury for CCS technology.

He called the university "the leading institution" in carbon capture research, which involves removing carbon emissions from the atmosphere and storing them in underground vaults.While at Holyrood, Mr Huhne also held talks with John Swinney, during which the finance minister called for an immediate release of Scotland's 200 million share of the fossil fuel levy (FFL), the penalty paid by energy companies that use non-renewable power sources to generate electricity.

The FFL is presently being withheld to fund the UK government's pending green energy projects, but Mr Swinney told Mr Huhne to release Scotland's portion now to help fund local renewable projects straight away.