Local climate bonds could raise billions for green projects

Bonds issued by local authorities could raise £3 billion to fund green energy projects in England, according to a new campaign.

The Green Finance Institute and direct investment platform Abundance have today (13 July) launched a campaign targeting all 404 UK authorities helping them to issue local climate bonds.

The crowdfunded bonds allow councils to raise capital from residents to fund specific initiatives in their wards such as solar panel installations and wind farms.

Local climate bonds, the campaign says, offer a source of funds cheaper than the Treasury-managed Public Works Loan Board, a way to diversify their funding base and a way to engage constituents in plans for decarbonisation.

Two pilot schemes by West Berkshire and Warrington councils in 2019 and 2020 raised £2 million in total.

Abundance has calculated that the bonds could raise as much as £3 billion if issued by the 343 local authorities in England.

Supported by UK100, Local Partnerships and Innovate UK the campaign aims to highlight the benefits of the bonds, share knowledge and provide access to green finance and municipal investment experts.

Rhian-Mari Thomas, chief executive of the Green Finance Institute, said: “We need to mobilise significant investment to meet our decarbonisation objectives; local climate bonds are an important part of this target and of the growth of green finance in the UK.

“This campaign will support councils to access cost-effective financing to deliver place-based transition projects for inclusive, resilient, net zero communities, and provide local residents with an attractive opportunity to invest in the long-term future of their communities.”

Karl Harder, co-founder and managing director, Abundance Investment, said: “We are very pleased that so many councils are recognising the strong connection between their citizens and financing the infrastructure we need to get to a net zero future.

“Warrington and West Berkshire are leading the way in empowering local action on climate change – we hope that many more will follow their great example.”

Amy Flynn, impact and performance manager, Sustainable Innovation Fund at Innovate UK, said: “Providing access to community-based green initiatives comes at a critical time in the global sustainability agenda.

“Seeing the Green Finance Institute and Abundance Investment launch this campaign will bring greater awareness to the effects of climate change and environmental sustainability and how innovation can help address them.”