Councils’ innovative way to fund green projects

 In News

A council scheme to persuade small investors to help fund green projects is very innovative, says a Midlands green energy expert.

“They will be able to support projects in their own communities to fight climate change for as little as £5,” said Ron Fox of Noreus Ltd on the University of Keele Science and Innovation Park. “Even better they will be given a near-guaranteed return of 1.2 per cent a year as they are underwritten by the local authorities.”

He said this is a new variation on the old idea of councils issuing bonds, which died out in the 1990s when investment was restricted to institutional investors putting in large sums of money.

This new plan works by a local authority issuing Community Municipal Investments (CMI bonds) directly to the public via an internet-based crowdfunding platform.

“The good news,” said Ron, “is that projects such as putting solar panels on city centre buildings do not have to make profits for the investor to get a return from councils which are not allowed by the Government to go bankrupt.

“But there is no guarantee of a payout or that all the projects would be green and locally based.”

West Berkshire district council was the first to launch a local government green bond in July this year to raise £1m to pay for solar panels to be installed on five of their buildings. Already it has got £600,000 from 480 investors.

Then in August, Warrington Borough Council in Cheshire started a green investment scheme for £1m to help develop a solar farm in Cirencester, Gloucestershire, which had topped £100,000 in only a few days. The council, which is aiming to be carbon neutral by 2030, wants to generate renewable energy for their needs with any surplus sold.

Then Leeds City Council is aiming to be the first big metropolitan council to raise more than £1m this autumn for projects including putting solar panels on city buildings.

Helping oversee the projects for the councils is the crowdfunding adviser Abundance Investments who are reported to be talking to around 30 councils about possible bond issues.

Their chief executive, Bruce Davis, said that a poll they had undertaken showed that 73 per cent would consider investing in a CMI, and the company reckons councils could raise £3 billion for local projects through their ethical investment platform.

But that figure is very small compared to the £157 billion that people lend to central government via National Savings & Investment products, said Ron.

However, he added: “It is a very innovative way for cash-strapped councils to respond to the challenge of a looming recession by providing new jobs while at the same time tackling the longer-term problem of a climate crisis. This scheme could play a key role in engaging people to help create a greener and more prosperous future so I hope more councils across the country will get involved.”

For more information about green energy call Ron on 01782 756995.

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