Earlier this year, the UK government issued its first state-backed ‘green transition’ loan to a business. Engineering and energy consultancy Wood Group will be using the money to improve their business and accelerate growth.
As the UK continues its progressions towards net zero, schemes like this will ensure that larger corporate businesses follow suit. Aside from driving sustainability forward, it is within the country’s best interests, both environmentally and financially to make this transition as soon as possible.
In the run up to COP26 in October, this loan marks yet another milestone in the UK’s sustainability journey.
What is a green transition loan?
The £430 million loan is backed by government agency UK Export Finance (UKEF). UKEF will guarantee up to 80% of the commercial loan, under what is known as the Transition Export Development Guarantee (EDG).
Established in 1919, aim of UKEF is to ensure no UK export fails due to a lack of private finance.
An EDG loan can help larger businesses to transition away from fossil fuels and towards greener alternatives. By encouraging a switch to a greener industry, the UK could profit exponentially from green trade and jobs.
According to the Department for International Trade’s Board of Trade, there could be more than 1.2 million full-time workers employed in the UK’s low-carbon industries by 2050. As the country continues to align its green values and steer away from fossil fuels, it is also predicted that it will deliver up to £170 billion of export sales in goods and services by 2030.
How does it work?
Woods currently employs more than 40,000 people and turns over £400 million annually. The firm has since committed to doubling its client base by 2030. They have also pledged to create many more green jobs.
Wood will use the loan to develop opportunities in clean energy, hydrogen, and decarbonisation. The funding will also go towards further research, and provide critical working capital for these projects. A loan that focuses on furthering green initiatives not only encourages sustainability but also makes the journey much easier.
Last year the government pledged to stop financing overseas fossil fuels projects. These projects are being phased out of the eligibility criteria for EDG funding ahead of COP26. Steps like this show us why the UK continues to lead the climate change movement. Redirecting this funding could support more than 40,000 jobs in the green industry by 2035.
Where does Monarch come in?
Efficiency and sustainability are two major factors in the drive to net zero. As we focus on a greener future, we must understand our consumption and how we can modify it to better both us and the planet.
At Monarch, our extensive services help clients to track usage and become as efficient as possible. Our 30 years of experience means that we know how to get you the best value for money, while making a sustainable future more accessible.
Get in touch today to find out how we can help you reach your green goals.