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Chancellor ‘set to issue £15bn in green savings bonds’

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30/06/2021
The Chancellor is set to announce the issue of £15bn of green savings bonds, allowing people to invest in renewable energy projects such as wind and solar power.

The bonds will be available to consumers through NS&I, the government-backed savings organisation, The Times reports.

Two tranches of green bonds are expected to be issued in 2021-22. The first is likely to be worth £7bn and will be issued in September, the newspaper said.

Laith Khalaf, financial analyst at AJ Bell, said the popularity of the bonds will depend on the interest rate on offer.

“Savers showed they’re willing to vote with their feet when NS&I cut interest rates across a swathe of accounts last November, and if the green savings bond offers a paltry rate of interest, it might fail to ignite demand from the public,” he said.

The money raised will be used to fund projects such as investments in wind and hydrogen power, which the prime minister has committed to in his climate plan.

Khalaf added: “The long term nature of funding green energy projects means the Treasury will need to give some thought to how long the new savings bonds will keep savers’ money locked up for.

“Presumably the government won’t want money flowing in and out regularly, so an instant access account doesn’t look feasible, and a product that locks up savings for say five years looks more appropriate. The longer the government asks savers to keep their money in the bond, the less take-up they are likely to get without offering a seriously big slice of interest.”

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