For some, it’s too little, too late. For others, Chancellor Alistair Darling’s proposal for the UK’s first-ever green investment bank – in practice, a fund for investing in green technology – is a welcome sign that Britain is moving towards a low-carbon economy.

The £2 billion investment scheme, announced in the budget, will support offshore wind energy and eco-friendly home retro-fitting measures, as well as streamline some £4 billion worth of existing financial support for small and medium-sized businesses to commercialise low-carbon technologies.

However, while the Government seems excited about the Green Investment Bank, critics worry it might not deliver as much, or as quickly, as it needs to.

In principle, it is a great idea, says Dr Gary Haq of the Stockolm Environment Institute at the University of York. “Anything that takes us closer towards a low-carbon economy has to be a good thing. We need to invest in low-carbon technology if we’re going to achieve the 80 per cent reduction in greenhouse gases by 2050 that is the Government’s target.”

But half of the £2 billion investment fund will be expected to come from the private sector, he points out. “In the current economic crisis, whether the private sector has the funds or is willing to do that, we will have to see.”

Why do we need it?

The major focus of the green bank is its commitment to offshore wind energy.

Experts estimate that in the next ten to 20 years, around 30 per cent of the UK’s conventional electricity generation is scheduled to close. No matter how Britain decides to fill this gap (be it through nuclear, wind or coal power), some major funds will be needed.

All eyes are now on offshore wind farms. Thanks to its strategic location, Britain is the world’s largest offshore wind power market, with the figures for potential revenue and job creation a huge incentive to get the ball rolling.

To date, investment has tended to be in the private sector, with companies such as Clipper Windpower and Mitsubishi committing funds and jobs towards wind turbine development here in the UK.

But earlier this year, the Crown Estate awarded contracts to expand offshore wind power and generate some 32GW of electricity – a quarter of Britain’s electricity needs – and 70,000 jobs, by 2020.

Darling’s commitment to offshore wind energy development is therefore a strategic boost to green morale. Some £60 million is expected to develop UK port sites to support offshore wind turbine manufacturing, funds that have already seen private investors – such as energy giants GE and Siemens – announce their own separate investments.

Thanks to these global giants, around £200 million is consequently expected to be invested in new UK offshore wind turbine centres, along with 3,000 jobs, by 2020.

Louise Hutchins, of Greenpeace UK, thinks this is a great start and could see the UK develop as a green leader: “The budget’s commitment to offshore wind energy could be a major boost to Britain’s economy.”

What could go wrong?

As Gary Haq points out, of the Government’s £2 billion investment bank, only £1 billion is actually coming from Government itself. The money is expected to hail from sales of existing assets – possibly High Speed One rail or Dartford Crossing, among others – and is hoped to be matched by some £1 billion in private investment.

But critics worry that there’s no guarantee that that extra £1 billion will come – and that the Government’s money on its own might not be enough to kick-start a green economy.

“The proposed green investment bank could help to get important projects off the drawing board,” says Ben Caldecott of the eco investment banking group, Climate Change Capital.

“However, as the cash for it is dependent on selling off strategic assets in difficult market conditions, it will take many months or even years before the fund is able to make a meaningful difference.

“Unfortunately, this simply doesn’t fit with the urgency of the task at hand.”

What could we expect?

Despite its terminology, the Green Investment Bank will be less of a high-street bank and more of a fund, stocked with expertise on financing, modelling and contractual support.

A few countries already have similar schemes, notably Germany, whose state investment bank KfW could serve as a model to us here, says Chris Goodall, author of Ten Technologies To Save The Planet.

One of KfW’s major successes, Goodall says, has been to invest in retro-fitting post-war German commercial and residential properties. Simple measures such as improving poor insulation standards have not only reduced people’s energy bills, but also developed an eco-refurbishment industry that has created jobs and skills.

Here in the UK, where 45 per cent of emissions come from existing buildings, the green lobby hope that the Government’s proposed “pay as you save” scheme, which proposes to finance low-energy housing refurbishment, might be a German-style success.

That said, perhaps some of the best news to come out of this budget is the knowledge that a green investment bank is on the cards no matter which government wins in the next general election. The Conservatives, Liberal Democrats and Labour are all proposing a green investment bank in one form or another.