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The transition to net zero in Wales is well underway as we enter 2025.
Welsh Government’s Wales Economic and Fiscal Report 2024 was published for the first time in December. It provides the economic and fiscal context for the draft budget for the year ahead and outlines how the 36% fall in Welsh emissions since the base year in 1990, along with wider economic trends, has focused attention on the importance of ‘green jobs’ as a key driver of improving the lives of everyone in Wales.
With £2 billion funds under management and a portfolio of 3492 customers, we can support government policy by developing innovative financial instruments that advance the ambitions for a green future in Wales and help to make communities and families better off.
Investment to fund positive action
As an experienced investor we understand the pressures businesses face and the competing priorities for resource and investment, especially when it comes to decarbonisation-focused action. Key barriers such as knowing where and how to invest, being time poor and having the necessary finance restricts businesses from taking positive action.
That’s why our products and services are always evolving and now include a range of programmes that offer Welsh businesses a package of support that helps to reduce carbon emissions. This includes providing practical advice as well as sustainable finance in the form of both loans and equity.
We’re working with new and existing customers to identify areas of environmental impact and promote the actions required to transition to net zero while proactively referring businesses to colleagues in Business Wales for support with sustainability.
Support for SMEs
We’re also conducting a pilot study for SME transition planning. This follows guidance released by the Transition Pathways Taskforce and a recent Transition Finance Market Review, both of which noted the lack of clear framework for UK SMEs. The pilot will support our customers to move from carbon assessments to setting targets, reduction plans and implementing these, while meeting international and UK standards for company reporting.
Four of our equity customers are taking part in the pilot, providing them with a framework and the information they need to better manage the emerging opportunities and risks associated with the drive to Net Zero. Their motivations for engaging in the pilot include implementing operational efficiencies such as energy saving and reductions in waste, retaining and winning new contracts, attracting and retaining talent and in so doing do their bit to tackle global warming.
Alongside this, we’re proud to be members of Project Perseus, a collaboration between UK banks, carbon experts, government, and other organisations to streamline carbon accounting for SME’s through automatic retrieval of smart meter data. We are collaborating to demonstrate the use of the Perseus system to support our green lending while reducing business burden on our customers.
Green business loans
Our Welsh Government-backed Green Business Loan Scheme has supported 28 businesses to date and created and safeguarded 2291 jobs with funding of £6.1 million. Anglesey-based Halen Môn is a great example of the companies that we’re helping to take the next step on the decarbonisation journey. A £77,000 loan from the Green Business Loan Scheme has enabled the business to fit a new 100kw solar panel system. The new panels and accompanying generation system will deliver a carbon saving of more than 380 tonnes per year and allow the business to export excess energy back to the grid. What’s more, the new PV system was designed and installed by another North Wales business, St Asaph-based Hafod Renewable Energy.
With the having made the full expensing regime permanent, capital allowances have become an increasingly valuable tool for reducing taxable profits. Full expensing – a 100% first year allowance – is available on most plant and machinery. A 50% first year allowance is available for certain ‘long-life’ capital assets. There is no cap on the amount of the amount of expenditure that can qualify for relief, further boosting the attraction of investing in decarbonisation equipment like solar panels systems.
Helping homeowners to cut costs and carbon
Meanwhile, homeowners across Wales can also access Green Homes Wales, a pilot scheme that provides interest-free loans to help fund the implementation of energy and carbon-saving measures. It’s an exciting step to help homeowners make green and energy-efficient choices to improve the long-term quality and comfort of their home.
As part of the scheme, homeowners can get funding to get specialist advice from a retrofit co-ordinator to help decide which type of decarbonisation technology works for their home. Eligible works may include the installation of an air source heat pump, external wall insulation and smart home energy systems. The added benefit of Green Homes Wales is that we are actively supporting the development of the market and strengthening of our local supply chains.
Working together to make positive change
We all have a responsibility to tackle climate change, and, with the range of help available, there's never been a better time to invest to save and make a positive change towards a greener future. Together, we can grow our green economy and improve the lives of everyone in Wales.
