Budget 2021: Green Gilts, Green Savings Bonds, and Green Investment

By Richard Howard

This year’s UK Budget [1] contained quite a few announcements relating to green investment and green-focused government debt (commonly know as green gilts).

These new green gilts have the potential to turbocharge the UK government’s ability to fund green projects. However, before we get too excited we need to understand what they are and consolidate what we currently know about them.

Also linked to the green gilts, there is the new green savings bond or product from NS&I, which will connect retail investors to the new green gilt. Again this seems like a potentially powerful tool, but information is thin on the ground.

Announcements from this year’s Budget related to green finance and green investment in the UK are summarised below.

Green Gilt

As announced in November 2020 the UK will be issuing its first sovereign green bond – green gilts – in summer 2021, with further issuance planned later in the year. Interestingly there will be a range of maturity dates on the green gilts as the Treasury seeks to ‘build a green curve’. This is a strong indication that the Treasury is building a whole new asset class that behaves in a similar way to existing government debt and is not just a one-off. The ‘green curve’ will be an interesting resource as it will be a key indicator of how green securities are perceived relative to other standard gilts.

The UK Treasury will be issuing a minimum of £15bn of green gilts in the financial year 20/21. In comparison to other sovereign green bond issuances this seems quite a healthy amount. According to the OECD [2] the total sovereign green bond issuance in 2020 was just under $30bn (nearly £22bn). So the UK Treasury’s efforts seem to be substantial with regards to other countries. Whether it will be substantial relative to challenges posed by climate change and other environmental issues is yet to be seen.

More information will be published in June 2021 about the Treasury’s green gilt. This will include details about what the money raised by these gilts can be put towards. Broadly this is described as financing to ‘help meet the government’s green objectives’. The framework will also include details about the ‘innovative reporting standards’ which are used to guide green gilt issuance as well as frequency of reporting, fund allocations and the environmental impacts of the programme.

It is also suggested that these green gilts will help fund other social benefits such as “job creation and levelling up”.

Green Savings Bonds

Closely linked to the green gilt programme is a new green retail savings product which will be offered through the state-owned savings bank National Savings and Investments (NS&I). This will enable UK retail investors and savers to access a product which is closely linked to the green gilt framework. Thus enabling UK citizens to use their own savings “to take part in the collective effort to tackle climate change”.

The terms of the savings products, such as the interest, term length, and total issuance, are unknown and will be published – along with further details – in Summer 2021.

Green Investments in the Budget 2021

  1. UK Infrastructure Bank – £10bn of guarantees to support private infrastructure projects and local authorities to meet the government’s objectives on climate change and regional economic growth.
  2. Funding to support offshore wind infrastructure, principally in two locations: Humber region (e.g. Able Marine Park [3]) and Teesside (e.g. Teesworks Offshore Manufacturing Centre [4]).
  3. Part of £30m Global Centre for Rail Excellence in South Wales to support testing of green technology.
  4. £20 million programme to help develop floating offshore wind technology.
  5. £68 million UK-wide competition to setup first-of-a-kind energy storage technology demonstrators or prototypes.
  6. £27 million, after review, for the Aberdeen Energy Transition Zone.
  7. £4 million to support the rural economy to improve biomass feedstock production, including forestry products and green energy crops.
  8. Part of £1 billion Net Zero Innovation Portfolio to support the development of new solutions to cut carbon emissions and accelerate near-to-market low-carbon energy innovation.
  9. £4.8 million, after review, for a Holyhead hydrogen hub
  10. Amending the Bank Of England’s remit to “reflect the importance of environmental sustainability and the transition to net zero”
  11. Review into voluntary carbon markets for high-quality offsets.


The Budget 2021 contained a healthy dose of financial planning linked to all things green. Certain sectors were very well catered for, especially offshore wind. The green gilts and green savings bonds are a step in the right direction but, as with everything, implementation is key. 


  1. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/966161/Budget_2021_Web_accessible.pdf
  2. http://www.oecd.org/coronavirus/en/data-insights/growing-momentum-for-sovereign-green-bonds
  3. https://www.ableuk.com/sites/port-sites/humber-port/amep/
  4. https://www.teesworks.co.uk/

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