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An Interview with Dr Rhian-Mari Thomas OBE, CEO of the Green Finance Institute and Chair of Innovation Zero World 2025
How can government and the private finance sector collaborate to deliver a net zero and nature positive economy?
Overcoming the barriers to investment into a low carbon and nature resilient economy requires innovation and collaboration across the public and private sectors.
The UK has a track record in radical collaboration, deploying public capital to share risks with the private sector, and adopting innovative financial structures to unlock investment in emerging sectors. Over a decade ago, the UK’s offshore wind market was catalysed by a series of co-ordinated and outcomes-focused interventions: from long-term support mechanisms like Contracts for Difference and specific regulatory changes such as those regarding seabed leasing to the integral role of the Green Investment Bank in mitigating construction and first of a kind technology risk.
Today, there is urgent need to replicate this public-private investment collaboration to support the deployment of public capital towards the net-zero sectors of the future. The Green Finance Institute (GFI) chaired the National Wealth Fund Taskforce, comprised of leading private sector financial institutions, that advised how to structure and implement the UK’s £27.5 billion National Wealth Fund (NWF). As a result, the NWF is equipped with the products, mandate, and risk capital to catalyse private capital into critical climate-smart infrastructure and unlocking growth opportunities across the UK.
What policy and regulatory environment is needed to mobilise private capital towards green investment? What are some successful examples we can see today?
Governments are uniquely positioned to create the enabling conditions that will attract private capital towards net-zero and nature resilient projects. These include:
- Setting national targets, for example the target to ensure that at least 10% of jet fuel in flights taking off from the UK comes from sustainable sources by 2030;
- Establishing policies to create demand and supply, such as the Zero Emission Vehicle Mandate that requires car manufacturers to sell a minimum percentage of zero-emission vehicles that increases over time;
- Introducing incentives for customers to buy, such as the Boiler Upgrade Scheme that offers capital grants for property owners installing a heat pump; and,
- Building capacity within key institutions that can support the transition, such as the Natural Environment Investment Readiness Fund, delivered by DEFRA and the Environment Agency with advice from the GFI, that help environmental organisations develop nature projects in England to a point where they can attract private investment.
What are some sector examples – in the Built Environment, Transport, and Nature – where you see the most disruptive and promising financial solutions?
At the GFI, we take a sectoral approach to decarbonisation, recognising the unique challenges and solutions that each sector needs to meet net-zero. Based on climate science, the GFI’s sectoral missions include buildings, transport and nature.
- Built Environment: The UK’s 29 million homes represent the leakiest housing stock in Europe, and 23% of UK emissions; the Climate Change Committee has estimated that £250 billion needs to be invested in UK home upgrades by 2050. To address this investment gap, the GFI has developed a portfolio of solutions to support investment into energy efficient buildings, including Green Mortgages – where a series of targeted GFI interventions has scaled the market from 3 to 60+ products within just 4 years – and Property Linked Finance, a solution that has mobilised over $18 billion towards building decarbonisation in the United States and that has the potential to mobilise £52-70 billion into home retrofits when launched in the UK.
- Transport: Transport is the largest contributor towards the UK’s greenhouse gas emissions, and is therefore a vital sector to decarbonise. To bridge the financing gap, the GFI’s transport programme has pioneered a suite of financial solutions including Utilisation Linked Finance – a solution that allows businesses and local authorities to make variable payments for EV charge points based on their utilisation, helping address the challenge of funding charge points in rural and ‘left behind’ communities across the UK – and residual value guarantees that can unlock much needed investment into e-Heavy Goods Vehicles.
- Nature: Nature is one of our greatest assets in both carbon removal as well as adaptation to climate change, delivering multiple positive impacts through nature-based projects that range from soil enhancement to improved flood resilience. A recent study by the GFI, in partnership with the Environmental Change Institute at the University of Oxford, the University of Reading, the UN Environment Programme World Conservation Monitoring Centre and the National Institute of Economic and Social Research, identified that nature degradation could lead to a potential 12% GDP reduction in the UK by the 2030[3]. To demonstrate and amplify the viable models for investment into nature, our flagship Revenue for Nature (R4N) project – a global project led by the GFI, in partnership with UNDP Biodiversity Finance Initiative, and UNEP Finance Initiative, and with the contribution of the Environmental Policy Innovation Centre, is creating a database of nature-based revenue models or markets that mobilise private sector investment, building a community of practice to share learning and replicate these models, and is implementing these models across a range of geographies.
How can we address the ‘missing middle’ when it comes to scaling clean tech solutions, and ensure that innovations are successfully scaled domestically without businesses having to seek overseas funding?
The ‘missing middle’ in climate finance is the funding gap between technology and business innovation stages, typically funded by grants and venture capital, and the point when mainstream financial institutions are willing to deploy capital into the businesses and solutions.
For example, the UK’s grant landscape has successfully driven investment into UK start-ups along the battery supply chain. However, without continued investment in this sector beyond grants, battery companies will fail to grow in the UK – and seek investment in other geographies, such as the EU. After engaging with financiers, industry and existing government grant bodies, the GFI designed the Battery Investment Facility (BIF) – a blended finance facility with potential to crowd in 3 to 5 times initial public investment via a co-investment model. This innovative structuring allows public capital to go further for longer, with no additional cost or risk – providing the taxpayer with value for money and allowing UK battery companies to cross the scale-up gap to deliver on their full potential. A BIF can invest in key building blocks across the whole battery supply chain, pivotal to securing the long-term future of both existing and future large-scale battery manufacturing plants in the UK, and can be adapted for other forms of advanced manufacturing that can support the net-zero transition.
Through granular analysis of the risks and barriers to investing into scale-up technologies and first-of-a-kind transactions, as outlined above, bespoke interventions and mechanisms can be developed to overcome the ‘missing middle’ and support UK innovators to achieve scale.
What message to do you hope to deliver to the audience of policymakers, funders and business leaders at Innovation Zero World? What progress do you hope can be achieved between GFI and the Innovation Zero platform?
As the UK’s leading net zero investment summit, Innovation Zero World offers a space for knowledge sharing, collaboration, cross-industry dialogue, and co-designing the solutions to overcome the major obstacles to low carbon innovation in the UK and beyond.
While the sustainability agenda is currently facing headwinds, we remain optimistic that momentum will continue if we demonstrate that sustainable investments can deliver attractive risk-adjusted returns and make commercial sense.
Necessity is the mother of invention and we know that a shift in our collective approach, to one of pragmatism, delivery and action is the response required from the global community: a shift from big tent ideas and high profile commitments, to practical solutions and real-economy transactions that can inform policy and systems change.
The race to net zero is a race for investment. Ultimately, there is only one route to economic growth that is supported by science and sharing examples of how we deploy capital towards net zero solutions is going to be key to ensuring that the UK is positioned to prosper.
Dr Rhian-Mari Thomas OBE, CEO, Green Finance Institute