Financing the Energy Transition: Aligning Capital with a Green Growth Mission

At this week’s Net Zero All-Party Parliamentary Group (APPG) session on Financing the Energy Transition, one message rang out clearly: the UK has both the opportunity and the financial firepower to lead the world in green growth – if it can align strategy, policy and delivery.

Speakers emphasised that finance mechanisms must be anchored to a central mission; a clear, long-term strategy that embeds green growth at the heart of economic decision-making. Without this shared purpose, the flow of capital risks being fragmented or hesitant.

Last year alone, over $2 trillion was invested globally in green technologies. Despite the UK’s position as a global hub for green finance, investor confidence is being held back by policy uncertainty and inconsistent signals from government. As several panellists noted, government must work hand in hand with the private sector to create certainty, reduce risk and scale up investment. Public institutions, such as the National Wealth Fund, can act as powerful engines for green growth, crowding in private finance and demonstrating what works through practical case studies.

One of the most promising opportunities to mobilise green finance is within the UK’s housing stock. Nationwide’s recent offer of £20,000 interest free loans to help existing mortgage customers retrofit their homes was highlighted as a positive example of how high-street lenders can play their part. However, speakers agreed that to make home retrofit truly scalable and long-term, government intervention remains essential, whether through guarantees, fiscal incentives or regulatory reform.

A recurring theme was the need to reframe the retrofit narrative. Rather than a narrow focus on insulation or heat pumps, the conversation should be about creating warm, comfortable, healthy homes. This, alongside rebalancing the costs of electricity and gas, could unlock greater public enthusiasm for low-carbon heating. Proposals such as UKGBC’s stamp duty rebates for renovated homes or salary sacrifice schemes for retrofit and heat pumps (mirroring the success of salary sacrifice models for electric vehicle adoption) could help bring these technologies within reach for millions.

For institutional investors, liquidity remains a constraint for large-scale infrastructure projects. This is where the National Wealth Fund and new investment banking models can play a catalytic role, helping to de-risk projects and guide capital toward the sectors that need it most. Transition finance and targeted investment that helps hard-to-abate sectors (like cement) to decarbonise was highlighted, as both are growth opportunities.

Finally, the group discussed public private partnerships for the energy transition and the potential for GB Energy to pivot toward community energy and housing retrofit. The meeting ended on an immediate call to action: stop the construction of all new homes that do not meet net zero standards and start investing in the homes and skills that will provide a greener, fairer energy future.