World’s first renewable energy pension fund launched in the UK

22.10.2015
The first pension fund investing solely in renewable energy was launched in UK. The picture shows a wind park off the coast of North Wales. (Photo: dpa)
The first pension fund investing solely in renewable energy was launched in UK. The picture shows a wind park off the coast of North Wales. (Photo: dpa)

The world’s first pension fund investing solely in renewable energy was launched today in London. The announcement came from Abundance, the ethical peer-to-peer investment platform. UK residents will be able to choose where to put their money, selecting among the UK renewable energy projects offered on the Abundance website. 

The self-invested personal pension (SIPP) is proposed in partnership with UK SIPP provider European Pensions Management Ltd, which will operate as trustee and administrator, while Abundance will be the point of contact for customers. A minimum of 5,000 GBP will be requested in the first 12 months. The scheme will benefit from tax advantages and be subject to access restrictions before the age of 55, in compliance with national regulations.

According to research commissioned by Abundance, the pension fund responds to three concerns of UK savers. The first is to reduce exposure to risk in global markets. A survey conducted by OnePoll among 2,000 people revealed that 47 % are worried about the impact of the global stock market on their pension and 44 % are interested in options that reduce vulnerability to such risks. The second is about transparency. 33 % of people surveyed are concerned on where their money is invested and just 14 % believe their pension provider is very transparent. 21 % would invest more in their pension if they knew where the money is going. The third is a growing demand for clean investment from millennials, the generation reaching adult age around the year 2000. 34 % of millennials are keen to open a pension 100 % invested in renewable energy, twice as many as older cohorts.

Launched in a difficult time for RE

The Abundance Pension is launched at a difficult time for the renewable energy industry in the UK. Several projects are coming to a halt, as the government is reviewing the subsidies policy cutting support to solar and on-shore wind. But Louise Wilson, Co-founder and joint Managing Director at Abundance, said in a blog that “there are plenty of projects whose long term fundamentals won’t be shaken by short term policy uncertainty.”

Some direction for the future is contained in a report launched today by the UK Committee on Climate Change, an independent body established under the Climate Change Act of 2008. The report outlines options to reduce CO2 emissions from the power sector by 2030, with the aim to advise the government on the fifth carbon budget. This will set the level of domestic CO2 emissions between 2028 and 2032. The ultimate goal is to reduce emissions by 80 % by 2050 compared to 1990.

Low-carbon is most cost-effective

The report says that new investment in power generation will be needed in the 2020s to replace retiring coal and nuclear power and to meet increasing energy demand. The Committee comes to the conclusion that a low-carbon electricity supply is the most cost-effective way to meet such needs. This will mean an increase of about 15 GBP of the annual electricity bill of a typical household in the 2020s.

Lord Turner of Ecchinswell, Member of the Advisory Board of the Energy and Climate Intelligence Unit (ECIU), a think tank in London, commented: “This report confirms what other recent analyses have also found, namely that the cheapest forms of renewable energy are increasingly cost-competitive with fossil fuels for electricity generation.”

Claudia Delpero (Author on Twitter: @Claudiacomms)

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