Earlier this year, in the Spring Budget, Rishi Sunak announced that the Government would launch their Green Savings Bond in 2021 – a new, fixed rate savings account that would be available from NS&I, and that would help fund environmentally-focused projects as part of the Government’s plan to hit net-zero carbon emissions by the year 2050.
What projects will the Green Savings Bond help to fund?
The Government have listed six types of green expenditures that will be financed by Green Savings Bonds:
- Clean Transportation
- Renewable Energy
- Energy Efficiency
- Pollution Prevention and Control
- Living and Natural Resources
- Climate Change Adaptation
Although the Government so far hasn’t given much detail about exactly what kind of projects will be included within these areas, it is expected that we will see projects such as building offshore wind farms, accelerating the transition to electric vehicles and revamping homes and public transport.
NS&I have said: “HM Treasury plans to allocate an amount equivalent to the funds raised from Green Savings Bonds, to its chosen green projects, within two years. The Government will publish details about how the money is being spent and what the environmental benefits are, so you can see the difference you’re making.”
How does the Green Savings Bond work?
The Green Savings Bond operates like a regular fixed rate bond, so the amount you save is locked away until the account matures – in this case, in three years’ time – and the interest rate is fixed throughout that period. You can open the account from as little as £100, and deposit a maximum of £100,000.
Is the Green Savings Bond worth it?
If Green causes are important to you, then you might be interested in supporting essential projects in the UK via the NS&I bond.
However, if you’re also looking for a competitive return on your money, the interest rate on this Bond is easy to beat with other banks and building societies. In fact, at the time of publication, the market-leading 3 year fixed rate bond was 1.82% – nearly three times the NS&I rate, meaning you could easily earn a higher rate of interest elsewhere.
If you want to help environmental causes, but don’t want to commit to low rates, one suggestion is that you could put your money in a higher-interest savings account, and use part of the interest earned towards green projects, such as a carbon offsetting scheme.
Raisin UK co-founder, Kevin Mountford, says: “Whilst there is a clear sentiment towards green-related issues, the rates offered by NS&I are very disappointing vs those available in the wider market. As an example, Raisin UK is currently offering an exclusive 3-year product paying 1.82% per annum with UBL UK – more than double the rate that you can earn from the Green Savings Bond. The 100% protection offered to savers via NS&I is also attractive, however, if you’re saving less than £85,000, FSCS protection ensures that money deposited into lesser-known, regulated entities is just as safe.”
*This article may contain information about partner banks, savings accounts, rates and bonus offers which were correct at the time of publication on 12th November 2021.