A group of UK and Australian pension funds representing £1.7tn assets, the Pensions and Lifetime Savings Association and IFM Investors, are urging the government to adapt its fiscal rules to attract private capital for the green transition, publishing a ‘blueprint’ for investing in renewable energy. 

‘Mobilising pension capital for net zero: a policy blueprint for the UK’  will be launched in Westminster on Wednesday at a roundtable with pension fund chief investment officers and UK government representatives. The group of signatories includes the Universities Superannuation Scheme, master trust Nest, Border to Coast, LGPS Central and the North East Scotland Pension Fund. Australian superannuation funds Aware Super, CareSuper, Cbus Super, Hesta, Hostplus and Rest are also among the signatories. 

The blueprint launch comes as governments, including the UK, are looking to private investors to help finance the green transition. 

A central recommendation by the group is that the UK government should reform public sector net debt by including the net worth of illiquid infrastructure investments for the first time, saying this would help GB Energy and the National Wealth Fund to attract private investment. 

IFM executive director Gregg McClymont, a former Labour shadow pensions minister, called it a “prerequisite” of investment that “the government should account for infrastructure assets more like a long-term investor, and less like a commercial bank holding equity as loan collateral to be sold in a fire sale”. 

Elizabeth Fernando, CIO of Nest, said: “We already have hundreds of millions of pounds invested in solar and offshore wind farms across the country, and we welcome discussions on how a scheme like Nest can further support the UK's green transition.” 

Carol Young, USS chief executive and a member of the National Wealth Fund taskforce, said: “We’re delighted to be involved with this important blueprint and its recommendations to government. Used well, the policy options offer the opportunity of better aligning pension scheme interests and capital with the government’s net zero ambitions.” 

Other recommendations in the blueprint include:  

• setting clearly defined commercial objectives for GB Energy so that it can effectively partner with and mobilise additional investment by long-term investors like pension funds; 

• focussing the National Wealth Fund on supporting the commercial development of higher risk net zero industries and projects, where it can play a valuable role bridging gaps in capital markets; 

• extending Contracts for Difference terms for new renewable and low carbon power generation beyond 15 years to reflect longer project lives and to unlock a lower cost of capital; 

• streamlining the permitting process for repowering onshore wind sites, using the latest technology to upgrade existing wind farms and increase renewable energy production; and  

• improving physical and regulatory integration between the UK and EU energy markets to support harmonised, tariff-free trading. 

The blueprint comes ahead of the UK government’s international investment summit on 14 October, where ministers will meet bank and other business leaders to promote the UK as a place for investment.