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2 Mar 2021

Budget 2021: NS&I to offer a 'green' savings bond

The bond will allow savers to fund projects that can help build a greener economy

The Treasury has announced it plans to launch the world's first 'green' savings bond via National Savings & Investments (NS&I).

UK savers will soon have the opportunity to help the country rebuild in an environmentally-friendly way and meet its target of cutting greenhouse gas emissions to net-zero by 2050.

The Chancellor could reveal further details at the Budget on 3 March.

Here, Which? explains what we know about the new NS&I bond so far.

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NS&I green savings bond

The bond will be offered through government-backed savings organisation NS&I which offers a range of savings products including premium bonds.

The new accounts will allow UK savers to invest in green projects. Funds raised via the bond will be earmarked for projects such as renewable energy and de-carbonising transport. The government hopes these will accelerate the move to a low carbon economy and create green jobs.

  • Projects will be chosen in line with the ICMA Green Bond Principles which give guidance on the categories of eligible green projects.

The Chancellor, Rishi Sunak said: 'The UK is a global leader on tackling climate change, with a clear target to reach net-zero by 2050 and a Ten Point Plan to create green jobs as we transition to a greener future.

'In a world-first, we're launching a new green savings bond which will give people across the UK the opportunity to contribute to the collective effort to tackle climate change.'

When can you invest and what can you earn?

The government says the NS&I green savings bond will go on sale later in 2021.

However, the Treasury has not yet revealed how much it is hoping to raise through the bonds or what savers will get in return for investing.

The NS&I green savings bond could follow the premium bonds structure, which means savings don't generate interest but give investors the chance to win tax-free cash prizes worth up to £1m each month, or they could just pay a fixed rate of interest.

Listen:our experts discuss the Budget on the Which? Money Podcast.

What else will be in the Budget?

As part of the Budget, the Chancellor will also launch three new programmes funded by the £1bn Net Zero Innovation Portfolio.

This is expected to include £20m for a competition to develop floating offshore wind projects, almost £70m for a competition to design a system to store excess low-carbon energy and £4m to find ways of increasing the production of green energy crops and forestry.

Are there other green savings available?

With climate change an increasingly important issue for many of us, governments and businesses have been taking steps to offer greener savings options.

Some local councils have already launched green bonds to invest in local renewable energy infrastructure, including West Berkshire Council and Warrington Borough Council. However, these schemes differ as they are investments while the NS&I green savings bonds will be savings accounts with 100% of the investment backed by the Treasury.

Gatehouse Bank recently launched a range of 'green' fixed-term savings and cash Isa accounts. It joins a number of providers offering green savings products, including Ecology Building Society, Tandem Bank and Triodos Bank.