a general view of the bank of england boe building the boe confirmed to raise interest rates to 175 in london britain august 4 2022 reutersmaja smiejkowska london sept 2 reuters  the bank of england should reconfigure a programme designed to encourage banks to lend cheaply to small businesses to ensure capitalintensive green projects are not starved of investment as interest rates rise a think tank proposed on friday the new economics foundation said green projects with high startup costs  such as wind and solar farms home insulation and electric car charging points  risked losing out to carbonintensive business plans that require less borrowing our ability to cut emissions fast enough to avoid climate catastrophe and reduce our dependence on volatile oil and gas is threatened when interest rates go up targeted cheaper lending for projects which will move us away from dangerous fossil fuels should be a nobrainer nef economist lukasz krebel said the boe has raised interest rates from 01 to 175 since december and financial markets think rates could reach more than 4 by the middle of next year britain needs 140 billion pounds 162 billion of green investment between 2023 and 2027 to meet netzero goals the nef estimated based on data from the british governments office for budget responsibility and climate change commission at the start of the covid19 pandemic the boes term funding scheme gave banks cheap fouryear finance against collateral if they in turn lent more to small and mediumsized businesses more than 192 billion pounds of loans were made under the programme we propose that the bank with support from the treasury simply greens the tfs makes it permanent and scales it up the nef said one use of a greener tfs would be to allow banks to issue interestfree loans to fund retrofitting buildings with heat pumps solar panels and domestic wind turbines to push interest rates on retrofitting loans towards zero a combination of a negative interest rate charged under the green tfs to banks and partial loan guarantees by the treasury similar to the pandemic schemes could be used the nef said