The director general of the CBI is urging the UK banking sector to investigate new loans that would make it easier for housholders and businesses to invest in green building improvements such as insulation or energy efficient appliances.

Speaking at the official opening of Solais House, building services firm NG Bailey's new green office showcase in Strathclyde, Richard Lambert told BusinessGreen.com that the CBI's climate change task force was working with Barclays to assess how new green financial services could work.

"We know that you get a payback on insulation, so if there is a net economic benefit why aren't people doing it?" he observed. "The reason, quite understandably is the upfront cost and if people have to choose between insulation and going on holiday most will choose the holiday. The problem is the time gap [between making the investment and getting the return] and bridging those time gaps is what banks do."

Lambert said he would like to see if banks could come up with the answer to the problem posed by long pay back periods on green building improvements by introducing new financial instruments that allow customers to pay back initial loans as the energy savings delivered by new technologies are delivered.

He also advised that governments and businesses should seek to make steady progress towards developing a low carbon economy, warning that "juddering changes" could have disastrous consequences.

Hinting strongly that he would like to see the European car industry given more time to meet upcoming EU emissions standards he argued that imposing major short term changes on businesses through tighter regulations would not work. " It is right and necessary to set the car industry demanding [emissions] targets, but if they do not fit into product cycles thye are going to bankrupt them," he observed.

In contrast, Lambert praised the UK's forthcoming climate change bill and the government's decision to work towards a long-term carbon target of cutting emissions 60 per cent by 2050 through a series of medium term five year "carbon budgets". He argued that such budgets would allow the economy to make gradual progress in cutting emissions while giving the government the ability to introduce new regulations and incentives if it emerges that a budget is likely to be missed.