With the New Year comes a new blow to those worried about a ‘green’ future. For those of us in the UK, we had established the world’s first ‘Green Investment Bank’. This bank was set up in 2012 with £3.8billion of public funding to help invest in green initiatives and schemes across the country. These investments have come in the form of wind farms, tidal power, research grants, subsidies etc. This was hailed as a great achievement when it was made as a step closer to the UK becoming a green, sustainable economy.
The first of its kind, the word bank is a bit of a misnomer as it acts more as investor than it does a bank, however, as a state funded entity it works. It has invested over £11bn of UK green infrastructure projects with £2.7bn of their own capital and the rest coming from private investors. As the years have gone on, there has been little turnover as would be expected by a company with long term assets, however last year they generated over £10m profit. This is expected to grow even more as their return on investments begins to pay off, to the tune of 10% ROI.
Now it is under threat. The Green Investment Bank (GIB) as it stands is Government controlled; however, the Conservative Government began a privatisation process for the Bank and it is expected in the coming months to be finalised and sold to a private firm. Shrouded in secrecy – even from other members of government – this has caused great concern amongst MP’s as they have asked for the sale to be halted until the GIB’s assets can be secured.
Clive Lewis, Labour shadow secretary of state for business and energy, said:
“Privatising the GIB makes no sense whatsoever. The bank is both a great success as a public institution and providing a healthy return to the taxpayer. It’s been multiplying our ability to build substantial low carbon infrastructure and fight climate change.”
The current favourite to take over the GIB is the Australian investment bank Macquarie. Privatisation of any company is a tricky topic; however, this particular investment bank has a poor reputation when it comes to the businesses it takes over. Macquarie has been known to take over, strip assets, then sell off the parts to turn a profit. This asset stripping would effectively destroy the GIB and thus investment opportunities for projects that are already hard to finance.
As Caroline Lucas, leader of the Green Party, stated
“This preferred bidder, Macquarie, not only has a dismal and terrible environmental record, it also has an appalling track record of asset-stripping. So why has the government given preferred bidder status to this company?”
The government’s energy minister Nick Hurd stated that
“the government has approved the creation of a special share, held by independent trustees to protect Green Investment Bank’s green purposes in future.”
This came as little reassurance however, as several people have pointed out the government would be virtually powerless to stop any form of asset stripping once the sale has been completed.
Even if the worst was to happen, that Macquarie did take over the GIB and strip it’s assets, it wouldn’t even have to re-invest the profits into the UK economy, thus effectively robbing the UK of any profit from its decision. We must also stress how much of a threat this move is as even the London Stock Exchange deemed Macquarie as an unsuitable owner for taking over companies due to the reputation the financial group had for the scale of its asset-stripping.
So to summarise, even though there has been staunch opposition by MP’s across all parties (including MP’s within the Conservatives) the fact remains that the GIB is very likely to be sold, and subsequently broken up. This could have disastrous consequences for the future of a low carbon or even a zero carbon economy. With a lack of investment opportunities in green technology, it will make it much harder for this country to achieve the goals we have set out to do under the Paris Agreements.