Proposal to sell off up to 70% of the Green Investment Bank will harm low carbon sector, say wide range of critics
The Green Investment Bank targets risky sectors like offshore wind and bioenergy (Pic: Statkraft)
By Megan Darby
The UK government is to sell up to 70% of its flagship Green Investment Bank to pay off government debt, business secretary Sajid Javid revealed on Thursday.
As well as raising an estimated £1.4 billion for the Treasury, Javid is arguing the move will allow the fund to access greater volumes of capital.
But experts involved in the green bank’s formation slammed the move as “completely reckless” and “the last thing we need”.
Set up in 2012 to mobilise cash for otherwise risky low-carbon sectors like offshore wind and bioenergy, the fund has inspired similar ventures around the world.
Ben Caldecott, associate fellow of conservative think-tank Bright Blue and former advisor to the GIB Commission, said a publicly owned institution could work in the public interest.
“The last thing we need is a publicly supported, but privately owned, asset manager using subsidised capital and jobs to compete with the private sector,” he added.
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By committing £2 billion of its own funds to 50 projects, the Green Investment Bank has encouraged private investors to sink three times that amount into the green economy. It has kickstarted initiatives from LED streetlighting to energy from waste plants.
“It’s gone from strength to strength,” said chancellor George Osborne. “That is why we can now begin exploring options for moving the bank into the private sector to enable it to access larger pools of capital and act more freely to invest in a broad range of green sectors.”
Nick Mabey, head of E3G, which developed the idea for the bank, disagreed.
“Selling off a majority stake in the Green Investment Bank would be completely reckless,” he said.
“It has kept investment in the real economy going at a time when bank lending had fallen to an all-time low. It has played a critical role in supporting the UK economic recovery.”
#GIB is labour of love of many in politics, finance and civil society. It should be held in trust for all of us not sold to highest bidder.
— Matthew Spencer (@Spencerthink) June 25, 2015
The move comes as the Conservative government is putting the brakes on onshore wind farms. While they are the cheapest large scale source of renewable power, these turbines are attacked as unsightly by a number of backbench MPs.
Liberal Democrat and Green Party MPs questioned the Conservatives’ commitment to low carbon investment.
According to a Guardian report, Tim Farron, leadership candidate for the Liberal Democrats, said: “The decision is incredibly reckless and will damage investor confidence in the sector.”
Green MP Caroline Lucas agreed: “The government should keep at least a majority stake in the Green Investment Bank to ensure investor confidence is upheld and the commitment to low-carbon lending remains.”