Following its announcement last week that it would close down the Renewables Obligation (RO) subsidy scheme a year early, the UK government has again courted controversy by announcing a proposal to sell off 70 percent stake in the Green Investment Bank (GIB) with a probable price of above £1 billion. It has already started to explore options to bring in private investors and hired Bank of America Merrill Lynch to advise on financial details and the timetable of the sale.
The Green Investment Bank (GIB) was the first bank in the world to be created by a government with the express intention of providing support for green energy projects and other ventures. The bank is a key component of the UK’s effort to meet legally binding environmental and green energy targets.
The decision has come under fire from a number of different directions, including senior and green-minded Conservatives. Other critics include the think-tank Bright Blue, LibDem MP Tim Farron and Green MP Caroline Lucas who branded the proposal as ‘rash and irresponsible’, adding that any such move would call into question the UK’s commitment to investing in a low-carbon economy.
E3G, a think-tank that advised on the original plans to establish the GIB, swiftly condemned the government’s plans. The organisation believes the proposed sell-off would damage investor confidence, both in the institution itself and the government’s ability to deliver a low-carbon economy.
“Selling off a majority stake in the GIB would be completely reckless” said E3G Chief Executive Nick Mabey. “The Green Investment Bank is not just the Government’s most lauded innovation in the war against climate change. 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. Privatisation threatens to destroy investor confidence which in turn will damage both energy security and the UK economy. On no account should more than 49 percent of the public stake in the GIB be sold now.”
Sepi Golzari-Munro, Senior Policy Adviser at E3G added that the government’s exact intention is hard to decipher and that there are many questions they need to answer.
“It’s hard to tell what the government intend to be honest, there are so many outstanding questions” said Ms Golzari-Munro. “I’d highlight two major ones at this stage. First, what happens to the remaining £1.8 billion allocated to the GIB, but yet to be deployed [the GIB has so far deployed £2 billion of the £3.8 billion allocated]? When I asked [Chief Executive] Shaun Kingsbury at Thursday’s meeting, he could not give me any assurances that this money (or any other amount for that matter) would remain with the bank. This raises further questions. Will the Treasury simply pocket this money? What will this mean for investor confidence? How will the sale deliver value for money for the taxpayer given the implications of removing the £1.8 billion will have for the value of the shares being sold? Secondly, How, when and to whom will the staek or stakes be sold? Would the public be able to buy shares? Would cities and devolved administrations? Will it be done in one tranche or in stages? Again, how will value for money be ensured?
Ms Golzari-Munro added that there are many, many outstanding questions and the government’s exact intention is hard to decipher.
There could be positive ways of going about this sale to ensure that the GIB retains not only the mandate but the operational ability to pursue its green purposes in the public interest – but if that doesn’t happen the government is likely to lose further credibility in the eyes of investors, the public and globally.
When asked if this is a possible indication that the government may be losing interest in renewable energy, Ms Golzari-Munro responded that there’s certainly a worry about that.
So what happens next remains to be seen, and many, many people across the country will be watching the government carefully.
I am an experienced freelance journalist with a wide and varied portfolio to my credit including web content, magazine articles, reporting, features, interviews, reviews and blogs. My special interests include environmental issues, particularly climate change, renewable energy, transport, green building and sustainable infrastructure. I have numerous secondary interests ranging from politics and current affairs to social justice, science, technology and innovation, historical topics and lifestyle subjects such as literature, psychology, contemporary spirituality and culture.