Parliament’s public spending watchdog has cast doubt on whether the privatised Green Investment Bank (GIB) will continue to support the government’s clean energy policy goals.
The report into the GIB’s £1.6 billion sale to investment bank Macquarie in 2017, issued today by the House of Commons Public Accounts Committee (PAC), raises concerns that the bank’s founding green goals were not sufficiently safeguarded by the government.
The GIB was set up in 2012 to help address a lack of private investment in the green economy needed to meet the UK’s climate change obligations.
Over the five years until its sale, the bank committed £3.4 billion to fund or part-fund 100 renewable and energy efficiency projects, attracting a further £8.6 billion of private capital.
Macquarie agreed to retain the five green purposes of the GIB, which has been renamed the bank’s Green Investment Group.
However the committee says the powers of the board of trustees, set up by the Department of Business, Energy and Industrial Strategy (BEIS) to vet the GIG’s adherence to its Green Purposes, do not extend to the approval of investment decisions.
These Green Purposes cover greenhouse gas emissions, efficient use of natural resources, the natural environment, biodiversity and environmental sustainability.
And it says Macquarie’s commitments to invest more than £3 billion in green energy projects over the three years following the sale are not legally binding.
It says BEIS failed to fully explore whether it could have obtained stronger green commitments to ensure that GIB continued to support its energy policy.
The report says: “We believe that it was a misjudgement that the department has so little assurance over GIG’s future investment in the UK and in emerging technologies, which will be crucial to ensuring that the UK’s green commitments are met.
“The measures the department put in place to protect GIB’s Green Purposes are not sufficient to ensure that GIB is an enduring institution.
“It is unclear whether Green Investment Group (GIG; the rebranded GIB under Macquarie ownership) will continue to support the government’s energy policy, or continue to have an impact on the UK’s climate change goals.”
The committee also concludes the government chose to sell GIB before fully assessing its impact and when making decisions about its future, prioritised reducing public debt and how much money could be gained from the sale.
Sir Geoffrey Clifton-Brown, the committee’s vice-chair, said: “This was a UK initiative but the rebranded Green Investment Group is not bound to invest in the UK’s energy policy at all, nor to invest in the kind of technologies that support its climate objectives.
“The protracted sale process put government on the back foot; had it been shrewder, it could have secured a better return for taxpayers.
“It was a mistake to repeal legislation protecting GIB’s green investment obligations without securing firmer commitments from potential buyers.
“Macquarie told us such commitments did not affect the price it was prepared to pay, indicating the government could and should have strengthened these commitments contractually.”