How to keep the 'green' in the Green Investment Bank?

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Richard Heap
April 24, 2017
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This content is from our archive. Some formatting or links may be broken.
How to keep the 'green' in the Green Investment Bank?

Brexit, angry MPs, a court challenge and now a surprise general election. If the UK government had any doubts about selling the UK Green Investment Bank, it has had plenty of opportunities to ditch the deal. But no such ditching has occurred.

On Thursday, UK government minister Nick Hurd confirmed the worst-kept secret in renewable energy finance: Australian bank Macquarie is set to buy UK GIB for £2.3bn. But the announcement has not answered concerns about the future of GIB’s mission, even while trying to quell fears that Macquarie will 'asset-strip' the bank.

The green bank was set up in 2012 to mobilise £3.8bn of government cash, and back renewables projects using nascent technologies that commercial banks saw as too risky. A bold move, a world first and it has since mobilised investment of £12bn.

This helped establish the UK as the world’s largest offshore wind market. And you can plot a course between that early financial support provided by UK GIB, industrialisation of the offshore wind sector, and the zero-subsidy proposals we now see in Germany.

We now see no shortage of financial institutions looking to invest in offshore wind. If anything, investors are too blasé about the risks of building huge wind farms further and further offshore. So, for offshore wind, you could argue the GIB’s job is done.

But the controversy about the green bank sale really isn’t about offshore wind. It is about what comes after, and the fears that a GIB in private hands will not make the same investments in nationally-important infrastructure and risky technology that the GIB has. We wrote about this in March 2016 and are still unconvinced.

The question is that, without GIB, which deep-pocketed investors will back the projects that lead to the commercialisation of projects using new technologies? Floating and airborne turbines; storage; wave and tidal; and so on. Essentially, the GIB has been an early-stage investor, but that unique mandate now appears at risk.

As Brexit looms, the UK needs to be a leader in industries including clean energy, so it seems crazy for government would remove a mechanism that could help deliver it. Post-Brexit UK won’t have access to the European Investment Bank, for example.

Of course, the UK government, Macquarie and the green bank itself have dismissed such concerns.

Hurd said the £2.3bn sale delivered a profit for taxpayers and the green bank's mission would not change under Macquarie: “GIB will invest more in the green economy than ever before,” he said, with £3bn of investment targeted in the next three years. But it is not the quantity of investment that is in question. It is the type.

Will GIB now take the risk investing in projects using emerging technologies? We are doubtful. Hurd’s statement also clarifies that GIB will be Macquarie’s main vehicle for investing in renewables in the UK and Europe; and that the deal allows GIB to expand internationally – which again appears to sideline the UK’s needs.

Macquarie has also published a series of commitments over the future of the GIB under its ownership.

It said the GIB’s green purpose and objectives would continue under the oversight for five independent trustees; that it planned to retain the GIB’s existing platform and brand; and use the skills embedded in its team. The sale is set to take around two months to conclude and is subject to European Union approval.

Undoubtedly, Macquarie is a serious investor in renewables, and it has got a great deal buying UK GIB. We can appreciate that.

And its focus, rightly, is on investing on commercial terms. It hasn’t been dubbed the ‘vampire kangaroo’ for nothing. Making profits isn't automatically bad, but it can get you a tabloidy nickname!

Our beef isn't about whether GIB was sold to Macquarie, but whether it should have been sold to a commercial player at all.

Not everyone is so sceptical. RenewableUK gave the deal its unqualified support on Twitter: “We’re confident that this sale will mean the Green Investment Bank can grow and build on its successes as a unique and trailblazing clean energy investor.”

We have no doubt that GIB can grow and build on its successes.
That is not the issue. Our question is whether it can do so while staying true to its mission thus far – which, surely, is the key point.

Brexit, angry MPs, a court challenge and now a surprise general election. If the UK government had any doubts about selling the UK Green Investment Bank, it has had plenty of opportunities to ditch the deal. But no such ditching has occurred.

On Thursday, UK government minister Nick Hurd confirmed the worst-kept secret in renewable energy finance: Australian bank Macquarie is set to buy UK GIB for £2.3bn. But the announcement has not answered concerns about the future of GIB’s mission, even while trying to quell fears that Macquarie will 'asset-strip' the bank.

The green bank was set up in 2012 to mobilise £3.8bn of government cash, and back renewables projects using nascent technologies that commercial banks saw as too risky. A bold move, a world first and it has since mobilised investment of £12bn.

This helped establish the UK as the world’s largest offshore wind market. And you can plot a course between that early financial support provided by UK GIB, industrialisation of the offshore wind sector, and the zero-subsidy proposals we now see in Germany.

We now see no shortage of financial institutions looking to invest in offshore wind. If anything, investors are too blasé about the risks of building huge wind farms further and further offshore. So, for offshore wind, you could argue the GIB’s job is done.

But the controversy about the green bank sale really isn’t about offshore wind. It is about what comes after, and the fears that a GIB in private hands will not make the same investments in nationally-important infrastructure and risky technology that the GIB has. We wrote about this in March 2016 and are still unconvinced.

The question is that, without GIB, which deep-pocketed investors will back the projects that lead to the commercialisation of projects using new technologies? Floating and airborne turbines; storage; wave and tidal; and so on. Essentially, the GIB has been an early-stage investor, but that unique mandate now appears at risk.

As Brexit looms, the UK needs to be a leader in industries including clean energy, so it seems crazy for government would remove a mechanism that could help deliver it. Post-Brexit UK won’t have access to the European Investment Bank, for example.

Of course, the UK government, Macquarie and the green bank itself have dismissed such concerns.

Hurd said the £2.3bn sale delivered a profit for taxpayers and the green bank's mission would not change under Macquarie: “GIB will invest more in the green economy than ever before,” he said, with £3bn of investment targeted in the next three years. But it is not the quantity of investment that is in question. It is the type.

Will GIB now take the risk investing in projects using emerging technologies? We are doubtful. Hurd’s statement also clarifies that GIB will be Macquarie’s main vehicle for investing in renewables in the UK and Europe; and that the deal allows GIB to expand internationally – which again appears to sideline the UK’s needs.

Macquarie has also published a series of commitments over the future of the GIB under its ownership.

It said the GIB’s green purpose and objectives would continue under the oversight for five independent trustees; that it planned to retain the GIB’s existing platform and brand; and use the skills embedded in its team. The sale is set to take around two months to conclude and is subject to European Union approval.

Undoubtedly, Macquarie is a serious investor in renewables, and it has got a great deal buying UK GIB. We can appreciate that.

And its focus, rightly, is on investing on commercial terms. It hasn’t been dubbed the ‘vampire kangaroo’ for nothing. Making profits isn't automatically bad, but it can get you a tabloidy nickname!

Our beef isn't about whether GIB was sold to Macquarie, but whether it should have been sold to a commercial player at all.

Not everyone is so sceptical. RenewableUK gave the deal its unqualified support on Twitter: “We’re confident that this sale will mean the Green Investment Bank can grow and build on its successes as a unique and trailblazing clean energy investor.”

We have no doubt that GIB can grow and build on its successes.
That is not the issue. Our question is whether it can do so while staying true to its mission thus far – which, surely, is the key point.

Brexit, angry MPs, a court challenge and now a surprise general election. If the UK government had any doubts about selling the UK Green Investment Bank, it has had plenty of opportunities to ditch the deal. But no such ditching has occurred.

On Thursday, UK government minister Nick Hurd confirmed the worst-kept secret in renewable energy finance: Australian bank Macquarie is set to buy UK GIB for £2.3bn. But the announcement has not answered concerns about the future of GIB’s mission, even while trying to quell fears that Macquarie will 'asset-strip' the bank.

The green bank was set up in 2012 to mobilise £3.8bn of government cash, and back renewables projects using nascent technologies that commercial banks saw as too risky. A bold move, a world first and it has since mobilised investment of £12bn.

This helped establish the UK as the world’s largest offshore wind market. And you can plot a course between that early financial support provided by UK GIB, industrialisation of the offshore wind sector, and the zero-subsidy proposals we now see in Germany.

We now see no shortage of financial institutions looking to invest in offshore wind. If anything, investors are too blasé about the risks of building huge wind farms further and further offshore. So, for offshore wind, you could argue the GIB’s job is done.

But the controversy about the green bank sale really isn’t about offshore wind. It is about what comes after, and the fears that a GIB in private hands will not make the same investments in nationally-important infrastructure and risky technology that the GIB has. We wrote about this in March 2016 and are still unconvinced.

The question is that, without GIB, which deep-pocketed investors will back the projects that lead to the commercialisation of projects using new technologies? Floating and airborne turbines; storage; wave and tidal; and so on. Essentially, the GIB has been an early-stage investor, but that unique mandate now appears at risk.

As Brexit looms, the UK needs to be a leader in industries including clean energy, so it seems crazy for government would remove a mechanism that could help deliver it. Post-Brexit UK won’t have access to the European Investment Bank, for example.

Of course, the UK government, Macquarie and the green bank itself have dismissed such concerns.

Hurd said the £2.3bn sale delivered a profit for taxpayers and the green bank's mission would not change under Macquarie: “GIB will invest more in the green economy than ever before,” he said, with £3bn of investment targeted in the next three years. But it is not the quantity of investment that is in question. It is the type.

Will GIB now take the risk investing in projects using emerging technologies? We are doubtful. Hurd’s statement also clarifies that GIB will be Macquarie’s main vehicle for investing in renewables in the UK and Europe; and that the deal allows GIB to expand internationally – which again appears to sideline the UK’s needs.

Macquarie has also published a series of commitments over the future of the GIB under its ownership.

It said the GIB’s green purpose and objectives would continue under the oversight for five independent trustees; that it planned to retain the GIB’s existing platform and brand; and use the skills embedded in its team. The sale is set to take around two months to conclude and is subject to European Union approval.

Undoubtedly, Macquarie is a serious investor in renewables, and it has got a great deal buying UK GIB. We can appreciate that.

And its focus, rightly, is on investing on commercial terms. It hasn’t been dubbed the ‘vampire kangaroo’ for nothing. Making profits isn't automatically bad, but it can get you a tabloidy nickname!

Our beef isn't about whether GIB was sold to Macquarie, but whether it should have been sold to a commercial player at all.

Not everyone is so sceptical. RenewableUK gave the deal its unqualified support on Twitter: “We’re confident that this sale will mean the Green Investment Bank can grow and build on its successes as a unique and trailblazing clean energy investor.”

We have no doubt that GIB can grow and build on its successes.
That is not the issue. Our question is whether it can do so while staying true to its mission thus far – which, surely, is the key point.

Brexit, angry MPs, a court challenge and now a surprise general election. If the UK government had any doubts about selling the UK Green Investment Bank, it has had plenty of opportunities to ditch the deal. But no such ditching has occurred.

On Thursday, UK government minister Nick Hurd confirmed the worst-kept secret in renewable energy finance: Australian bank Macquarie is set to buy UK GIB for £2.3bn. But the announcement has not answered concerns about the future of GIB’s mission, even while trying to quell fears that Macquarie will 'asset-strip' the bank.

The green bank was set up in 2012 to mobilise £3.8bn of government cash, and back renewables projects using nascent technologies that commercial banks saw as too risky. A bold move, a world first and it has since mobilised investment of £12bn.

This helped establish the UK as the world’s largest offshore wind market. And you can plot a course between that early financial support provided by UK GIB, industrialisation of the offshore wind sector, and the zero-subsidy proposals we now see in Germany.

We now see no shortage of financial institutions looking to invest in offshore wind. If anything, investors are too blasé about the risks of building huge wind farms further and further offshore. So, for offshore wind, you could argue the GIB’s job is done.

But the controversy about the green bank sale really isn’t about offshore wind. It is about what comes after, and the fears that a GIB in private hands will not make the same investments in nationally-important infrastructure and risky technology that the GIB has. We wrote about this in March 2016 and are still unconvinced.

The question is that, without GIB, which deep-pocketed investors will back the projects that lead to the commercialisation of projects using new technologies? Floating and airborne turbines; storage; wave and tidal; and so on. Essentially, the GIB has been an early-stage investor, but that unique mandate now appears at risk.

As Brexit looms, the UK needs to be a leader in industries including clean energy, so it seems crazy for government would remove a mechanism that could help deliver it. Post-Brexit UK won’t have access to the European Investment Bank, for example.

Of course, the UK government, Macquarie and the green bank itself have dismissed such concerns.

Hurd said the £2.3bn sale delivered a profit for taxpayers and the green bank's mission would not change under Macquarie: “GIB will invest more in the green economy than ever before,” he said, with £3bn of investment targeted in the next three years. But it is not the quantity of investment that is in question. It is the type.

Will GIB now take the risk investing in projects using emerging technologies? We are doubtful. Hurd’s statement also clarifies that GIB will be Macquarie’s main vehicle for investing in renewables in the UK and Europe; and that the deal allows GIB to expand internationally – which again appears to sideline the UK’s needs.

Macquarie has also published a series of commitments over the future of the GIB under its ownership.

It said the GIB’s green purpose and objectives would continue under the oversight for five independent trustees; that it planned to retain the GIB’s existing platform and brand; and use the skills embedded in its team. The sale is set to take around two months to conclude and is subject to European Union approval.

Undoubtedly, Macquarie is a serious investor in renewables, and it has got a great deal buying UK GIB. We can appreciate that.

And its focus, rightly, is on investing on commercial terms. It hasn’t been dubbed the ‘vampire kangaroo’ for nothing. Making profits isn't automatically bad, but it can get you a tabloidy nickname!

Our beef isn't about whether GIB was sold to Macquarie, but whether it should have been sold to a commercial player at all.

Not everyone is so sceptical. RenewableUK gave the deal its unqualified support on Twitter: “We’re confident that this sale will mean the Green Investment Bank can grow and build on its successes as a unique and trailblazing clean energy investor.”

We have no doubt that GIB can grow and build on its successes.
That is not the issue. Our question is whether it can do so while staying true to its mission thus far – which, surely, is the key point.

Brexit, angry MPs, a court challenge and now a surprise general election. If the UK government had any doubts about selling the UK Green Investment Bank, it has had plenty of opportunities to ditch the deal. But no such ditching has occurred.

On Thursday, UK government minister Nick Hurd confirmed the worst-kept secret in renewable energy finance: Australian bank Macquarie is set to buy UK GIB for £2.3bn. But the announcement has not answered concerns about the future of GIB’s mission, even while trying to quell fears that Macquarie will 'asset-strip' the bank.

The green bank was set up in 2012 to mobilise £3.8bn of government cash, and back renewables projects using nascent technologies that commercial banks saw as too risky. A bold move, a world first and it has since mobilised investment of £12bn.

This helped establish the UK as the world’s largest offshore wind market. And you can plot a course between that early financial support provided by UK GIB, industrialisation of the offshore wind sector, and the zero-subsidy proposals we now see in Germany.

We now see no shortage of financial institutions looking to invest in offshore wind. If anything, investors are too blasé about the risks of building huge wind farms further and further offshore. So, for offshore wind, you could argue the GIB’s job is done.

But the controversy about the green bank sale really isn’t about offshore wind. It is about what comes after, and the fears that a GIB in private hands will not make the same investments in nationally-important infrastructure and risky technology that the GIB has. We wrote about this in March 2016 and are still unconvinced.

The question is that, without GIB, which deep-pocketed investors will back the projects that lead to the commercialisation of projects using new technologies? Floating and airborne turbines; storage; wave and tidal; and so on. Essentially, the GIB has been an early-stage investor, but that unique mandate now appears at risk.

As Brexit looms, the UK needs to be a leader in industries including clean energy, so it seems crazy for government would remove a mechanism that could help deliver it. Post-Brexit UK won’t have access to the European Investment Bank, for example.

Of course, the UK government, Macquarie and the green bank itself have dismissed such concerns.

Hurd said the £2.3bn sale delivered a profit for taxpayers and the green bank's mission would not change under Macquarie: “GIB will invest more in the green economy than ever before,” he said, with £3bn of investment targeted in the next three years. But it is not the quantity of investment that is in question. It is the type.

Will GIB now take the risk investing in projects using emerging technologies? We are doubtful. Hurd’s statement also clarifies that GIB will be Macquarie’s main vehicle for investing in renewables in the UK and Europe; and that the deal allows GIB to expand internationally – which again appears to sideline the UK’s needs.

Macquarie has also published a series of commitments over the future of the GIB under its ownership.

It said the GIB’s green purpose and objectives would continue under the oversight for five independent trustees; that it planned to retain the GIB’s existing platform and brand; and use the skills embedded in its team. The sale is set to take around two months to conclude and is subject to European Union approval.

Undoubtedly, Macquarie is a serious investor in renewables, and it has got a great deal buying UK GIB. We can appreciate that.

And its focus, rightly, is on investing on commercial terms. It hasn’t been dubbed the ‘vampire kangaroo’ for nothing. Making profits isn't automatically bad, but it can get you a tabloidy nickname!

Our beef isn't about whether GIB was sold to Macquarie, but whether it should have been sold to a commercial player at all.

Not everyone is so sceptical. RenewableUK gave the deal its unqualified support on Twitter: “We’re confident that this sale will mean the Green Investment Bank can grow and build on its successes as a unique and trailblazing clean energy investor.”

We have no doubt that GIB can grow and build on its successes.
That is not the issue. Our question is whether it can do so while staying true to its mission thus far – which, surely, is the key point.

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Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.