A new report published this week by the UK’s National Audit Office regarding the sale of the Green Investment Bank to Australian banking giant Macquarie has raised concerns that existing commitments only require the newly-named Green Investment Group to continue contributing to green financing for the first three years.
The UK’s Green Investment Bank (GIB) was initially formed back in 2012 by the Coalition Government with the intention of accelerating “the UK’s transition to a greener, stronger economy” by investing in green projects. As of March of 2017, the GIB had invested in 100 projects and committed up to £3.4 billion of its own capital to attract a further £8.6 billion in private capital — a return of around £2.50 for every £1 invested.
However, in June of 2015 the GIB announced plans that it intended to seek privatization. What followed was two years of stormy and controversial negotiations set up against numerous calls for the process to be halted and scrapped until in April of 2017 Australia’s Macquarie Group agreed to acquire the GIB from the UK Government for £2.3 billion while at the same time committing to the GIB’s newly-established target of driving £3 billion in new green energy investments. The sale to Macquarie was completed in August.
“Combined with Macquarie’s resources as the world’s largest infrastructure investor, the Green Investment Group will be uniquely placed to continue in its pioneering role in the world’s transition to a low-carbon economy,” explained Daniel Wong, Head of Macquarie Capital Europe said at the time. “We look forward to growing the Green Investment Group’s capacity and its contribution to the UK and global renewables markets.”
However, a report published on Tuesday by the UK’s National Audit Office (NAO) revealed that the “sale of GIB in 2017 was complex and took much longer than expected but the final sale price was within the government’s valuation range, at the lower end.” In fact, if the Government had decided to pursue its phased sale option it could have raised an additional £63 million — though “this could have been higher or lower depending on the uncertain outcomes from the phased sale option.”
Further, the future of the Green Investment Bank (now the Green Investment Group) is on shaky ground. According to the NAO, “Macquarie has made public (non legally binding) commitments for the first three years after the sale, including commitment to GIB’s green objectives and the Green Principles … However, government actions to meet climate change commitments will extend beyond 2020” and as a result “Macquarie has no legal obligation to ensure GIB will keep focusing on its green objectives and be an ‘enduring institution’ for years to come.”
“Ultimately the value for money of the Green Investment Bank intervention will only be seen over time,” said Amyas Morse, head of the National Audit Office. “A key test will be whether the Government needs to intervene again in this way to stimulate growth in the green economy and to help it achieve its climate change commitments.”
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