The planned privatisation of Britain's Green Investment Bank (GIB) must not go ahead unless the government can guarantee the bank's environmental objectives are protected, a parliamentary committee report released on Saturday said. The bank was created as a commercial venture at the end of 2012 to back Britain's green energy projects and encourage private sector investment. It says it has invested 2.3 billion pounds ($3.4 billion) in 62 projects worth over 10.1 billion pounds including offshore wind farms and waste management plants.
In June the new government announced its plans to privatise the bank, saying the move would give the bank greater freedom to borrow, removing state aid restrictions, and allow it to attract more capital. "The government needs to demonstrate how the privatisation of the bank will contribute to the balance of public and private sector initiatives required to meet the ambitions of the Paris climate change agreement," the report by the select Environmental Audit Committee (EAC) said.
Last week negotiators from more than 190 countries signed a landmark deal in Paris to curb greenhouse gas emissions and limit global temperature rises to "well below" 2 degrees Celsius above pre-industrial levels. The bulk of emission reductions are expected to come from electricity generation.
The EAC fears privatising the bank means it would move away from helping innovative and more complex projects in favour of funding easier and more immediately commercial projects, and that its green credentials could be compromised. "The government is currently relying on assurances from potential shareholders and the commercial case for retaining the Green Investment Bank's green purposes. That is not robust enough," the report said.
Britain's Business Secretary Sajid Javid said in June the government would sell a majority stake, though no decision has been made on the exact proportion that will be sold. The report said if the privatisation goes ahead the Government should retain a minority stake to demonstrate its commitment to the green economy and ensure the bank's long-term strength.
The Department for Business Innovation and Skills (BIS) said in a November policy update it expects pension funds, infrastructure private equity funds and sovereign wealth funds to be interested in investing in the GIB. The ministry said it hoped to carry out the sale in the next financial year and that changes to the country's Enterprise and Regulatory Reform Act must be made before it could start selling any stakes in the bank.