David Cameron: UK Green Investment Bank Is “Leading The World”

On Friday last week (15 May) Prime Minister David Cameron visited the UK Green Investment Bank plc (GIB) headquarters in Edinburgh, five years after he committed to establish the organisation.

GIB is the first bank of its kind in the world; set up by the UK Government to invest in new green infrastructure projects across the UK in areas including waste management, energy efficiency and offshore wind.

Edinburgh was selected as the headquarters of GIB in 2012, beating off competition from 34 other UK cities.

Since its launch in November 2012, GIB has committed £1.8bn of capital to 46 projects across the UK supporting new investment in UK energy infrastructure of £7bn.

David Cameron – “From its headquarters in Edinburgh it is leading the world in finding innovative solutions to make sure that the UK is at the forefront of the next generation of energy infrastructure”

GIB has invested in eight projects in Scotland, bringing a total investment of up to £450m. This includes investments in low energy streetlighting in Glasgow, small-scale hydro-power investments in Crianlarich, a new renewable energy plant in Speyside that will provide heat to The Macallan whisky distillery and a new high technology waste plant in Lanarkshire.

Prime Minister David Cameron said: “Almost five years ago to the day we committed to create the world’s first green investment bank. It has now been up and running for two years and has already backed over forty new green energy infrastructure projects, bringing £7bn of new investment into every part of the UK.

“From its headquarters in Edinburgh it is leading the world in finding innovative solutions to make sure that the UK is at the forefront of the next generation of energy infrastructure.”

Lord Smith of Kelvin, Chair of GIB said: “It was a pleasure to welcome the Prime Minister to our headquarters in Edinburgh. From here we have built a business, which is envied and is being copied across the world.

“Our innovative business model is working – we are investing to support new projects, mobilising private capital and helping to establish new markets, all on fully commercial terms. These green investments will result in vital new, modern energy infrastructure for the UK and deliver a profit for UK taxpayers.”

Recent Investment

Recently (26 March) GIB and Irish electricity utility Electricity Supply Board (ESB) made a combined commitment to invest £70m in a new £190m renewable power facility at the Port of Tilbury, Essex.

GIB and ESB are each committing £35m in a combination of equity and shareholder loans, with an additional £2m participation from technology provider Aalborg Energie Technik a/s. Senior debt funding is being provided by EKF (Eksport Kredit Fonden), Investec and Rabobank.

The Tilbury Green Power facility is expected to generate 300 GWh of green electricity per year, enough to power more than 70,000 homes, when it is commissioned in early 2017.

Up to 370 jobs will be created during the construction phase and nearly 50 permanent jobs in on-going operations. Stobart Biomass will be providing 270,000 tonnes per year of waste wood fuel for the project, sourced from the local catchment area and processed at an onsite facility.

The GIB confirmed it will also invest £28.25m into the new £111m Levenseat few project in Lanark, Scotland, alongside Foresight Group and Zouk Capital. (See CIWM Journal Online story)

Investment Criticism

Concerns were raised earlier this year that GIB interventions in the UK waste sector were likely to prove “far from green”, and risk hindering the country’s efforts to increase recycling and decarbonise energy, according to Eunomia’s Dominic Hogg.

After reviewing of the projects funded by the bank since it was created in 2012, the chairman of the consultancy revealed that out of a total waste sector investment of £269.7m, over 90% is in projects that are mostly or wholly energy from waste (EfW) residual waste treatment facilities.

Of the ten projects that it has funded, whether directly or through its fund managers, seven are wholly or mainly EfW.

Dr Hogg said – “If there’s one thing you’d expect a group of bankers to be able to do right, it’s their sums. Had they got the interest rate wrong on their investments, heads would roll. But there doesn’t seem to be the same concern over a serious flaw in their investment appraisal approach”

The remaining three are anaerobic digestion (AD) plants. These ten projects yield a total of 1,935k tpa of treatment capacity. Of this, 3% is for recycling, 12% for AD and 85% thermal energy from waste (EfW). (See CIWM Journal Online story)

Dr Hogg said: “If there’s one thing you’d expect a group of bankers to be able to do right, it’s their sums. Had they got the interest rate wrong on their investments, heads would roll. But there doesn’t seem to be the same concern over a serious flaw in their investment appraisal approach.

“No-one will thank the GIB when the only obstacle to having decarbonised the electricity grid is the incinerators they built under the guise of being green. In 20 years’ time these facilities will still be producing energy – and by that time, the carbon intensity will be almost ten times the grid average.”

Borrowing

According to the Institute of Environmental Management & Assessment (IEMA), 92% of it’s members who took part in a survey think the Green investment Bank (GIB) should be given powers to borrow and invest in projects that both protect and improve the UK’s natural capital.

Two thirds of IEMA members said that ultimately national needs must take priority where there is conflict between national and local built environment issues.

From 646 Members polled, 65% said that while a balance is obviously needed, nationally significant infrastructure projects must take priority.

Three quarters of IEMA’s respondents say that the current planning system is not equipped to aid the UK’s much-needed transition to a sustainable economy. (Read CIWM Journal Online story).


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