When the UK coalition government came to power in May 2010 they vowed to be the greenest UK government to date. As part of the promised drive to the (somewhat mythical in the UK) green economy, there was the announcement of a Green Investment Bank. Details were very sketchy on the Bank, its powers, location, size, etc. until May 23 of this year.
At the start of this week, Deputy Prime Minister and leader of the Liberal Democrat party, Nick Clegg, started to flesh out the details with Business Secretary, Vince Cable.
This is what we know, and still don’t know so far:
- The UK government has stated that the Bank will be established under primary legislation, meaning that it will have full operational independence from the government, under the leadership of a board.
- The Bank will start lending money in April 2012 but will not be able to raise money itself until 2015.
- The initial £3 billion ($5 billion) seed capital has been set aside by the UK government that could catalyze a further £15 billion ($25 billion) in green investment – though no clear indication as to where this £15 billion will come from.
- The advisory group, which is in essence setting up the Bank, is to be chaired by Sir Adrian Montague, who is currently chairman of private equity group 3i, but who was the chairman of nuclear operator British Energy (poacher turned gamekeeper?)
- The initial priorities of the Bank will be investments in major infrastructure projects such as offshore wind, waste, and non-domestic energy efficiency.
- What we still don’t know is the size or location of the Bank, though it is thought it will be about 50 to 100 people. We could see a shift in the size of the Bank depending on its location.
The two elephants in the room are its relationship to the nuclear industry and its location.
Nuclear – green or not? The UK’s relationship with nuclear energy is contentious, at best. Our current government said that it was not shutting the door on nuclear but that it had to operate on a “level playing field” and would not be given access to specific government subsidies.
Since then, both sides of the debate have been drawing up documents, reports, and retorts showing the argument as they see it, and decrying the stupidity of the other side. Such is the UK energy market!
Now getting back to the Green Investment Bank. Remember the phrase “major infrastructure projects”? While investment in nuclear has been ruled out in the first round of funding, the government said that it has not been ruled out for the second round. Taking into consideration that the Bank will have independence from the government and the person in position to run it is an ex-nuclear chief, it is not a huge leap to think that, after 2015, some of the billions that the Bank has to invest will go into new nuclear. But…
The second elephant was location. And to me at least, this could be the swing factor. The three locations that are in the running for the Bank are Bristol, London, and Edinburgh. I understand that a lot of non-Brits will shrug their shoulders and say “so what”.
Quick geography reminder – to give the UK its full title, it is the United Kingdom of Great Britain and Northern Ireland, with Great Britain being made of England, Scotland and Wales – three countries under one flag. With the process of devolution, Scotland, once again, has an increasing number of powers over its own country, independent of Westminster. Within these independent powers are various aspects of energy regulation (e.g. electricity; coal, oil and gas; nuclear energy). So Scotland sets its own energy policy. Holyrood, home of the Scottish Parliament, was the setting in 2010 for the announcement by its First Minister that its renewable electricity target was being raised from 50% to 80% by 2020 with 100% as an aspirational target. It bears repeating: renewable electricity, not nuclear electricity. Scotland’s First Minister even went so far as to rule out new nuclear plants in Scotland.
Now, hopefully you can see the importance of location. If the Bank went to Edinburgh it could, and should, use it to strengthen Scotland’s position as a leading light in renewable energy with Edinburgh as its heart. The investments would be UK-wide but the soul would be Scotland. Would nuclear still be on the table? Probably, but interest in other options would be much higher than if the Bank was in London, home of the old way of doing things. Bristol is the outsider, but again this is in England and therefore missing the call to arms for renewables.
The UK’s energy picture is murky at best with the Feed-in Tariffs (FITs) being messed around with, new policies coming out piecemeal and building codes being relaxed. The Green Investment Bank has the opportunity to be a beacon, a call to arms, for my country. I just hope it hasn’t already been bought and sold to the nuclear industry.
NOTE: For the sake of full disclosure, I am against the building of a new generation of nuclear power plants in the UK. Not only do I believe that nuclear is not sustainable, but also that it is not needed. With new distributed generation technologies coming and increased energy efficiency, coupled with more efficient uses of the resources we do have, natural gas and renewable, long lead time and massive energy projects such as these hark to old times.