Green Investment Bank

Debate between George Freeman and Caroline Lucas

Thursday 29th October 2015 Westminster Hall

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (George Freeman)]

It is a great pleasure to serve under your chairmanship, Mr Percy. We started the debate under Mr Crausby, and I nearly addressed you as him. It is a genuine pleasure to respond to the debate. We have had a gem of a debate; as other hon. Members have observed, we have covered a huge amount of ground, and I think we have covered all the main issues.

The hon. Member for Cardiff West (Kevin Brennan) rattled off a veritable machine-gun volley of questions. A bit like the football results, the answers are coming out of my teleprinter as I begin my speech, and I am confident that, by the end, I will have the detail to deal with all the questions that have been asked.

I thank my hon. Friend the Member for Beverley and Holderness (Graham Stuart) for raising this issue, which he has done with the support of hon. Members from all parties. I also congratulate him on his tenacity. He recently met my right hon. Friend the Secretary of State, along with E3G and the Aldersgate Group. He was also a distinguished member of the Committee that considered the draft Climate Change Bill back in summer 2007, and he served with great distinction for four years on the Environmental Audit Committee. He is not a Johnny-come-lately on this subject, but somebody who has been interested in it for some time.

Despite one or two of the comments made earlier, I am not filling in for anybody. I am here as a Minister at the Department for Business, Innovation and Skills, and I have a long interest in green energy. I served at the Department of Energy and Climate Change as a Parliamentary Private Secretary. In a 15-year career in investment in technology companies, I saw that this country and its economy have great strength in clean tech and green tech. As a Minister with responsibilities for science, technology and innovation at BIS, I know the Department wants to do everything it can to unlock UK leadership in the clean-tech sector. Energy costs are a major issue for UK business, and making sure we have a clean, green, lean, resilient economy for the 21st century is of strategic national interest for the Department. It is therefore a pleasure to respond to the debate on behalf of the Department’s ministerial team.

Unusually, we have the luxury of time this afternoon, although you will pleased to know, Mr Percy, that I do not intend to exceed my great-great-great-uncle Gladstone’s record of speaking for more than three and a half hours in the House. However, I do have the chance to set out the full context and to deal with all the questions that have been raised. If I fail, perhaps I can write to hon. Members to pick up any points I have missed.

I am struck by the degree of common interest among all parties in the House. Everyone present wants the Green Investment Bank to flourish and celebrates the success it has had. We start from a good place; we all want the same thing—a green investment bank that brings about growth in the sector and its activity, taking on UK leadership in that space. I congratulate and thank the chairman, chief executive and staff of the Green Investment Bank for their work. They have taken the initiative and made a great success of it. It is a tribute to them that we are engaged in a conversation about options for what we can do with the institution. We should not overlook that.

Since its establishment in 2012, the Green Investment Bank has committed more than £2 billion to 55 green projects and seven funds, and has pulled in £6 billion of additional private investment. It invests on fully commercial terms, achieving strong returns without the need for soft loans or grants. It does so because it can draw on its specialist expertise to assess commercial risks properly and to identify sound investment opportunities that can provide good commercial returns. That is how it has been able to attract new sources of finance into green sectors for the first time—by demonstrating to the wider market that investing in green can be profitable and is not the preserve only of Government subsidy. Achieving that demonstration effect and attracting new sources of private capital into green sectors are crucial since Government funding alone will not achieve the transition to a clean, green and resilient economy that we all want.

An example of the bank’s success is the important role it played in securing a £500 million financing deal for the Westermost Rough offshore wind farm off the coast of Yorkshire. That is a new offshore wind project in the early construction phase that involves the first use in the UK of new larger and more efficient turbines. It represents a step forward for that important sector. The deal demonstrates what the Green Investment Bank does well—attracting private investment into such important projects. Its leadership has helped to stimulate not just UK or European but global private interest in renewable energy. I looked earlier in the debate at the latest data from Bloomberg New Energy Finance and the eighth United Nations Environment Programme report on global trends in renewable energy investment. The sector globally was up 17% in 2014. That was the first time it was back up in four years, as it had had a quiet three years. It has now raised £270 billion for green energy globally. Renewable power, excluding large hydro, around the world, has gone from between 8% and 8.5% to just over 9%, so there is success globally.

In the UK between 2010 and 2014 we raised £42 billion in the green energy sector and renewable electricity generation has gone from 6% to 19%. That is a stunning achievement in anyone’s books. There are 11,550 firms here in the supply chain, with 460,000 employees. Since 2010, on average, if the peaks and troughs are evened out, more than £7 billion a year has been invested in UK renewables, and renewable energy capacity in the UK trebled between 2010 and 2014. That is in no small part because of interest in the Green Investment Bank and the work that it has done.

[Caroline Lucas]

I apologise to the Minister because I have another meeting and so will not be able to hear his full reply now; but I will check it in Hansard later. I am sorry.

I have two things to say. First, the Minister was bigging up renewables investment in the UK, but to bring him down to earth I remind him of an article from earlier in the year saying that the UK has just hit a 12-year low in attracting renewables investment. We need to be aware of the context. Secondly, does he agree that a privatised Green Investment Bank will become more risk-averse and therefore contribute to market failures, rather than helping to eradicate them?

[George Freeman]

No, I do not accept that. The hon. Lady’s party is committed to promoting green technologies and investment, but I do not think her insistence that the sector is in decline will be encouraging for investor sentiment. We all have a duty, whatever our policy differences, to contribute to confidence in the sector.