Government and business at odds over green investment bank

There have already been some noises off between the UK government and the green energy industry over the green investment bank, the government’s proposed investment vehicle for funding clean energy projects. Apart from anything, many in the sector simply don’t think the £1bn promised by Chris Huhne, the energy secretary, is enough.

But another faultline opened up today at a briefing attended by both Sam Laidlaw, the chief executive of Centrica (pictured), and Huhne himself. Specifically, the pair seemed to be at odds over whether the green investment bank could be used to fund energy efficiency initiatives.

Centrica has been among the first utilities to back the Green Deal – the governent’s energy efficiency drive – announcing its British Gas unit would offer customers a “Green Deal plan”, even before the government made the details clear. What’s more the scheme will cost the company £30m.

So maybe it shouldn’t surprise us that Sam Laidlaw said today:

There is an important role for the green investment bank in helping energy efficiency.

It’s going to be 18 months to 2 years to get the Green Deal up and running… We have elected to go early with a £30m pilot. But there’s only so much supply companies can put on their balance sheet.

Perhaps he didn’t realise what the government reaction to this would be – Chris Huhne had not arrived by that point. But he was soon set straight by the energy secretary, who said:

I do not envisage the green investment bank being very important for the Green Deal. Assuming the securitisation markets pick up again, big players in the Green Deal can do things on the balance sheet and then securitise that and roll it over.

To be fair, when I have spoken to British Gas, they have always been clear that they do not expect government funding for the Green Deal – that was always supposed to come from third party financiers.

Surely Laidlaw knew what the government policy was on this issue, in which case was this a covert plea that was as quickly slapped down as it was uttered?

Timing tensions

That was not the only point of tension the green investment bank. Huhne spent a long time explaining how he wanted to take time to make sure the bank’s formation was just right. He said that the analysis on its formation would be complete by May, but added, “It may take longer than that.”

This did not go unnoticed by Climate Change Capital’s James Cameron, who spoke up for potential investors when he said rather pointedly:

The worry is that if you spend a long time fighting civil servants to create the perfect institution it’s too late. We’ve got time passing.

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