United Kingdom

United Kingdom

UK poised to start GIB privatisation

UK: The UK government is setting in motion its plans to privatise the Green Investment Bank (GIB), causing it to lose its legal obligation to invest in green projects.

Gwynt y Mor is one of several UK offshore wind projects to have been supported by the GIB
Gwynt y Mor is one of several UK offshore wind projects to have been supported by the GIB

The government is expected to issue a report today on how it will begin selling shares in the bank in a bid to encourage private investments in green projects.

As a result of the sale, the GIB would lose its legal obligation to support only green energy and infrastructure projects.

However, in a bid to protect its green heritage, the GIB is planning to set up a "special shareholder" status and create a board of independent experts that will protect the bank's five "green purposes" of reducing greenhouse gas emissions; advancing efficiency in the use of natural resources; protecting or enhancing the natural environment and biodiversity; and promorting environmental sustainability.

Projects requiring funding from the bank must meet the five purposes and the board must approve any changes to the purposes. The board would hold a "power of veto" to any proposed changes, a GIB spokesman said.

GIB independent chairman Lord Smith of Kelvin said: "I am confident that the sale process will provide the GIB with good new owners who will support GIB's continued growth and leadership role in the global green economy long into the future.

"This launch, and the wider plans to introduce new capital and new owners to GIB, has the full support of GIB's independent board."

The UK government announced it would sell a majority share of the bank in June 2015.

UK chancellor George Osborne said moving the bank into the private sector would "enable it to access larger pools of capital".

However, in December, a group of MPs said the government had failed to make a reasonable case for selling off the bank.

In a report, the members of the environmental audit committee said: "The government's case could have been strengthened if it had provided evidence that this is the right time to privatise the Green Investment Bank.

"The absence of this, coupled with the government's reliance on its view that this is merely the 'natural next step' for the bank, is likely to lead to the suspicion that the move and its timing are not evidence-based policy," the report added.

While the initial sale of the bank would leave it retaining a minority share in the bank, the government has hinted a total sell-off is likely.

The GIB has supported several offshore projects in the UK. E.on's 400MW Rampion, the 630MW London Array and RWE Innogy's 576MW Gwynt y Mor are among the projects to receive support from the bank. 

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