Recycling chiefs have urged ministers to publish the terms on which the £3bn worth of Green Investment Bank (GIB) loans will be handed out amidst claims its ambitions have been scaled back.
Vince Cable confirmed that waste projects would be a major priority for the bank and announced a new group, the UK Green Investments team, had been set up to drive green infrastructure investment until the GIB goes live.
The team will have £100m to invest in smaller waste infrastructure projects on commercial terms and will begin investing from April 2012, until the bank, which needs European Commission state aid clearance, is formally established.
The announcement followed Cable dismissing claims earlier this month that ministers had been forced to “dramatically lower” funding for the bank.
In response to Labour MP Glenda Jackson, he said: “Those reports are simply incorrect. The Government’s commitment was for £3bn, and that remains the case. We expect the bank will have leveraged in another £15bn by the end of this Parliament.”
Jackson’s question, during a House of Commons debate, followed national media reports that draft proposals had recommended the bank lend on commercial terms and make a profit every year.
This raised questions about whether it would be able to invest in important areas that are currently too risky for private lenders, Labour and other campaigners said.
The announcement received a tepid reception from the waste sector with questions raised about how quickly loans would be available and whether the bank had targeted too many areas (see comment).
The GIB’s five ‘priority sectors’
- Offshore wind power generation
- Commercial and industrial waste processing and recycling
- Energy from waste generation
- Non-domestic energy efficiency
- Support for the Green Deal
Chartered Institution of Wastes Management chief executive Steve Lee said the waste industry continued “to be regarded as a higher risk sector in terms of attracting investment”.
“It remains to be seen whether the GIB will be adequately structured and resourced to provide the right level of support to overcome these barriers,” he added.
Adam Read, global practice director at AEA, also raised questions around the lack of information for potential borrowers.
He told MRW: “How will the fund be directed and what criteria will be used to assess proposals? This lack of clarity is still a concern for a bank that will be investing in under four months’ time.”
Waste industry expert, Paul Levett, previously Veolia deputy chief executive, said small and mid-sized companies in the sector “had very high expectations” of the GIB because private sector banks were not lending.
“We will only know how useful it will be when we hear the criteria on which it will lend, he added, “The GIB should be able to learn a lot of lessons from the London Waste & Recycling Board which has played a similar role on a regional basis,” he added.
Senior figures privately raised concerns to MRW that the UK government’s deepening row with the European Union could yet have implications for the GIB because the bank requires EC approval under state aid rules.
See also - comment by Dustin Benton