The Green Investment Bank (GIB) will bail out flagging public-private partnership (PPP) waste projects at the expense of riskier schemes, it has been revealed.
A senior GIB official told a debate at Parliament he was “disappointed” the bank would be used in this way but pledged that smaller schemes would not be frozen out.
Ian Nolan, a member of the GIB’s start-up team UK Green Investments, said: “The evidence at the moment is that some of the larger PPP deals are struggling to get bank finance.
“That makes our challenge more difficult and more urgent. We will intervene in some of these projects, which is disappointing because it would have been nice if we could have started to engage where there is clearly more risk.”
Industry experts attending the Associate Parliamentary Sustainable Resource Group meeting expressed disappointment the bank would be used in this way but said market conditions left few alternatives.
London Waste And Recycling Board chief operating officer Wayne Hubbard said: “All things being well we do not need a GIB to invest in PPP/PFI projects because they have good counterparties. But we are not in that situation and therefore there may be a case.”
Waste experts warned that if the GIB focused a slug of its finance on bailing out projects that should be able to secure commercial lending, smaller projects which are less appealing to traditional investors would suffer.
One waste finance expert said: “I can understand why they would want to do this but it was not really why the GIB was set up. They should be looking at projects struggling to get funding because they are a new technology.”
The GIB is due to become operational this autumn from its Edinburgh headquarters and will have £3bn to invest on its mission to boost the green economy.
Waste is one of five priority sectors for the bank, and ministers are poised to announce which fund managers will be charged with handing out £100m of funding specifically for smaller waste projects.
Nolan told MRW ministers would announce the fund managers for the bespoke waste fund set up by UK Green Investments “in the next two weeks”.
GIB executive director Oliver Griffiths told the Parliament debate projects wanting funding “needed to demonstrate the private sector was not doing this already and it needs new money”. The bank would not become a “lender of last resort”, he added.