The Green Investment Bank (GIB) was launched in November 2012 to help finance a new ‘green economy’ by providing loans to environmentally friendly, low-carbon projects. It is fully owned by the Government’s Department for Business and Industry. So far it has been given a £3 billion budget.
Yet the first ever large loan they granted was a £100 million for Drax, to help them partially convert from coal to biomass. This was later reduced to £50 million after the Treasury granted Drax a £75 million private loan guarantee. Read more about how Drax depends on pellets from whole trees from high-biodiversity southern US and Canadian forests in their profile.
According to Secretary of State Vince Cable, without this GIB loan Drax “would have closed down because it has to meet European rules on coal use and it wouldn’t have been able to survive“. So thanks to a GIB loan, Drax won’t just be burning millions of tonnes of wood from clearcut biodiverse and carbon-rich forests – they’ll also be burning around 3.7 million tonnes of coal every year, long-term. Without the GIB, they would have had to shut down their polluting, carbon-spewing power station.
You might think that the GIB would have been embarrassed by the revelation that Drax is relying on pellets made from whole trees from temperate and boreal forests, rather than residues. Burning this at best results in more carbon in the atmosphere than burning coal for 35 years (for the same units of energy), and at worst, for many centuries. You might also think that they would have been shocked to learn about Drax’s sourcing of pellets made from clearcut ancient swamp forests. But no – the GIB continues to insist that Drax meets their ‘sustainability’ criteria. Even worse – in their first Annual Report they ascribed over 91% of estimated ‘greenhouse gas savings’ from all their loans so far, to the one given to Drax.
There are fears that the GIB will give similar loans to other large forest-destroying biomass projects – perhaps even to Forth Energy in Scotland, who have planning permission for two large new power stations which would burn wood from the Americas. The GIB’s Chair, Lord Smith of Kelvin, happens to also be Chair of SSE, who own half of the shares in Forth Energy.