On the 20th of March Biofuelwatch were invited to attend a meeting with the Green Investment Bank (GIB). The request came in response to an e-alert that Biofuelwatch launched in February calling on people to write to the chair of the GIB to demand an end to their substantial investments in big biomass.
After only a few weeks of going live online, over a thousand people had participated in Biofuelwatch’s e-alert by sending a letter to Lord Smith, the bank’s Chairperson, demanding that the GIB commit to not funding any more big biomass projects. In particular, the letter highlighted the fact that burning biomass is as socially and environmentally devastating as burning coal is, and so cannot be considered a green investment.
Despite the extensive documented evidence of the negative global impacts of big biomass, in December 2012, the UK’s new Green Investment Bank agreed to loan Drax (the UK’s largest coal-fired power station) £100 million. The money will help Drax to finance its conversion from a power station which can only burn coal, to one which can also burn biomass. If this happens, by 2016, half of Drax’s generating capacity will be reliant on burning a vast amount of imported wood.
At the GIB offices in Edinburgh, members of Biofuelwatch were met by three representatives of the bank. While the meeting was useful for establishing our respective positions on the issue of funding for big biomass, Biofuelwatch left the meeting disappointed that GIB representatives refused to acknowledge the devastating impacts of big biomass. We were also concerned by some of the contradictory remarks that were made.
The first issue of concern relates to how the GIB decides where to place its investments. Since the GIB is a state funded bank, we were informed that the energy sectors it is allowed to invest in are set by State Aid rules which are guided by government policy. To emphasise this point, Group Operations Director Rob Cormie, commented that “We are a policy taker, not a policy maker.” He suggested that, in light of this, our argument over finance for big biomass was with the government rather than with the GIB.
However, when it was pointed out that biomass isn’t actually set as a priority area for the GIB according to State Aid rules, the GIB replied that it does not have to adhere to the priority areas that are set for it, but rather is guided by the market. Therefore, the GIB has invested in big biomass because it is an attractive investment opportunity at this time.
Biofuelwatch were unable to discern from these two conflicting statements whether the GIB’s investments are in fact guided by government policy and State Aid rules, or whether the GIB, as a private company, is guided by market forces and free to make investments into the industries of its choice.
Our second cause for concern also relates to State Aid rules. The EC’s State Aid decision stipulates: “Project holders seeking funding from the GIB will be requested to provide evidence that they have been denied funds or have not obtained all the necessary funding from market operators. The GIB’s intervention will also rest on a so-called “additionality principle”: whenever possible, funding provided by the GIB will come in addition to market financing.”
During the meeting we were clearly told that financial viability and attractiveness to commercial funders was a key criteria for GIB funding, and that the GIB is providing funding on the basis that for every pound input by the GIB, several pounds will come from other investors. However this appears entirely contradictory to the statement quoted above.
Our final concern and contradiction highlighted in the meeting was over the GIB’s investment criteria. During our meeting we asked what their criteria were, and GIB representatives replied that as part of “due diligence” their board is currently developing a set of policies “to be published in due course.” We were informed that the policies and criteria they devise will be published such that interested parties will be able to comment. However, when asked if there would be a consultation on them that we could participate in, they replied no.
Since the meeting Biofuelwatch have written to the creators of the GIB, the department for Business Innovation and Skills (BIS), to ask for clarification on these points. We have asked them if they think it appropriate that the GIB has already begun to make substantial investments without the existence of agreed-upon investment criteria and policies. We have also queried whether it is the opinion of the BIS that these criteria and policies should be consulted upon in such a way that allows public participation and have requested a meeting with them to discuss the matter further.
We continue to encourage people to add their voice to the growing call from people across the UK to put a stop to plans to burn ever greater quantities of biomass in our power stations.
You can sign the e-alert and read more about the issues here