From the TUC

German lessons for the Chancellor

27 Jun 2013, by in Environment

One unwelcome statistic yesterday could have guided the Chancellor’s Comprehensive Spending Review – a 3.5% increase in our carbon emissions last year. Instead, further deep cuts in the environment and energy departments, including holding Defra’s expenditure on flood defences at current levels, were shaded by  an £800m boost for the Green Investment Bank – but not until 2015. The banks’ impressive first annual report shows what a well capitalised, independent bank with a green purpose could achieve – but it’s no German KfW.

Just to get the awkward fact provided by the Committee on Climate Change out the way, the UK’s carbon emission increase followed a switch from gas to coal in power generation to meet the energy needs of a cold winter. The ” slow movement of offshore wind projects into construction” delayed by the government’s energy reforms, didnt help.

GIB investments

The GIB report sets out the produce of its first year’s work:

  • £635m invested in 11 low-carbon projects for energy efficiency, renewable energy and waste management matched by £1.6bn from other private sector sources, a leverage of 3:1.
  • Transactions – once projects are fully operational – that will reduce our greenhouse gas emissions by 2.5 million tonnes a year over their life.
  • Around 9.5% of the UK’s projected renewable electricity output in 2020 – the electricity needs of around 2.5m homes.

Just a little detail here: only two GIB investments – offshore wind farms at Walney and Rhyl Flats – were operational and generating carbon savings, each for only limited periods of time during which bank was an investor. They generated power for 15,000 homes, saving 22,498 tonnes of CO2.

The big picture shows GIB’s current portfolio saving 43 million tonnes of CO2 over the projects’ lifetimes. It’s equivalent to the target annual emissions for Scotland in 2020. Over the period 2018–22, the bank’s investments will cut about 3% of the UK’s annual target reduction in GHG emissions during that period.

Set these achievements against the product of the KfW, Germany’s strategic, State investment bank. It is currently financing environmental and climate protection under the KfW Action Plan to support the German government’s energy turnaround – involving a massive shift to renewables:

  • In the first half of 2012, 12.1 billion euros (41 % of the potfolio) for environmental and climate protection.
  • In 2011, 262,000 homes underwent energy efficient modernisation or were newly built as KfW Efficiency Houses, cutting carbon emissions by 567,000 million tonnes a year.
  • The KfW Offshore Wind Energy Programme, on behalf of the Federal Government, financing up to ten offshore wind farms. Two of these supply around 805,000 households with renewable energy.

The additional £800m for the GIB is welcome. But today the Chief Secretary to the Treasury promises “£28 billion over the 6 years from 2014 in enhancements and maintenance of national and local roads.”

Shaun Kingsbury, GIB chief executive, also said today that this year was “critical” to establishing the UK as an attractive global centre for long-term energy investments. The appetite of institutional investors was waning, adding the many billions of pounds targeted at renewables had so far generated only half the rate of carbon savings required. It was vital to get the government’s Electricity Market Reform proposals “right”.

Today’s German lesson: provide the GIB with access to investments on the scale deployed by our main European competitor.


One Response to German lessons for the Chancellor

  1. jed goodright
    Jun 27th 2013, 2:07 pm