Green Investment Bank in Edinburgh? But there’s already a bank here that could do that job

Date: 13 January 2011

Liz Murray, head of WDM Scottish campaigns, Edinburgh

Environment Minister, Chris Huhne, was here in Scotland yesterday, speaking to MSPs about the UK Government’s plans for the Green Investment Bank.  Talk, perhaps inevitably, turned to whether the bank might be based in Edinburgh, given the renewable energy investment expertise that exists here.

Here at WDM we’re right behind the idea of the Green Investment Bank (wherever it ends up being), although there is a big question mark about the rather puny £1billion of initial capital that the Government is suggesting that it starts off with.  But it shouldn’t be overlooked that there is already a bank based in Edinburgh that, like the proposed Green Investment Bank, is almost entirely owned by the Government and that, with the right investment criteria, could make an even bigger contribution to moving the UK swiftly to a low carbon economy than the GIB’s £1billion initial capital. 

That bank, the Royal Bank of Scotland, is more than 80% owned by the Government (and the UK taxpayer) after being bailed out with a whopping £45.5billion by the last Government, but it finances more fossil fuel exploitation than any other bank in the UK.  This is in direct conflict with Government targets to tackle climate change and the proposed low carbon investments of a Green Investment Bank. 

The Green Investment Bank Commission estimated that for the UK to reach its climate change and renewable energy targets, £550 billion of investment will be needed between now and 2020.  The Green Investment Bank’s £1billion is going to have to attract a lot of private investment in order to reach levels like that.  But imagine if RBS’s investment criteria matched those of the Green Investment Bank (or perhaps it was even merged with it!) adding its huge financial muscle, for the good of the environment?  That could really make a difference, and perhaps result in the step change in low carbon investment that is needed.

As its major shareholder, the Government could, and should, ensure that RBS’s investment criteria are aligned with those of the GIB so that it can add to the positive environmental impact of the GIB rather than undermining it.