The British tax payer is to invest millions of pounds into solar panels and wind turbines in Africa and Asia as part of a new drive to help poor countries by developing green business.
Environment Correspondent 4:20PM GMT 19 Nov 2010
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Andrew Mitchell, the International Development Secretary, said aid money will be used in a new way to tackle climate change, as well as funding health and education.
In a controversial move, the Coalition Government will be using tax-payer’s money to encourage private investors to put further funds towards ‘green’ development projects.
However aid agencies and charities argue it is dangerous to involve big business in aid because they will only help people while there is the potential for profit.
Mr Mitchell announced two public-private partnership projects in Africa and Asia to stimulate investment in renewable energy schemes.
The UK Government has put aside £2.9 billion of the aid budget to tackle climate change over the next four years.
Grants will be put in a central pot and then matched by private investors, renewable energy projects can then dip into the fund to develop hydro-electric plants and other schemes.
Once the money is flowing private investors will see that there is profit to be made from investing in solar panels and other technologies for poor people. A ‘green market’ will be created for the first time in some of the most ‘energy poor’ areas of the world.
Initial modelling of the fund estimates £9 of private investment could be raised for every £1 put in by the UK Government.
DfID estimates that, over 25 years, the project could generate energy for millions of rural homes, create 60,000 jobs and save 150 million tonnes of carbon dioxide.
The project is all part of international efforts to fight climate change by making sure that developing countries, which will produce the most carbon in the future, grow in a green way.
The last round of United Nations (UN) climate change talks in Copenhagen failed and the next major session in Cancun at the end of this year are not expected to end in a deal to halt global warming.
But Mr Mitchell said Britain must continue to fight climate change despite the failure of the talks.
He said one of the best ways to do this is to reduce emissions in the developing world, at the same time as funding development.
"When it comes to tackling climate change across the world, we have to get on with the job,” he said. "At the same time as working tirelessly towards a global deal, we must not be paralysed into inaction on the ground.
"The private sector is certainly not waiting. Decisions are being made every day on where to locate, on investments and on insurance premiums. These decisions are based on the business reality of climate change."
Kirsty Hughes, Oxfam’s Head of Advocacy, gave a cautious welcome to the promise of funds - as long as the money does not come out of funding for health and education.
“We welcome Mitchell's emphasis on the need for urgent action because climate change is hitting the poorest now, especially women,” she said.
“But we need to know how that action is going to be paid for without dipping further in to pledged aid money.”
But Kirsty Wright from the World Development Movement, said it was dangerous to involve big business.
“The message from Andrew Mitchell’s speech is clear - the UK government is once again ignoring the voices of people in the developing world and prioritising the needs of big business,” she said.
Commentators have expressed concern about ‘aid’ money going towards the renewables business in countries like India, which is investing its own money in energy projects, at a time of austerity for Britain.
Friday, 19 November 2010
David Cameron breaks silence on green matters
From a green investment bank to sustainable development, the PM claims the coalition will stay true to its environment pledges
The "greenest government ever" should be a type example of a phrase that casts a hostage to fortune. But the statement, made by David Cameron just days after taking office in May, was then followed by near deathly silence on all green matters. Today, in front of the massed ranks of the House of Commons liaison committee, he broke that silence.
The key thing he revealed is how brilliant a political performer he is: affable, unflappable and unpindownable. But here's what he revealed – and did not – on green issues. (Watch it all here, from about 15:24 onwards.)
Green investment bank: On the face of it crystal clear here. Asked by Labour's Joan Walley whether it would really, truly be a bank, and not a fund, whether a dispute was likely between the department of business and the treasury, and whether he would take a personal interest, he said: "Yes, yes and yes, to all of those questions." But as Tim Webb elegantly reveals here, there a lot of wriggle room in a simple word like "bank". A government-backed bank could leverage vastly more investment than a private bank for low-carbon energy, energy efficiency and other major projects to cut the UK's greenhouse gases and tackle climate change.
Criteria of success for being the "greenest government ever": The conservative Tim Yeo asked what these might be. Cameron replied that the structural reform plans for each department would "give you the weapons to beat us with if we don't perform", while acknowledging that the plans themselves were "not a thrilling read". The plans – also called business plans by officials – set out a timetable of action for departments, and Cameron rattled off the list of things in Decc's plan (PDF): the green investment bank, carbon capture and storage funding, electricity market reform, 10% cuts in government's energy use in a year, the renewable heat incentive and more. Impeccable command of detail from the prime minister, but given that the business plan is almost entirely devoid of numbers, it's hard to see how that can be used to hold the coaltion to account.
Sustainable development: Walley took on Cameron on how he was weaving the need for sustainable development into the business of government, ie making sure environmental and social impacts were considered when making decisions, not purely economic ones. Why abolish the Sustainable Development Commission, she asked? "Obviously we made difficult decisions in the spending round," was the bland reply, before claiming many green plans had been protected and that environment groups had given the whole package a "warm reception". Cameron said the UK's carbon budgets and his pledge to "transparent information" on the government's own green performance would keep the coalition honest on its green pledges.
Carbon capture and storage: Very clear here, with Yeo asking had the government worked out how to pay for the three demonstration plants not funded in the comprehensive spending review. No, said Cameron. The first demonstration has got £1bn of public money, the rest will, I think, be funded by a levy on electricity and gas bills. The power to raise the levy was in the energy bill passed just before the election.
Flood defence funding: The Conservative MP Anne McIntosh tackled the PM on this, amid accusations of cuts. Cameron said that £2.1bn would be spent over the next four year, roughly the same as the last four years, and that it should be possible for local communities to "top this up" from their own pockets.
Forestry Commission land sell-off: No holding back here from the PM in the face of fears over whether sold-off forests would preserve access and wildlife: "I don't think it is absolutely vital who owns it," and "I think the innovative financing we are looking at shouldn't worry people." I'd humbly suggest that in the wake of the great banking crash, the idea of "innovative financing" is utterly terrifying.
Nuclear power: Cameron backed new nukes – no surprises there – but used a telling phrase: "no specific subsidies". Both parties in the coalition have pledged no subsidy to the nuclear industry but his phrase today does not rule out subsidies that apply to all low-carbon energy, even if nukes will be the biggest benefactor.
Energy prices and market reform: "Prices are on an upward trajectory," Cameron said. Why? "Because so much of our electricity infrastructure is out of date, because so much of our nuclear industry is about to come to the end of its life." He also articulated the government's desire to pull back from the fully liberalised free market that Labour created and go for a "slightly more planned view". My head spins at that reversal of the political orthodoxy, but we live in interesting times.
The "greenest government ever" should be a type example of a phrase that casts a hostage to fortune. But the statement, made by David Cameron just days after taking office in May, was then followed by near deathly silence on all green matters. Today, in front of the massed ranks of the House of Commons liaison committee, he broke that silence.
The key thing he revealed is how brilliant a political performer he is: affable, unflappable and unpindownable. But here's what he revealed – and did not – on green issues. (Watch it all here, from about 15:24 onwards.)
Green investment bank: On the face of it crystal clear here. Asked by Labour's Joan Walley whether it would really, truly be a bank, and not a fund, whether a dispute was likely between the department of business and the treasury, and whether he would take a personal interest, he said: "Yes, yes and yes, to all of those questions." But as Tim Webb elegantly reveals here, there a lot of wriggle room in a simple word like "bank". A government-backed bank could leverage vastly more investment than a private bank for low-carbon energy, energy efficiency and other major projects to cut the UK's greenhouse gases and tackle climate change.
Criteria of success for being the "greenest government ever": The conservative Tim Yeo asked what these might be. Cameron replied that the structural reform plans for each department would "give you the weapons to beat us with if we don't perform", while acknowledging that the plans themselves were "not a thrilling read". The plans – also called business plans by officials – set out a timetable of action for departments, and Cameron rattled off the list of things in Decc's plan (PDF): the green investment bank, carbon capture and storage funding, electricity market reform, 10% cuts in government's energy use in a year, the renewable heat incentive and more. Impeccable command of detail from the prime minister, but given that the business plan is almost entirely devoid of numbers, it's hard to see how that can be used to hold the coaltion to account.
Sustainable development: Walley took on Cameron on how he was weaving the need for sustainable development into the business of government, ie making sure environmental and social impacts were considered when making decisions, not purely economic ones. Why abolish the Sustainable Development Commission, she asked? "Obviously we made difficult decisions in the spending round," was the bland reply, before claiming many green plans had been protected and that environment groups had given the whole package a "warm reception". Cameron said the UK's carbon budgets and his pledge to "transparent information" on the government's own green performance would keep the coalition honest on its green pledges.
Carbon capture and storage: Very clear here, with Yeo asking had the government worked out how to pay for the three demonstration plants not funded in the comprehensive spending review. No, said Cameron. The first demonstration has got £1bn of public money, the rest will, I think, be funded by a levy on electricity and gas bills. The power to raise the levy was in the energy bill passed just before the election.
Flood defence funding: The Conservative MP Anne McIntosh tackled the PM on this, amid accusations of cuts. Cameron said that £2.1bn would be spent over the next four year, roughly the same as the last four years, and that it should be possible for local communities to "top this up" from their own pockets.
Forestry Commission land sell-off: No holding back here from the PM in the face of fears over whether sold-off forests would preserve access and wildlife: "I don't think it is absolutely vital who owns it," and "I think the innovative financing we are looking at shouldn't worry people." I'd humbly suggest that in the wake of the great banking crash, the idea of "innovative financing" is utterly terrifying.
Nuclear power: Cameron backed new nukes – no surprises there – but used a telling phrase: "no specific subsidies". Both parties in the coalition have pledged no subsidy to the nuclear industry but his phrase today does not rule out subsidies that apply to all low-carbon energy, even if nukes will be the biggest benefactor.
Energy prices and market reform: "Prices are on an upward trajectory," Cameron said. Why? "Because so much of our electricity infrastructure is out of date, because so much of our nuclear industry is about to come to the end of its life." He also articulated the government's desire to pull back from the fully liberalised free market that Labour created and go for a "slightly more planned view". My head spins at that reversal of the political orthodoxy, but we live in interesting times.
Chris Huhne signals frustration with Treasury over green investment bank
Energy secretary likens reluctance to give investors government guarantee to mistakes of 1930s which prolonged depression
Tim Webb and Damian Carrington guardian.co.uk, Thursday 18 November 2010 12.25 GMT
The behind-the-scenes battle over the level of government financial support for ambitious new green energy projects broke out into the open today when Chris Huhne, the energy and climate change secretary, delivered a coded criticism of the Treasury's stance on the issue.
He risked a row with George Osborne's department, after appearing to compare the Treasury's opposition over the green investment bank to its scuppering of a similar stimulus plan backed by the economist John Maynard Keynes in the 1930s. Some economists argue that sticking to more fiscally conservative policies helped to prolong the Great Depression in Britain.
The Liberal Democrat minister, who drew the analogy at a private meeting of City financiers, was careful not to criticise the Treasury directly. It is understood that he acknowledged media reports of the differences with the Treasury on the issue without denying them.
Uncertainty over the bank's future has also prompted a furious response from a member of the Green Investment Bank Commission, who wanted to remain anonymous. The commission was set up by Osborne in February to advise the Treasury. The member said it was essential that it was able to raise money by issuing government-backed bonds: "Frankly, if it doesn't there's no point in it existing. If we were only ever going to do one thing, the green bond is the thing we need to do."
He added: "It is now an imperative nationally and internationally that governments fund these banks and get on and fund climate change projects because if they don't we won't have a planet. It's a simple as that."
Today, in answer to questions from MPs on the Commons liaison committee, David Cameron said he would back the bank. Asked whether it was "truly going to be a bank" and not a fund, whether there was the risk of dispute between the Department of Business and the Treasury, and whether he would take a personal interest in the issue, he said: "Yes, yes and yes, to all of those." The nature of how the bank would operate was not covered.
Negotiations over the green investment bank are complex and at a sensitive stage, involving several government departments. Huhne and other backers of the plan are anxious not to antagonise Osborne or powerful officials at the Treasury, whose approval is required for it to go ahead.
The Lib Dems and the Conservatives committed to the establishment of a bank in the coalition agreement, but the Treasury's priority of reducing the deficit has led to serious differences within Whitehall over how much government financial backing the bank should have.
Pressure appears to be growing across government departments on the Treasury to sanction a fully functioning green investment bank. But no breakthrough has been made and frustration is growing in Whitehall and the City over the slow pace of negotiations.
Huhne has been championing the establishment of a green investment bank which would be able to help deliver the estimated £200bn of investment in clean power plants, offshore windfarms and smart grids required by 2020. He wants a bank able to leverage capital from the private sector – for example by issuing "green bonds" – to invest in riskier projects at the early stage. Such a bank would probably have to offer investors either an implicit or explicit government guarantee.
Some officials at the Treasury remain opposed to the idea of a government-backed bank taking on billions of pounds of liabilities adding to the deficit and want a more limited bank.
At the Wednesday morning meeting, Huhne who had a successful career in the City and was an economics journalist before entering politics, outlined his vision for the bank. He drew the analogy with the "Macmillan Gap" identified in 1931 by a government-appointed commission, which included Keynes. It proposed establishing a government-backed bank to finance smaller British businesses, which were struggling to cope with the global depression and could not secure finance from banks.
The fiscally conservative Treasury resisted the proposal, Huhne told his audience. It was not until 1945 that the Industrial and Commercial Finance Corporation was set up, which eventually became 3i Group, one of Europe's leading private equity groups.
Huhne did not directly say that current Treasury officials have a similarly cautious fiscal mindset, but it is understood that the audience of mostly bankers and City investment managers was left in no doubt of the message he was sending.
Tim Webb and Damian Carrington guardian.co.uk, Thursday 18 November 2010 12.25 GMT
The behind-the-scenes battle over the level of government financial support for ambitious new green energy projects broke out into the open today when Chris Huhne, the energy and climate change secretary, delivered a coded criticism of the Treasury's stance on the issue.
He risked a row with George Osborne's department, after appearing to compare the Treasury's opposition over the green investment bank to its scuppering of a similar stimulus plan backed by the economist John Maynard Keynes in the 1930s. Some economists argue that sticking to more fiscally conservative policies helped to prolong the Great Depression in Britain.
The Liberal Democrat minister, who drew the analogy at a private meeting of City financiers, was careful not to criticise the Treasury directly. It is understood that he acknowledged media reports of the differences with the Treasury on the issue without denying them.
Uncertainty over the bank's future has also prompted a furious response from a member of the Green Investment Bank Commission, who wanted to remain anonymous. The commission was set up by Osborne in February to advise the Treasury. The member said it was essential that it was able to raise money by issuing government-backed bonds: "Frankly, if it doesn't there's no point in it existing. If we were only ever going to do one thing, the green bond is the thing we need to do."
He added: "It is now an imperative nationally and internationally that governments fund these banks and get on and fund climate change projects because if they don't we won't have a planet. It's a simple as that."
Today, in answer to questions from MPs on the Commons liaison committee, David Cameron said he would back the bank. Asked whether it was "truly going to be a bank" and not a fund, whether there was the risk of dispute between the Department of Business and the Treasury, and whether he would take a personal interest in the issue, he said: "Yes, yes and yes, to all of those." The nature of how the bank would operate was not covered.
Negotiations over the green investment bank are complex and at a sensitive stage, involving several government departments. Huhne and other backers of the plan are anxious not to antagonise Osborne or powerful officials at the Treasury, whose approval is required for it to go ahead.
The Lib Dems and the Conservatives committed to the establishment of a bank in the coalition agreement, but the Treasury's priority of reducing the deficit has led to serious differences within Whitehall over how much government financial backing the bank should have.
Pressure appears to be growing across government departments on the Treasury to sanction a fully functioning green investment bank. But no breakthrough has been made and frustration is growing in Whitehall and the City over the slow pace of negotiations.
Huhne has been championing the establishment of a green investment bank which would be able to help deliver the estimated £200bn of investment in clean power plants, offshore windfarms and smart grids required by 2020. He wants a bank able to leverage capital from the private sector – for example by issuing "green bonds" – to invest in riskier projects at the early stage. Such a bank would probably have to offer investors either an implicit or explicit government guarantee.
Some officials at the Treasury remain opposed to the idea of a government-backed bank taking on billions of pounds of liabilities adding to the deficit and want a more limited bank.
At the Wednesday morning meeting, Huhne who had a successful career in the City and was an economics journalist before entering politics, outlined his vision for the bank. He drew the analogy with the "Macmillan Gap" identified in 1931 by a government-appointed commission, which included Keynes. It proposed establishing a government-backed bank to finance smaller British businesses, which were struggling to cope with the global depression and could not secure finance from banks.
The fiscally conservative Treasury resisted the proposal, Huhne told his audience. It was not until 1945 that the Industrial and Commercial Finance Corporation was set up, which eventually became 3i Group, one of Europe's leading private equity groups.
Huhne did not directly say that current Treasury officials have a similarly cautious fiscal mindset, but it is understood that the audience of mostly bankers and City investment managers was left in no doubt of the message he was sending.