There is much to write about yesterday’s budget, but I thought I would highlight just one paradox – one I genuinely don’t understand.
Alistair Darling announced a £1bn fund for low carbon projects. This green investment bank is designed to provide the stimulus which will encourage other lenders to also back renewable energy projects and the like. The Treasury reckon this will lead to a total of £2bn extra for low carbon infrastructure. In itself this is to be welcomed, but is nothing like the level of investment we need in climate protecting technologies if I am to have a comfortable retirement come 2050. So far so normal.
Alistair Darling also announced that the bailed-out banks would be given new requirements to lend to small businesses. They did a similar thing back in November with their ‘asset protection scheme – again, no massive surprise. OK, so, here’s the paradox. In the last couple of weeks, 84% public-owned RBS have made two major energy related announcements.
1) They are cutting their backing for renewable energy projects and companies.
2) They are opening a new office in Alberta so they can get more involved with tar sands extraction – often described as ‘the most destructive project on earth’.
The second of these is pretty significant. If we don’t stop tar sands extraction, we can’t stop run-away climate change. A recent report from oil experts at PLATFORM shows that, since the bail-out, RBS have already backed tar-sands companies to the tune of $2.5bn. This more than negates all of Darling’s support for renewables. The Treasury, and UK Financial Investments (who manage our shares in the bail-out banks on behalf of the Treasury) faced a Select Committee hearing on what the bailed out banks could do to back the transition to a low carbon economy a fortnight ago. MPs from all major parties ripped them apart for failing to stop RBS backing companies involved in projects like tar sands, with Martin Horwood later describing it as “The angriest Select Committee I’ve ever seen”. Colin Challen argued that the failure to use RBS to finance the transition to a low carbon economy would be seen as ‘the great missed opportunity’ once climate change begins to bite . The Government has decided that it wants to lever private finance behind green energy projects? Great. It is holding one of the biggest financial levers in the British economy. It is willing to use it for other good things. Why won’t they use RBS to lever finance behind their own green investment bank? I am genuinely baffled. Adam Ramsay works for People & Planet (www.peopleandplanet.org) campaigning of climate change finance, and writes for www.brightgreenscotland.org