In my opinion, one of the great Liberal Democrat achievements of the Lib Dem/Conservative Coalition UK Government of 2010-2015 was the establishment of the Green Investment Bank (GIB).

The GIB was set up with UK public money to “back green projects on commercial terms and mobilise other private sector capital into the UK’s green economy”. It invests in a variety of green UK projects such as energy efficiency, waste/bioenergy, and offshore wind. By June 2017 it had invested into 99 projects, committing £3.4bn into the UK’s green economy (much of that from private co-investors).

As a Brit who is dedicated to greening the global economy, I was proud to see this excellent development and excited to think about the huge potential impact that it would have.

I envisaged a British version of KfW, the German Government-owned bank with over €489.1bn of total assets and annual revenues of over €74.1bn (in 2014). KfW has had a transformation impact on the German green economy and wider economy. It is 90% financed by the capital markets, issuing bonds that are guaranteed by the Federal Government (and therefore have an interest rate that is extremely low).

I was therefore shocked to hear that the Conservative government (2015-2017) had agreed on the £2.3bn sale of the GIB to Macquarie, an Australian infrastructure investment bank. Many have criticised the sale, saying it has been sold off on the cheap and that the bank will not stick to the green investment mantra after the obligatory 3 year period.

Apparently, the GIB chair was in favour of the sale as they believed it was important to get new investment to grow the bank’s impact and secure its long-term future. How true that is (or how much it is someone protecting their job/position) I can’t tell, but I can somewhat see the logic.

What I find odd is the fact that the GIB would surely be a key channel that the Government could use to deploy capital to support their flagship Industrial Strategy policy. This Strategy was formulated to stimulate technology and green businesses so that the UK economy is well positioned to grow and be globally competitive for years to come. Selling the GIB removes a crucial funding dispersal mechanism that could have addressed barriers to green economic development and buttressed the Government’s efforts.

Additionally, I would have thought that leaving the GIB in public hands would be ideal for the UK Government’s commitments under the Paris Agreement and the commitment to spend 0.7% of GDP on international aid. Having a bank focused on clean energy projects would have been an ideal channel to deploy capital into projects aligned with these commitments.

This year, there were rumours that the sale could be abandoned in favour of an IPO. That appeared to be the preferred option of the second favourite bidder, Sustainable Development Capital. Whether the recent election miscalculation of Theresa May has interfered with it remains to be seen.