This is the fifth annual report of progress by government departments against the greening government commitments (GGCs).
The Greening Government Commitments (GGCs) are targets for reducing the negative effects that government’s estates and operations have on the environment.
The previous annual reports are also available.
The government is announcing today the sale of the UK Green Investment Bank plc (GIB) to Macquarie Group Limited (Macquarie), with a £2.3 billion deal which secures a profit on the government’s investment in the bank, provides value for taxpayers and ensures GIB continues its green mission, in the private sector.
GIB has been a real success story since it was created in 2012 – the world’s first dedicated green investment bank, established to accelerate private sector investment into the UK green economy. It has fulfilled that mission, supporting almost 100 green infrastructure projects in the UK so far, and attracting £3 of third party funding for every £1 it invests. It has shown, as it set out to do, that green investment can be both green and profitable. Having demonstrated its success, the government decided to move GIB into the private sector where it can continue its success on an even greater scale.
The deal, secured through a competitive process as set out in a report to Parliament on 3 March 2016, will meet the objectives outlined by government of securing value for money for the taxpayer while ensuring GIB continues its green mission, free from the constraints of public sector ownership. It has the backing of GIB’s independent board.
Under the ownership of Macquarie, one of the largest infrastructure investors in the world, GIB will invest more into the green economy than ever before, with £3 billion of new investment targeted over the next 3 years, exceeding GIB’s track record of committing £3.4 billion of investment over the 4 and a half years since it was founded. GIB will become the primary vehicle for Macquarie’s renewable energy investment in the UK and Europe, allowing GIB to expand internationally.
Macquarie has today published a series of commitments over the future of GIB under their ownership, including that GIB’s green purpose and green objectives will be maintained. This is in line with the ‘special share’ in GIB to safeguard GIB’s green purposes, which will be held by 5 independent trustees who will have the power to approve or reject any proposed change to GIB’s green mission.
Macquarie has also committed to continue GIB’s investment approach, targeting investments across all areas of the green economy and across all stages of the project lifecycle, including the critical phases of development and construction. This will ensure GIB remains a specialist green investor supporting renewable energy investment and emissions reduction in the UK.
Macquarie is committed to maintain the GIB platform and brand, and to utilise the skills and experience of GIB employees in Edinburgh and London. GIB’s Edinburgh office will be home to a new revenue generating project delivery business providing services to the green energy portfolios of GIB and Macquarie in the UK.
The transaction value of around £2.3 billion ensures that on completion, all taxpayer funding invested in GIB has been returned with a substantial profit. This comprises proceeds from the sale of around £1.7 billion, with a further £0.6 billion of GIB’s current outstanding commitments which will be met by Macquarie and its partners, rather than by taxpayers.
As part of the transaction, a number of GIB’s offshore wind assets will be moved into a new offshore wind investment vehicle, which GIB will manage and hold a 25% stake. Investors in this investment vehicle will be long-term institutional investors Macquarie European Infrastructure Fund 5 (MEIF5) and the Universities Superannuation Scheme (USS). This type of transaction structure matches GIB’s existing approach to asset ownership, providing a mechanism for long-term institutional investors to invest in low carbon projects while ensuring GIB can recycle its capital into new green investments.
The government will continue to hold a £130 million portfolio of a small number of GIB’s existing investments. This portfolio will continue to be managed by GIB until these investments can be sold on in a way which returns best value for taxpayers’ money.
The government would like to put on record its gratitude to GIB management and staff, who have all played a key role in GIB’s success, and who have worked tirelessly and professionally to support the sale process while continuing to source and finance green projects across the UK.
The sale proceeds will be received on completion of the transaction, which is expected to take around 2 months. The transaction is conditional on certain regulatory approvals including EU merger clearance. Under the Enterprise Act 2016, government is required to provide a full report to Parliament on completion of the transaction.
The UK Green Investment Bank plc (GIB) will look to invest at least £3 billion into the green economy after a deal was agreed to sell it to Macquarie Group Limited (Macquarie), Climate Change and Industry Minister Nick Hurd confirmed today (20 April 2017).
The deal, which has the backing of GIB’s independent board, was secured through a competitive process and will meet the objectives government outlined when it launched the sales process last year. As well as securing value for money for the taxpayer and freeing GIB from the constraints of public sector ownership, it will enable GIB to grow its support for green projects.
Nick Hurd Climate Change and Industry Minister said:
The Green Investment Bank has been very successful in attracting private capital to the UK’s green economy. It now makes sense to move it into the private sector where it will be free from the constraints of public sector ownership, allowing it to build further on its success.
This deal gives us the best of both worlds. We have secured fair value for the UK taxpayer. GIB has a well-funded new owner that is committed to the Bank’s green mission, with a track record of success in green investment and an ambition to grow the business. The UK will benefit from increased investment in our green infrastructure as we make the transition to a green economy.
Today’s sale to Macquarie, with a transaction value of around £2.3 billion, ensures that on completion, all taxpayer funding invested in GIB since its creation, including set-up costs, has been returned with a profit.
Lord Smith of Kelvin, chair of GIB’s independent board said:
There is a compelling logic in the world’s first green bank joining forces with the world’s largest infrastructure investor. When we embarked on this process, we were determined to find a new owner who would build on GIB’s successful history – an owner who would have access to deep pools of capital, a commitment to expand GIB’s activities, and a respect for the unique role GIB has played in the market. Macquarie will bring all of this to GIB, along with its own impressive track record of green investments. Its vision for the future growth of GIB demonstrates a redoubling of its commitment to a low carbon economy.
Launched in 2012, GIB has been a huge success story, supporting nearly 100 green infrastructure projects in the UK to date. For every £1 it has invested, it has attracted another £3 of third party capital.
GIB will become the primary vehicle for Macquarie’s renewable energy investment in the UK and Europe, with a commitment to target £3 billion of new green infrastructure investment over the next three years, exceeding GIB’s track record of committing £3.4 billion of investment over the 4 and a half years since it was established.
Macquarie has published today a series of commitments for the future of GIB under its ownership, including:
David Fass, CEO EMEA, Macquarie Group, said:
The addition of the Green Investment Bank, its people and expertise, strengthens Macquarie’s commitment to the green energy sector. Our combined platform will build on the legacy of the Green Investment Bank and, alongside our knowledge of energy and infrastructure, will open further opportunities in low carbon investment both in the UK and further afield. We are excited by a business that will take a leading role in the green economy using the specialist knowledge of our teams in Edinburgh and London.
As part of the transaction, a number of GIB assets will be moved into a new offshore wind investment vehicle which will be managed by GIB, which will retain a 25% stake. Investors in this investment vehicle will be long-term institutional investors Macquarie European Infrastructure Fund 5 (MEIF5) and the Universities Superannuation Scheme (USS).
This transaction structure matches GIB’s existing approach to asset ownership following its success in raising a £1 billion offshore wind fund and selling three GIB assets into that fund. GIB was established to accelerate investment in new green energy projects, not to be a long-term owner of operating projects.
The government will continue to hold a £130 million portfolio of a small number of GIB’s existing green infrastructure investments. These assets will continue to be managed by GIB until they are sold on in a way which returns best value for taxpayers’ money.
Since 2010, Macquarie and its managed funds have invested or arranged more than £8.5 billion of capital into green energy projects globally. In the UK, Macquarie is involved in a number of green energy projects in offshore wind, solar, waste and bioenergy and tidal energy.
The deal will support GIB’s international expansion into Europe and developing countries. As part of this, Macquarie is committed to supporting the UK Climate Investments Initiative, a £200 million pilot joint venture between GIB and the government, established to invest in renewable energy and energy efficiency projects in developing countries.
1) Completion of the transaction is conditional on certain regulatory approvals including EU merger clearance and is expected to take around 2 months.
The total value of the transaction at the date of signing is £2.3 billion, which comprises:
At completion, the total value of the transaction will adjust for any further GIB investments made between signing and completion, together with an interest rate applied between the dates of signing and completion.
The total government funding provided to GIB since 2012 is £1.5 billion. The transaction price at the date of signing represents a £160 million (approximate) premium on total government funding.
2) The Green Purposes Company was established on 2 February 2016 to hold a ‘special share’ that safeguards the green mission of the GIB once it moves from UK government ownership into the private sector. The trustees will formally take up their role on completion of the sale. The nominated trustees are:
The Environment Agency publish permits that they issue under the Industrial Emissions Directive (IED).
This decision includes the permit and decision document for:
This programme will help to provide long term protection of over four million square kilometres of marine environment across the UK Overseas Territories.
Funded through the Conflict, Stability and Security Fund (CSSF) the programme will support the UK Overseas Territories develop, implement and enforce marine protection strategies.
The programme is initially focused on Territories which have designated, or committed to designating, large scale areas (>50% of their maritime zone, or of recognised international importance) for marine protection and ensuring these areas are effectively managed and enforced. These OTs are:
The programme is currently working with the Overseas Territories to identify and develop a number of projects that will:
It will also provide support for UK Overseas Territories which have not committed to large scale marine protected areas through the UKOT Darwin Plus funding scheme, which will provide additional resource for small scale bespoke marine projects.
For more information on the Blue Belt programme please contact Programme Directors, Craig McGarvey or Steve Millward