My Lords, we should remind ourselves why these green purposes are so important. This bank has been set up in order to facilitate investment into green projects and to help the UK to move to a low carbon economy. The definitions set out in the Bill will be the guiding principles by which the bank operates. The bank could definitely be sold off in the future; there are provisions in the Bill to enable this to happen, so these governing principles are very important and must pass the test of time.
The amendment would introduce two changes to the Government’s proposed wording in Clause 1(1)(b). First, a test of significance would ensure that projects showed a significant advancement in resource efficiency or energy saving. We believe that this is important not because we do not trust the bank but, as I say, because of how it may change and develop in the future. The test of significance would prevent projects qualifying legally for support from the bank which deliver only a very marginal improvement in any project. It is not beyond the imagination to see that under these definitions of purpose you could secure support and funding for a very marginal improvement in the efficiency of a coal-fired boiler, for example. That is not the sort of investment I think the Government are seeking; therefore, this part of the Bill needs tightening for the avoidance of doubt.
It might be argued that this is illogical and that we will not see a bank that is called the Green Investment Bank investing in coal-fired projects. I have an example of how things can go quite illogically wrong when dealing with climate change and greenhouse gases. The global carbon market has an investment facility called the clean development mechanism, under which it is perfectly legal and possible to invest in slightly more efficient coal-fired power stations in India to allow for European coal-fired power stations to carry on emitting. When we get into the world of sustainability,
climate change and emissions reduction, things can get a bit illogical. It is important that a lot of attention is paid to these definitions and that we get them right.
The second change proposed in the amendment is to add a specific reference to energy savings. A very strict interpretation of natural resource efficiency might preclude energy efficiency from electricity. Electricity is not a natural resource, it is manmade. Again, we want to make sure, for the avoidance of doubt, that the bank is set up to focus on electricity and energy saving. We know that this is true because, of the five areas identified in the bank’s objects, two are about energy efficiency—one for commercial entities and one to support the Green Deal. They are very important for electricity efficiency, and we are not convinced that the provision fits well with this definition. So we encourage the Government to reconsider the wording of subsection (1)(b) on natural resource efficiency, because we do not think that it does what the Government want it to do.
Finally, I have two questions for the Minister: what is his definition of,
“efficiency in the use of natural resources”?
Secondly, will he undertake to amend the wording to make sure that energy saving, in particular electricity savings, are included under these purposes?