$100m green fund to fight climate change
The Government will channel $100 million into a ‘‘green’’ fund to marry private investors with climate change solution start-ups.
It’s a key part of a promise to tackle global warming, which Prime Minister Jacinda Ardern has described as her generation’s ‘‘nuclear-free moment’’.
The New Zealand Green Investment Finance fund is part of a suite of measures to steer the economy towards carbon neutrality in the next thirty years.
It will act as a magnet to attract investors – like pensions, KiwiSaver funds, domestic and foreign companies or iwi – to fledgling companies with greenhouse gas-busting ideas.
‘‘The mission is to create the low-carbon economy for New Zealand. So, one of the things that has got to happen is that we have got to direct private finance and financial flows towards new technologies, new businesses, innovations that help us get our green house gas emissions down to as close to zero as we can,’’ Climate Change Minister James Shaw told Stuff.
‘‘Some of that stuff is already happening but it is not happening at nearly the speed, or the scale that we need it to happen, and so this is a catalyst for that investment.’’
The fund’s managers will seek out investment opportunities in electric vehicles, manufacturing processes, energy efficient commercial buildings and farming practices. But it’s not aimed at energy projects.
‘‘We have said that it shouldn’t invest in large-scale electricity generation, because that investment has no trouble getting access to capital. It wouldn’t add anything,’’ Shaw said.
The projects must be past the development stage, and ready for upscaling, commercialisation or use. The fund can structure deals, create financial products, and offer flexible repayment terms.
Eventually, the fund will be paid back, or its stake in the project will be sold off for a profit.
The policy was one of the Green Party’s big wins in postelection negotiations.
Money for the initial capital injection was announced in May’s Budget, and Shaw shared the stage with Ardern yesterday to announce further details.
‘‘We are putting $100m of startup capital into it. I know that that sounds like a lot of money but when you consider the size of the overall economy, comparative funds, it is actually quite a small amount. It is what you would describe as the minimum, viable amount to get a fund like this going and because we want to attract private capital in, essentially the size of the investment should be several multiples of that over time.’’
It will be a Schedule 4A entity – like City Rail Link Limited, O¯ ta¯ karo Limited or Predator Free 2050 Limited – which means it is a commercial operation with a ‘‘mission.’’
Similar green investment funds and banks exist in Britain, Europe, Australia, Japan, Malaysia, United Arab Emirates and some US states. They have raised between $2 and $10 for every $1 of government contribution, Shaw said.