How green is green enough?

The new board of NZ Green Investment Finance, a new $100 million Government-funded venture, faces a complex task.

It effectively has two different goals, which do not sit comfortably together. As well as boosting funds flowing into projects which cut the carbon footprint of the economy, it is also tasked with turning a profit. This could create a conflict, not because green technology is inherently unprofitable but because the company is meant to act as a means to boost projects which the market is failing to back.

Does it target highly ambitious projects, which have a high risk of failure but could have a huge impact on New Zealand’s emissions profiles? Or does it find low hanging fruit, with more modest gains in reducing carbon but have a strong chance of making a profit for the fund?

As well as having commercial implications, investing in ventures which fail could have political costs. But what is the point in executing projects which make little difference?

New chairwoman Cecilia Tarrant said the fund would have a portfolio of investments, with different amounts of risks across its investments.

She also noted that it was not the job of NZGIF to have a significant role in the research and development sector.

The task of the fund is broad. Although it appears the company will target efficient commercial buildings, farming practices, electric vehicles and manufacturing processes, Cabinet has given NZGIF a ‘‘broad and flexible mandate’’.

Not only will it work to identify which projects should be backed, it can design how to best structure investments as a means of getting the private sector to join the ride.

This makes it quite different from the NZ Venture Investment Fund, which has poured hundreds of millions of dollars into early stage companies, without really making any investment decisions.

The venture fund picks experienced investors and outsources the decision-making, leaving the private sector to pick the winners.

This opens NZGIF up to accusations of picking winners, or corporate welfare.

‘‘The fund will be picking technologies that can’t attract capital in an open market.

‘‘It will pick them precisely because they fit the Government’s own particular political preferences,’’ ACT leader David Seymour said.

The Government, meanwhile, sees the fund having a major task. ‘‘The fund is a central plank in the Government’s plan to transition to a clean, green, carbon-neutral New Zealand,’’ which also fulfils a confidence and supply agreement promise with the Green Party.

But the scale of the task make the scale of funding seem modest.

As Green Party co-leader James Shaw says, $100 million ‘‘sounds like a lot of money’’. In isolation it represents a significant commitment of taxpayer money. But it represents 3 per cent of the provincial growth fund, and less than half a per cent of the NZ Superannuation Fund.

Prime Minister Jacinda Ardern has described climate change as New Zealand’s ‘‘nuclear free moment’’, while Shaw claims that moving towards carbon neutrality represents the greatest economic opportunity in a generation.

If either of them really believes that, the scale of the fund seems like a token effort.

As well as having commercial implications, investing in ventures which fail could have political costs.