How green is green enough?

Taranaki Daily News - - News - Hamish Ruther­ford hamish.ruther­[email protected]

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.

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