News in the FT today that three environmental groups have filed a suit to make sure the Royal Bank of Scotland does more to promote renewable energy, foregoing its traditional dominance in oil and gas projects.
Ian Leggett, People & Planet’s director, said: “The government now controls RBS and has an exceptional opportunity to drive investments in low carbon jobs and infrastructure, not to repeat the recklessness of the past.”
As I’ve argued before, state-owned development banks have a key role to play in transforming our economies from a high to a low carbon footprint.
Modern project finance – particularly the use of the special purpose vehicle – was of great use in the 1970s to drive the development of the North Sea oilfields. It has been fundamental in creating the hydrocarbon society of the last 50 years.
We now need it to help us develop the post-hydrocarbon society.
While the development of the north Sea oil sector was mainly done by private oil companies and banks, although with some tax incentives from the government, I would suggest the construction of the post-hydrocarbon society is better driven by state-owned banks and retail investors than private banks, because these are capital intensive projects aimed at protecting the public good rather than private wealth.
RBS, with its expertise in project finance, is a good place to start.
