Additionality for Green Investment Bank: The Case Study of the UK Green Investment Bank

Details

Supervisors

Platten, Isabelle

Faculty

Louvain School of Management

Degree label

Master [120] en Ingénieur de gestion

Abstract

Since the beginning of the 21st century, the environment and the global warming have become more and more of an issue. Indeed, if the world continues its development as it currently is, consequences will be disastrous. To address the objectives of greenhouse gas (GHG) emissions restrictions, governments need to take action. In particular, there is a need to act on scaling-up the investments in low-carbon, climate-resilient (LCR) infrastructures as they are accounting for a large part of developed countries’ GHG emissions. Therefore, from this context has emerged the concept of Green Investment Bank (GIB), namely publicly capitalised entities sharing the common goal of addressing the investment barriers and catalysing private investment in low-carbon and climate-resilient infrastructures (OECD, 2016). In order to have a real impact on GHG reduction, GIBs are following the mandate of additionality, meaning that they are avoiding to make use of public funds to invest in a project that would have been undertaken anyway by the private sector. Therefore, this thesis will focus on the following research topic: the Additionality concept for Green Investment Bank. The topic will be broken down into two research questions: Is the methodology used by the United Nations Framework Convention Climate Change (UNFCCC) adequate for testing additionality for Green Investment Bank? Is additionality respected by the UK Green Investment Bank and by Green Investment Banks in general? Those questions will be answered by using the UNFCCC methodology for testing additionality for Clean Development Mechanism (CDM) projects. The methodology, which consists of a four steps analysis grid of qualitative and quantitative criteria, will be applied to five case studies featuring five past investments made by the UK Green Investment Bank. The analysis concluded to the non-additionality of the five investments. Therefore, a tree-analysis of the possible conclusions to be drawn from that result was made and lead to the following conclusion: the question is not whether the UNFCCC methodology is correct and applicable for testing additionality for GIB – even though it is not – but if the additionality concept makes sense for Green Investment Bank in the first place. The conclusion is that, even though the ideal of not misplacing public investment by undertaking projects that would be funded by the private sector anyway is very appealing, it is not believed to be feasible for GIBs.