Save our Carbon Trust

Like the proverbial economists, if you ask 10 different green business execs what they think of the Carbon Trust you will almost certainly end up with 11 different answers.

The most high profile of the previous government's green quangos has always divided opinion with some hailing it as one of the driving forces behind the UK's low carbon revolution and others citing it as a prime example of Labour's ineffective profligacy. The problem, as the new government prepares to axe the Carbon Trust in order to fund its planned Green Investment Bank, is that there is truth in both assessments.

The Carbon Trust and its accompanying network of green quangos are undoubtedly flawed. As one observer put it the organisation has become "bloated " and for such a lavishly funded agency its role has always been pretty poorly defined.

Moreover, it was inevitable the deficit hawks in the coalition government would look at the investment arm of the Carbon Trust, the Technology Strategy Board and the Marine Renewable Deployment Fund and ask why all these agencies are doing fundamentally the same job. Business leaders have also long complained that you need a compass and a knack for orienteering to navigate the labyrinthine network of quangos, agencies and incentive schemes to access green funding that they are clearly entitled to.

Repeated questions about the extent to which the organisation offers value for money, not helped by a decidedly mixed report from the National Audit Office, further strengthen the hand of those within the new government who would like to see the agency join David Cameron's bonfire of the quangos.

And yet the Sunday Times report suggesting the government is to axe the Carbon Trust and numerous other environmental quangos in order to raise the £2bn needed to launch its Green Investment Bank will still raise concerns amongst many green businesses.

The fact is the Carbon Trust and the prospective Green Investment Bank do not perform precisely the same function. Yes, there is undoubtedly a case for replacing the scattergun investment strategy embodied by the Carbon Trust, the Technology Strategy Board, the Marine Renewable Deployment Fund and others with a more focused and professional low carbon infrastructure bank capable of raising private as well as public funds. But what happens to those, arguably more effective, parts of the Carbon Trust, such as its carbon labeling initiative or its work to promote environmental best practices. An investment bank is not going to get involved in the "soft" side of the low carbon economy, like skills development, carbon labeling and the normalisation of green business models. Who will do that vital work if the Carbon Trust is scrapped?

The Green Investment Bank will also have to overcome numerous challenges if it is to prove more effective than the various agencies it replaces. A well funded infrastructure bank is likely to prove effective at providing capital for large-scale green projects, such as new high speed rail lines and offshore wind farms. But what about those smaller, higher risk, early stage projects that have previously relied on funding from the likes of the Technology Strategy Board?

Will a huge investment bank largely backed by private capital really be interested in university-led research that is still decades away from commercialisation, but may provide the secret to slashing greenhouse gas emissions? Will it really provide funding for bleeding edge projects such as marine energy when it could focus its investment on projects with a stronger track record of success, such as wind energy?

A huge amount already rests on the government's ability to get the Green Investment Bank just right, asking it to also replace a large number of different green agencies and initiatives would leave almost all the government's low carbon eggs in one basket.

Finally, killing off the Carbon Trust would also kill off a lot of useful brand equity. One of the criticisms leveled at the agency has been that it has been too marketing-led, more interested in issuing press releases than delivering results. But all those press releases have had an impact. The organisation is well known and has played a key role in normalising the concept of carbon management within many board rooms. As such, scrapping the agency would strike a symbolic blow to the UK's wider low carbon agenda.

The Carbon Trust and the UK's network of green quangos need urgent reform. But axing them all in favour of a Green Investment Bank that will rightly focus on large scale infrastructure projects would prove a retrograde step. The urgent need to build a low carbon recovery means there is not the time to throw the baby out with the bathwater.