A leading political economist has told Q+A there are reasons to be wary of the announcement that asset management fund BlackRock will launch a fund to invest in New Zealand’s renewable electricity generation.
The Government announced last week it would partner with the US company on the $2 billion “first of its kind” fund.
Uppsala University professor Brett Christophers said for BlackRock, the potential benefits of such an investment include both the likelihood of making a return but also the positive PR that results from being associated with renewables.
“For the most part, people want to see them carrying out ‘ethical’ investments,” Christophers said.
He cautioned that while much of the detail isn’t known, it’s highly likely that BlackRock have been given some sort of behind the scenes assurance that its investment will be safe, despite the financial risks sometimes attached to renewable investment.
“It does not invest in renewables unless it has seen that a significant amount of that risk has been absorbed by other actors.”
Christophers said the mechanism will be for BlackRock to set up an investment fund, which other holders of capital will put money into on the promise of a profit in the future.
“They’ve said they’ll establish the fund, but they’re yet to go on the road to raise that capital. And so while they’re doing that, there’ll be ongoing discussion with the New Zealand Government about how renewable energy investment is regulated and managed.”
Christophers said the deal reflects a widespread view among governments that these sorts of investment shouldn’t be made by the public sector, rather they should be funded and owned by private interests.
“This deal is absolutely a sign of wider times.”
Prime Minister Chris Hipkins described the deal as a “game-changer” and a “no-brainer”. He also said it was a “watershed moment in our transition to 100% renewable electricity”.
The day after the BlackRock announcement, the Government released a “road-map” consultation document for transitioning New Zealand’s energy generation.
