The politics of climate finance: Consensus and partisanship in designing green state investment banks in the United Kingdom and Australia

Abstract

The Paris Agreement will require national level mitigation action that takes advantage of economic and technological opportunities while redirecting finance towards low-carbon alternatives. However, climate change has been politicized in many countries, potentially blocking the introduction of climate policies and broader green industrial policies. Publicly funded green investment banks (GIBs) are one policy instrument that mobilizes private finance into national opportunities. However very little is known about the political decisions behind the establishment and design of these banks. Taking an exploratory approach, we analyse the parliamentary discourse behind the establishment and design of the UK's Green Investment Bank and Australia's Clean Energy Finance Corporation. We find that the debate on GIB establishment focused on arguments related to high-level policy goals and the role of the state. The debate on GIB design focused on technology target sectors, tasks and tools to be implemented, and organizational aspects. We find a difference in political controversy levels with Australia's debates displaying distinct partisanship on all debate topics, whereas the UK's debates displayed clear consensus on the majority of debated topics. We also find that debate on higher-level establishment concepts, especially the role of the state, received more attention in Australia, whereas in the UK there was greater discussion of design concepts, namely organizational aspects. We derive propositions on the politics of GIBs beyond our two cases, and conclude with an agenda for future research.