Call for low-carbon clarity

Three months after its publication, the Government’s Energy Bill has not managed to meet the investor community’s high expectations.

This is according to Ernst & Young’s latest quarterly global Renewable Energy Country Attractiveness Indices (CAI).

The indices scored 40 countries on the attractiveness of their renewable energy markets, energy infrastructure and suitability for individual technologies.

Ben Warren, Ernst & Young’s environmental finance leader said: “A series of delays, some very public political squabbling and the over-hyped ‘once in a generation chance’ to reform the UK’s energy market has failed to meet the sector’s expectations.”

He added that the main source of disappointment for investors was confirmation that a decarbonisation target will not be set until 2016.

This delay, claims Warren, has cast doubts over the UK’s commitment to cut carbon emissions 50% by 2027, leaving investors with a sense of uncertainty.

“The Chancellor’s planned tax breaks for shale gas exploration and his new Gas Strategy have caused widespread concern,” he added.

“While the promise of low cost gas cannot be ignored, environmental groups and businesses are sceptical that a gas boom similar to the one witnessed in the US can be replicated in the UK. Instead, the technology should be used as an interim measure to sustain energy supply levels while the cost of renewables continues to fall.”

Warren’s sentiments were echoed by the manufacturers’ organisation EEF earlier this month following the launch of its ‘Tech for Growth’ report.

The EEF urged the Government to provide the clarity it needs to invest by setting out a clear low carbon vision for industry by the end of 2013.

It noted that over half of large companies are developing new low-carbon products and internal processes.

According to EEF, this would help industry take advantage of significant opportunities to export these solutions to the rest of the world.

The report estimates that the potential prize of doing this could provide a boost to the UK economy worth up to £880 billion between now and 2050.

However, the EEF also published an analysis which showed that the UK is placed towards the bottom of the OECD countries in government research spending on climate and energy related R&D.

Gareth Stace, EEF’s head of climate and environment policy said: “We are currently failing to take advantage of the opportunity to be a world leader in low-carbon goods and services.

“We need government to set out its vision of manufacturing’s place in the low carbon economy, focus more on innovation and provide greater regulatory stability and predictability to unlock investment in breakthrough technologies that will deliver it.”