House of Lords sounds alarm over EU low carbon investment uncertainty
A clearer EU policy is needed to unlock investment in secure, affordable and low carbon energy, according to a report released today by the House of Lords.
The EU Sub-Committee for Agriculture, Fisheries, Environment and Energy has called for stronger EU leadership, a revised EU Emissions Trading System (ETS) and a 2030 decarbonisation target.
The report follows an eight-month inquiry, during which the Committee heard from organisations such as the European Commission, the Confederation of British Industry (CBI), the World Wide Fund for Nature (WWF) and power companies.
According to the report, the Committee has become increasingly alarmed at the degree of uncertainty and complacency surrounding affordable, secure and low carbon energy supplies.
Committee Chairman Lord Carter of Coles said: "It is clear to us that investment is urgently required, notably in a low carbon, interconnected and innovative energy system, that makes us less reliant on imports of highly volatile and dirty fossil fuels.
"Such investment would help to deliver secure and low carbon energy, boost European economic growth, and stabilise household and industrial costs."
The Committee is concerned that, although there is more than enough capital in the investment community, the value of energy companies have slumped since 2008.
"This should be a great time to invest in long term assets, such as energy, but clear policy is needed in order to release it. No country is an energy island, so EU policy is particularly important," said Carter.
"At the heart of that framework, we see two core policies. First, a revised EU Emissions Trading System (ETS). The ETS has failed but it is not dead. It needs to include a minimum price for carbon, providing governments and investors with the confidence to support innovation through investment.
"Second, and contrary to UK Government policy, a target for the proportion of energy to be delivered through renewable energy until 2030 is required," he added.
The Committee also recommended that member states should make better use of fiscal policies to unlock investment, as well as encouraging a regulatory approach to boosting carbon capture and storage.
Other recommendations include the development of electricity interconnections between member states and the adoption of a greenhouse gas reduction target of 40% compared with 1990 levels, in line with an 80% reduction by 2050.
Carter said: "There are no easy answers to meeting these challenges and keeping Europe competitive in the global market. But unless we find a way of doing this, our future energy could well be highly polluting, unaffordable and insecure."