The CBI yesterday warned that that the UK is failing to attract the level of investment needed to build low carbon infrastructure.
With a third of our energy supply due to close in the next decade and ambitious emissions reductions targets to meet, the UK’s power sector alone needs £150bn of private sector investment over the next twenty years, the CBI said.
In its new report called Risky Business: Investing in the UK’s low-carbon infrastructure, the CBI reveals that senior business leaders are not convinced that the UK can attract low-carbon investment at the scale and pace required.
“We know the UK needs a balanced energy mix to cut emissions and grow the low-carbon economy, but the big question now is how we pay for it,” said CBI chief policy director Katja Hall.
“Businesses want to get on with building new low carbon infrastructure, but there is still too much policy uncertainty. We need the Government to set a clear direction of travel and to stick to it.
“Electricity Market Reform is a positive start but more needs to be done to provide wider policy certainty for low-carbon investment. It is particularly important that the planning system delivers timely decisions and there are no more sudden policy shifts as we saw with the Carbon Reduction Commitment. The Green Investment Bank needs to issue bonds as soon as possible to provide a secure bridge between pension funds and capital intensive technologies.”
The report’s findings were based on interviews by Accenture with a range of different investors from utilities, manufacturing and property owners on their views on potential barriers and solutions to securing investment.
ICE director general Tom Foulkes said the findings echoed issues raised by the institution.
“Low carbon infrastructure will underpin our long-term economic recovery, driving our international competitiveness, and so it is crucial that Government gives investors the certainty they need to deliver it,” he said. “The Green Investment Bank, alongside planning and energy market reforms and the second National Infrastructure Plan, can play a critical role in de-risking investment however it is vital that Government demonstrates continued commitment to the principle of an enduring, independent bank - not a fund vulnerable to abolition by changing governments - if it is to succeed in generating investment on the scale needed.”
Call for action
The CBI is calling for the Government to:
- Develop a long-term, low carbon growth strategy and delivery plan for the UK.
- Send the right investment signals through reform of the electricity market.
- Implement a planning system that will facilitate growthand aim to tackle the backlog of energy infrastructure projects waiting approval, by ensuring that the Infrastructure Planning Commission continues to make decisions on projects currently under review until the establishment of the Major Infrastructure Planning Unit.
- Make the Green Deal for energy efficiency workable for investorsby designing a viable financial model where no party will bear a disproportionate level of financial risk.
- Allow a Green Investment Bank to issue government guaranteed bonds as soon as possible.