CBI says policy uncertainty stifles low-carbon investment

With emissions reductions targets to meet and a third of the country’s energy supply due to close in the next decade, the UK’s power sector alone needs £150bn of private sector investment over the next twenty years, the CBI (Confederation of British Industry) said.

In a new report entitled Risky Business: Investing in the UK’s low-carbon infrastructure, the CBI shows that senior business leaders are not convinced that the UK can attract low-carbon investment at the scale and pace required.

‘Businesses want to get on with building new low-carbon infrastructure, but there is still too much policy uncertainty,’ said Katja Hall, chief policy director for the CBI. ‘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 that 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 conducted by Accenture with investors from utilities, manufacturing and property owners on their views on potential barriers and solutions to securing investment.

‘The companies we spoke to were clear — few believe that the UK is on track to meet its emissions-related targets,’ said Omar Abbosh, UK and Ireland managing director of resources at Accenture. ‘If the government reduces investment risks, low-carbon spending can happen sooner, driving economic growth and cutting the cost to the end consumer.

‘If not, investment could be attracted to other countries with more appealing incentives.’

Commenting on today’s report, Tom Foulkes, director general of the Institution of Civil Engineers (ICE), said: ‘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.

‘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.’