UK Low-Carbon Projects at Risk

The UK Government risks failing to achieve emissions reduction targets despite its ambition, according to the CBI.

Launching its latest Climate Change Tracker today, the CBI (UK) said the Government had set the wheels in motion in a number of key areas, including providing more clarity on Climate Change Agreements and funding for the Green Investment Bank. But it warned that investor confidence remains low, with the UK falling from 5th to 13th in a global ranking of low-carbon investment.

The tracker shows that only one of the thirteen indicators is on track, and that progress is lagging on decarbonising buildings, transport and industry.

The CBI has highlighted the damage to business confidence caused by unexpected changes to the Carbon Reduction Commitment (CRC) energy efficiency scheme, feed-in tariffs and the North Sea oil and gas tax. Uncertainty also surrounds a number of major policies, including electricity market reform, funding for Carbon Capture and Storage (CCS), the Renewable Heat Initiative and consumer grants for low-carbon vehicles.

Katja Hall, CBI Chief Policy Director, said:

“One year on from pledging to be the ‘greenest government ever’, the coalition has still not delivered the policy landscape needed to ensure we meet tough emissions targets.

“Decisions being taken now will make or break the UK’s low-carbon economy. Our latest climate change tracker shows that progress is failing to match the Government’s ambition. Business confidence has clearly been bruised by sudden and unexpected policy shifts on the Carbon Reduction Commitment, the oil and gas tax hike and feed-in tariffs.

“The carbon floor price and CRC have been dressed up as helping achieve carbon targets but they risk becoming little more than revenue raisers for the Treasury. Meanwhile, there is also genuine concern about how the Green Deal and electricity market reform will work.”

With £150 billion of investment needed to decarbonise the energy sector alone, the CBI is calling on the Government to take the following actions in the next six months:

· Publish the Electricity Market Reform white paper by July, providing greater clarity on the transitional arrangements for renewable energy.

· Use the Energy-Intensive Industries Strategy to set out plans to protect vulnerable industries from carbon leakage.

· Finalise the nuclear Generic Design Assessment and designate the energy National Policy Statements as soon as is practical.

· Incentivise businesses to invest in energy efficiency measures by taking action to simplify the CRC and wider issues of policy overlap.

· Make a decision on the winner of the first Carbon Capture & Storage demonstration plant, and confirm the future funding arrangements for CCS, the RHI and the consumer grant for low-carbon vehicles.

· Enact the Localism Bill by the end of 2011 and include provisions to streamline the fast-track process for major infrastructure and ensure that crucial sub-national infrastructure can be delivered.

· Enact the Energy Bill and work closely with industry to develop the secondary legislation which will successfully deliver the Green Deal.

The tracker charts progress in decarbonising four areas: power, buildings, transport and industry. Detailed analysis of the CBI’s interactive climate change tracker can be found at: www.cbi.org.uk/climatetracker