The Committee on Climate Change has said DECC’s lack of clarity for energy policy beyond 2020 is harming investment opportunities for renewables in the UK.
Addressing the Energy and Climate Change Select Committee’s inquiry on the 5th carbon budget, CCC chairman Lord Deben said the need to offer more clarity for investors is vital as the rest of the world enacts climate change mitigation policies.
“It becomes more and more important to give that confidence, as we are in a more competitive market for capital investment,” he said.
“If everyone will be giving opportunities to invest, the necessity for the UK government to show the UK is a good place to invest becomes more acute.”
Deben said DECC’s stated policy to have three Contracts for Difference auctions during this Parliament for offshore wind did not offer enough detail to offer certainty to investors.
The government should offer “real security” to encourage investment in power generation capacity in the next decade, he added.
The CCC chair said he has pressed DECC to offer “very detailed” information when it sets out later this year how the UK will meet the 4th and 5th carbon budgets.
Addressing questions from the ECCC on the government’s policy to end subsidies for onshore wind, the CCC criticised DECC for “being clearer about what it doesn’t want than what it does want.”
“Nothing has happened that has made it impossible to meet 5th carbon budget but we are cognisant of things that aren’t going to be done,” said Deben.
The government should also make the Levy Control Framework more transparent by showing how benchmarks such as wholesale power and fossil fuel prices affect it, he said.
“If the LCF isn’t a transparent mechanism, it can be easily used to benefit a particular technology.”
Deben confirmed that last December’s COP Paris agreement to pursue efforts to limit warming to 1.5C above pre-industrial levels was unlikely to change their advice on the 5th carbon budget.
Image: Lord Deben (Combined Heat and Power Association)
