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Ministers urged to act fast on green investment

Financial Times

By Carola Hoyos and Jim Pickard

Published: April 7 2009 03:00 | Last updated: April 7 2009 03:00

The CBI yesterday served notice on ministers that they must bridge the yawning gulf between their environmental rhetoric and Britain’s painfully slow progress in shifting to a low-carbon economy.

At stake are tens of thousands of potential jobs and the security of the country’s future energy supply, according to the body that represents some of Britain’s heaviest polluters.

Richard Lambert, director-general of the CBI, warned that billions of pounds of potential investment in renewable and nuclear energy would go elsewhere unless the government took “urgent action”.

That the government should have been found wanting by business – until recently generally hostile to regulations designed to tackle climate change – is particularly embarrassing for ministers.

It will also serve to focus attention on whether this month’s Budget will fulfil the promise of rebuilding the economy along low-carbon lines made by Gordon Brown, the prime minister.

A report by the New Economics Foundation last week found that only £100m of the £20bn stimulus package from last November was genuinely new money towards green measures.

There were high hopes within the environmental movement when Ed Miliband was appointed to head the new Department of Energy and Climate Change last autumn. So far, however, he has failed to win plaudits from the greens or the nuclear industry.

Meanwhile, several energy companies, including Centrica, Shell and BP, have cut back on investments in UK renewables.

John Cridland, the CBI’s deputy director-general, said the UK was falling behind Germany and Denmark in its attempts to forge a green industry. “We have used up all our contingency time. It is now or never,” he said.

Ministers were on the right path but companies were still “jittery” about investing because of the laborious planning system, slow funding of new technology and poor connections to the National Grid, according to the CBI.

There must be a better regime for tax and intellectual property and a “robust” price for carbon. At its present trajectory, the UK would miss its renewables targets, it said.

By 2020 Britain must obtain 15 per cent of its power from renewables – or 35 per cent of its electricity – under the European Union’s renewable energy directive. At present the figure is a meagre 1.5 per cent, less than any other country in the EU bar Malta and Luxembourg.

It was time for the government to show its commitment by purchasing a fleet of electric vehicles, said the CBI. It should also pay drivers money to scrap older, polluting vehicles – a policy already under consideration by ministers.

Separately, current policies on carbon emission reduction in homes would fail to deliver the large-scale emissions reductions needed, the CBI said.

Last summer Mr Brown promised a “green revolution” with £100bn of investment in renewable energy leading to 10,000 wind turbines, 7m solar heating systems and green jobs for 160,000 people.

Chris Smith, chairman of the Environment Agency – and a former Labour minister – recently told the FT that the government was “saying all the right things” but should do more.

Philip Wolfe, director-general of the Renewable Energy Association, said the government lacked the will to make the tough decisions needed to match their “bold statements”. “If you could solve this by talking the talk we would have done it by now,” he said.

The energy department said it had acted swiftly to remove barriers to energy investment through its energy and planning acts. The £12.5bn purchase of British Energy and the strong interest in Nuclear Decommissioning Authority sites being auctioned were proof of investor appetite, it said.

Environmentally friendly goals

Measures in the CBI’s low-carbon proposals include : * A scrappage scheme and fiscal incentives to boost purchase of low-carbon cars * The government to buy a fleet of electric vehicles, stimulating private sector investment in the industry * Requiring dashboard displays of real-time fuel consumption * Active traffic management schemes to ease congestion

* Approval of an additional carbon capture and storage demonstration project * Approval for the Severn Barrage project for tidal power generation * Smart meters fitted in homes and businesses allowing residents to monitor power usage * Extending incentives to industry to invest in renewable energy equipment

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