That’s the damning verdict of a report published today by the a UK government committee, which also concludes that the value of energy companies has slumped in recent years and will not recover without policy stimulus.
The report by the House of Lords’ EU Sub-Committee for Agriculture, Fisheries, Environment and Energy follows an eight month inquiry in which the committee heard evidence from a host of organisations and individuals, including the European Commission, UK Energy Secretary Ed Davey, the Confederation of British Industry and environmental group the WWF.
The committee was alarmed at the degree of uncertainty and complacency surrounding affordable, secure and low carbon energy and concluded that more funds held by institutional investors would be invested in energy projects if there was a clear EU policy about how to deliver green power.
Committee chairman Lord Carter of Coles said: “It is clear to us that investment is urgently required, notably in a low carbon, interconnected and innovative energy system, that makes us less reliant on imports of highly volatile and dirty fossil fuels. Such investment would help to deliver secure and low carbon energy, boost European economic growth, and stabilise household and industrial costs.”
He added that the value of energy companies “has slumped since 2008” and said that while “the public purse is severely constrained”, there is “more than enough money is around in the investment community”.
“This should be a great time to invest in long term assets, such as energy, but clear policy is needed in order to release it. No country is an energy island, so EU policy is particularly important. We need leadership and direction from the EU and its Member States in developing and agreeing an energy policy framework through to 2030.”
That leadership and direction, he said, should come in the form of two core policies. Firstly, he called for an overhaul of the EU Emissions Trading System.
“The ETS has failed but it is not dead,” said Lord Carter. “It needs to include a minimum price for carbon, providing governments and investors with the confidence to support innovation through investment.”
The second policy stimulus should be a target for the proportion of energy to be delivered through renewable energy until 2030 – a target that the UK government has so far chosen not to impose.
Lord Carter added that there were “no easy answers to meeting these challenges and keeping Europe competitive in the global market”, but warned that “unless we find a way of doing this, our future energy could well be highly polluting, unaffordable and insecure”.
Among the committee’s other recommendations is a regulatory approach to boosting carbon capture and storage; the development of a regulatory structure for the exploitation of shale gas in the EU; and the development of electricity interconnections between EU member states.