Following the publication of the Committee on Climate Change’s Progress Report to Parliament, the Aldersgate Group urges the government to rapidly put in place robust policies that will allow the UK to meet its existing carbon budgets on time, affordably and in a way that could deliver significant economic benefits for the UK.
Nick Molho, Executive Director of the Aldersgate Group said: “The government faces several critical decisions during the early months of this Parliament to ensure that the deployment of energy efficiency and a wide range of low carbon infrastructure remains on track and the cost of new technologies continues to be cut. Policy and funding gaps, particularly after 2020, must be filled urgently.
"In the run up to the important climate change summit in Paris later this year, it is vital that the UK’s very positive role to date in these negotiations is seen to be backed up by continued tangible commitments to decarbonise its economy at home. This is all the more the case, given the recent announcements on onshore wind and the future of the Green Investment Bank.”
The Aldersgate Group, which will be publishing a major report next week on the government’s climate and energy policy priorities, argues that an early decision on the extension of the Levy Control Framework and a reboot of energy efficiency policy, with clear objectives and proposals tailored to different types of energy efficiency measures, will allow businesses to continue investing and innovating in the UK, delivering important infrastructure, cost reductions and economic growth.
Uncertainty about future funding could see projects being delayed and have a particularly damaging impact on supply chains and continued cost reductions.
Nick Molho said: “The offshore wind sector provides a good example of the benefits produced by a clear policy framework. The cost of energy from UK offshore wind farms has fallen by almost 11 per cent in the past four years, with the UK the world leader in this sector. However,offshore projects can take up to ten years to build, so the industry is already looking to the mid-2020s for some clarity about expected levels of deployment.”
Nick Molho added: “The report’s dual focus on tackling and addressing the potential impacts of climate change in the UK is welcome and highlights the importance of the government setting out a coherent vision on climate change, which must include improving the resilience of the UK’s infrastructure to its impacts. This will require good co-ordination between the government’s adaptation strategy and its objective to rapidly improve the state of the UK’s natural capital such as the ecological condition of farmed countryside.”
Following the announcement made by the Secretary of State for Business, Innovation and Skills Sajid Javid this morning, the Aldersgate Group stresses that any reforms to the Green Investment Bank must ensure that its public mission to reduce risk for investors in low carbon and environmental projects remains firmly in place. In addition, the government must retain a significant and sufficient shareholding in the Bank to convince the market that it remains firmly behind its mission.
The Aldersgate Group, whose business members represent a wide range of economic sectors and a collective turnover in excess of £300bn, is strongly supportive of the positive impacts that the Green Investment Bank (GIB) has had in reducing the cost of capital, increasing the quality of projects and mitigating policy risks for its mandated areas of investment
From significant co-investments in efficient street lighting to major offshore wind projects, the GIB has played an important role in reducing the risk profile of some low carbon projects that were harder to finance and has already mobilised over £5bn of investment in the UK’s low carbon economy.
The right level of private ownership in the GIB should be agreed through transparent analysis and in-depth consultation with the finance community to determine the optimum level of government shareholding that continues to maximise private finance's willingness to invest in the green economy throughout the lifetime of this parliament and beyond.
Nick Molho, Executive Director of the Aldersgate Group, said: “The injection of private capital into the Green Investment Bank could be a positive development but only if the Bank’s public mission to drive investments in low carbon projects perceived as riskier is fully maintained and the government retains at least a significant shareholding, allowing it to demonstrate a meaningful stake in the continued success of the Bank.
Failure to provide such reassurance would, just a week after retrospective policy changes on onshore wind, send negative signals to low carbon investors, threatening inward investment flows and undermining the low carbon sector’s important contribution to the UK’s continued economic recovery.”
Nick Molho added: “With a few months to go ahead of the climate change summit in Paris, it is also critical that the UK’s positive leadership in these negotiations does not become undermined by a perception abroad that the government is diluting its domestic commitments and abandoning its own stake in the future growth of the UK’s low carbon economy. Retaining at least a significant holding in the Green Investment Bank and making rapid decisions in key areas such as the future of the levy control framework will be key here.”
The Aldersgate Group also reiterated some of the key recommendations from its recent cross-industry report on the future of the Green Investment Bank, highlighting the importance going forward for the Bank to have greater flexibility in leveraging private finance and in investing across a broader range of environmental projects such as those aimed at improving the state of the UK’s natural capital.