Doubts have been cast over whether the €1tn investment needed by 2020 to stave off an EU energy crisis will be found.
Following an eight-month long inquiry, the Lords EU Sub-Committee on Agriculture, Fisheries, Environment and Energy has expressed its growing alarm at the degree of uncertainty and complacency about affordable, secure and low carbon energy supplies.
The committee found that, while the money is there from institutional investors, investment is being held back by a lack of clear EU policy about how to deliver secure, affordable and low carbon energy.
“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,” says committee chairman Lord Carter of Coles.
“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.
“The value of energy companies has slumped since 2008, the public purse is severely constrained, but 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.”
Among the recommendations made by the committee are: better use by member states of fiscal policies to unlock investment; the EU Commission and member states working with large-scale investors to highlight opportunities within the sector; and development of electricity interconnections between states.
The committee also recommends revising the EU Emissions Trading System (ETS), or carbon trading scheme, which was thrown into crisis last month after the EU Parliament rejected a measure to prop up prices, as well as setting targets for the proportion of energy produced through renewable means.
“The ETS has failed but it is not dead. It needs to include a minimum price for carbon, providing governments and investors with the confidence to support innovation through investment,” says Coles.
“Second, and contrary to UK Government policy, a target for the proportion of energy to be delivered through renewable energy until 2030 is required.
“There are no easy answers to meeting these challenges and keeping Europe competitive in the global market. But unless we find a way of doing this, our future energy could well be highly polluting, unaffordable and insecure.”
The committee’s full report is available here.