Report wants $1.3trn EU injection

A clearer policy is needed if the EU is to deliver secure, affordable low-carbon energy, according to a report by the UK’s House of Lords.

The study by the EU Sub-Committee for Agriculture, Fisheries, Environment and Energy says an injection of €1trn ($1.3trn) is needed this decade.

The peers conclude that muddled Brussels policy is putting off big investors. They express alarm at “the degree of uncertainty, complacency and inertia” around how this level of investment can be achieved.

The report calls for stronger EU leadership, a revised Emissions Trading Scheme (ETS); a greenhouse gas reduction target of 40% compared to 1990 levels, rising to 80% by 2050; and the development of electricity interconnections between countries.

It follows an eight-month inquiry, during which the committee heard from the European Commission, the Confederation of British Industry, the World Wide Fund for Nature and power companies.

“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,” says committee chairman Patrick Carter.

“Such investment would help us 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.”

The report says a minimum price of carbon across the bloc could support the ETS, which has seen the value of carbon allowances plummet to below €3 per tonne in the past month. Members of the European Parliament voted in April against a plan to withhold some permits from the auction to provide a short-term boost to carbon prices.

The Lords committee found there was sufficient money held by institutional investors to construct the infrastructure required for Europe’s future power needs. But it says this is being held back by a lack of clear policy from the EU and member states, including the UK.

It cites a growing sense of “alarm at the degree of uncertainty and complacency about affordable, secure and low-carbon energy supplies”.

The reports also attacks the UK government for failing to set a target for how much energy will be delivered from renewables by 2030.