The UK needs to simplify and streamline its climate and environmental policies in order to attract more green investment, members of the parliament (MPs), the industry and analysts have said.

“The UK is a midden of semi-failed low-carbon policies,” Michael Liebreich, CEO of analysis firm Bloomberg New Energy Finance, told a UK Policy Exchange event on Tuesday. He emphasised that having so many measures – renewable energy obligations, the Green Investment Bank, a carbon price floor, levies, among others – confuses investors.

“This is why it’s difficult to drive [green] investments to the UK … We need to do quite a lot of simplifying” of the policies, he added. “This is the moment when we decide whether we want to lag or lead.”

Laura Sandys, a Conservative MP and part of the cross-party Energy and Climate Change Select Committee, agreed: “We need to simplify the complex layers of incentives. The key issue is consistency and coherency – that’s what attracts new [investors].”

Jeff Lockett, a global asset manager for US technology and energy company AIR Products, which developed the Teesside Valley energy-from-waste plant, said this project was suitable for the UK because of the support it found from the Renewable Obligation legislation. But he added that because of delays in this policy coming into place, the project almost did not happen.

Meanwhile, a lack of policy certainty has meant investment in home retrofits will fall short and prevent technology firms from fulfilling its huge potential to save energy and reduce domestic energy costs, said Alan Whitehead, a Labour MP on the energy and climate change committee.

“Energy efficiency assets are very difficult to put on the book,” because investors need to be granted long-term investment security, he said.

Whitehead added that the UK’s Electricity Market Reform – a legislative proposal drafted earlier this year to meet climate change goals at the lowest cost – is crucial to get right, but the bill is “hideously complex” at a time “when we absolutely need certainty”.

The government needs to ensure that the Green Investment Bank starts operating now and not in 2018, it should issue more green bonds, he suggested, and start to underwrite ‘contracts for difference’ systems – a measure by which operators of low-carbon electricity generation receive a top-up if wholesale power prices are lower than their cost of generation.

By Elza Holmstedt Pell
Environmental Finance