UK needs clear energy policy soon: industry

LONDON (Reuters) - Britain will meet its targets for a low-carbon economy only if the new government provides clarity on energy policy within six months, so companies can make the right investment choices, a leading UK business lobby said.

"Business is convinced that a secure low-carbon energy system at an acceptable cost is possible but is doubtful that current government policy will enable the investment needed to deliver this," said Richard Lambert, director general of the Confederation of British Industry (CBI) in a report released on Monday.

The government should deliver decisions on a number of key energy policies by February next year, including its plans for new nuclear power stations, revision to tax policy on gas storage and North Sea projects and its choice of winners for carbon capture and storage (CCS) concepts, the CBI said.

At the end of July, the coalition government made its first in-depth statement on energy policy but failed to give the industry the decisions needed.

"Time is running out for investors to make the decisions that will provide timely delivery of badly needed generating capacity to replace the looming shortfall," said Ernst & Young assistant director Jim Fitzgerald shortly after the government's announcement.

The CBI also called for clarity on project planning. It asked for the government, for example, to process project applications made to the Infrastructure Planning Commission (IPC) before it was announced that the body would be scrapped.

Another key issue is regulation of power grids, which need to be modernized and adapt to more renewable energy connections, the CBI said.

The Energy and Climate Change Secretary said in response to the CBI report that the new government had already made significant progress on energy policy, such as introducing the Green Deal for home insulation, and that a carbon floor price and a green investment bank will be created in the autumn.

"We're taking action across all technologies, and we'll introduce a new efficient, democratically-accountable planning system that provides a fast-track process for major infrastructure projects."

"This should take no longer than under the current regime," Huhne said.

(Editing by Jane Baird)