March 3, 2016 / 12:32 AM / a year ago

British government must restore energy sector confidence – MPs

A tractor mows a field on the site where EDF Energy's Hinkley Point C nuclear power station will be constructed in Bridgwater, southwest England October 24, 2013.Suzanne Plunkett

LONDON (Reuters) - Britain's government must set out its policies beyond 2020 to restore confidence in the country's energy sector if it is to secure the billions of pounds of investment needed to keep the lights on while meeting climate targets, MPs said on Thursday.

"Investor confidence has been dented by a series of sudden policy changes... which may lead to a hiatus in project developments and threaten the UK's ability to meet its energy security and climate change objectives," MPs from the Energy and Climate Change Committee said in a report.

Britain has a target to cut its carbon dioxide emissions by 2050 to 80 percent below 1990 levels but also needs to invest about 100 billion pounds to replace its ageing nuclear and coal power plants.

The Levy Control Framework -- which sets out the amount of money available to support low-carbon energy projects -- only runs until 2020. The government's domestic carbon tax, which penalises high-carbon coal plants, is also only set until 2020.

Investors have been spooked by last year's announcement of changes to existing energy policies, including the scrapping of support for onshore wind farms and abandonment of a 1 billion pound scheme for carbon capture and storage technology, the report said.

The government said the changes were needed to rein in costs and to keep a lid on electricity bills, but MPs warned that the long-term costs could rise.

"Nervousness among investors will make it harder and more expensive to build the new energy infrastructure that we need. Any increase in the cost of project capital will ultimately get passed on to consumers," MP Angus MacNeil said.

Energy projects such as gas-fired power stations, wind farms and nuclear power stations can take years to build and often have high up-front costs.

Government figures last week showed that Britain's electricity generation fell to its lowest level in more than 20 years in 2015.

Reporting By Susanna Twidale; Editing by David Goodman

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