European Union energy policy inertia is freezing the 1 trillion euros ($1.3 trillion) of investment required to secure low-carbon power supplies in the region, a committee of the U.K.’s House of Lords said.
A new policy should include a floor price for carbon and a tighter cap on the number of allowances in the EU’s Emissions Trading System, according to the report today from the Lords’ EU Sub-Committee for Agriculture, Environment and Energy.
The price of emitting carbon plunged to a record low last month after the 27-member bloc’s parliament voted against a plan to cut a glut in supply created by the euro-area recession. The EU needs to agree on clear policy to 2030 to create a stable environment to attract institutional investors holding 13.8 trillion euros that could be invested in clean energy, the committee said.
“The ETS has failed but it is not dead,” said Committee Chairman Patrick Carter. “It needs to include a minimum price for carbon, providing governments and investors with the confidence to support innovation through investment.”
The EU should set a renewable energy target for 2030 alongside the existing 2020 goal to get a fifth of its energy sustainably, according to the report. It should also establish energy efficiency and consumption targets, as a large number of coal plants close due to environmental rules, and develop EU-wide regulation governing drilling for shale gas.
The committee, which heard evidence from Vestas Wind Systems A/S, EDF Energy Plc, SSE Plc, the WWF and Bloomberg New Energy Finance among others, pointed out that times have changed from 2008, when the current EU energy and climate policy was adopted. “The EU finds itself in a dramatically altered economic situation,” it said. About 1 trillion euros is needed in the current decade to secure supplies, according to the report.
“We are therefore alarmed at the degree of uncertainty, complacency and inertia about how an affordable supply of secure and low carbon energy will be provided in the European Union,” the committee said.