U.K. Lawmakers Rebuke Cameron in Favor of Early Carbon Goal

Lawmakers in Prime Minister David Cameron’s coalition this week plan to rebel against the government in favor of setting pollution targets earlier, a measure industry groups say would hurt the economy.

Some members of the ruling Conservative and Liberal Democrat parties plan to join with the Labour opposition in demanding the government set by April 1 a target for removing most carbon emissions from power generation by 2030. The government wants to postpone that decision until 2016. A vote on the legislation is due tomorrow in the House of Commons.

The rebels are concerned Britain risks delaying the investment needed to curb emissions blamed for global warming. Cameron, backed by some utilities and the Treasury, wants to wait for the economy to recover before establishing a target.

“It will be a very tight vote,” Barry Gardiner, a Labour lawmaker who is co-author of the proposal, said in an interview. “If we don’t pass this amendment and put in place a clear 2030 target, it’s going to make it extremely difficult to meet our legally binding obligations to reduce carbon emissions.”

The vote on an amendment to the government’s energy bill comes as the legislation clears the lower house of Parliament and moves to the House of Lords for consideration. The bill is aimed at stimulating 110 billion pounds ($167 billion) of investment in power stations and the electric grid needed as aging generators retire from service.

Support Amendment

Manufacturers including Danish wind turbine maker Vestas Wind Systems A/S and France’s nuclear reactor builder Areva SA say the target is needed to send a signal to investors that the government is committed to developing low-carbon power beyond

2020. Today, 55 organizations and companies, including SSE Plc, one of the nation’s top six generators, called on lawmakers to support the amendment.

“Wind projects have an investment horizon of 25 to 30 years,” said Brent Cheshire, chairman of the U.K. unit of Dong Energy A/S, which operates offshore wind farms. “We cannot undertake this type of large-scale, long-term investment if political and regulatory frameworks are too short-term and leave too much uncertainty.”

The target was recommended by the government’s own adviser on carbon policy, the Committee on Climate Change. It recommends ministers set a goal to reduce carbon from power output by 90 percent to 50 grams of carbon dioxide per kilowatt-hour in 2030.

Yesterday, Energy Secretary Ed Davey tried to stave off the amendment, urging lawmakers to support the bill as it is, saying it would lead to “massive” emissions cuts even without a 2030 target in place.

Reducing Emissions

The bill “will enable the U.K. to cut its economy-wide emissions by 50 percent by 2030,” Davey said in an e-mailed statement. It “will make the U.K. a destination of choice for investors in low-carbon energy,” driving growth and jobs.

Davey, a Liberal Democrat, originally pushed for a decarbonisation target before reaching an agreement with Chancellor of the Exchequer George Osborne to delay setting the measure until at least 2016.

Industry is also divided. Spanish oil producer Repsol SA, Cisco Systems Inc., the biggest maker of networking equipment, and renewable energy developer EDP Renovaveis SA were among companies joining Dong in signing today’s statement calling for lawmakers to back Gardiner’s amendment. The U.K.’s biggest business lobby, the Confederation of British Industry, said the measure shouldn’t be allowed to derail the law.

Tied Down

“Debates about the effect of including a target in the bill should not be allowed to prevent critical policy details being tied down,” CBI Chief Policy Director Katja Hall said in an e-mailed statement. “Vital investment decisions are hanging in the balance.”

Investors in renewables argue the target is needed because an existing European Union goal to get 15 percent of the country’s energy needs from renewables expires in 2020, with no certainty that the U.K. will still push clean energy beyond then.

Vestas in March joined five other manufacturers in writing to Davey and Osborne calling for the goal’s early introduction. Areva, Gamesa Corp. Tecnologica SA, Mitsubishi Power Systems Europe Ltd., Alstom SA and Doosan Power Systems U.K. were the other signatories.

Investment Decisions

“Manufacturers look to policy makers to create the market conditions to sustain demand for products and services like energy infrastructure that have long-term pay-back horizons,” Vestas Chief Marketing Officer Morten Albaek said in an e-mailed reply to questions. “Delaying until 2016 will result in higher costs in the long run and missed investment opportunities in the short run.”

Davey said investors already have certainty because the government has pledged to triple support for low-carbon energy to 7.6 billion pounds in the tax year ending in 2021 and to guarantee prices paid for nuclear and renewable power.

Gardiner said that under the current wording of the legislation, the government wouldn’t guarantee setting a decarbonization target in 2016. He’s pushed the amendment along with Tim Yeo, a Conservative who leads Parliament’s Energy and Climate Change Committee, which scrutinizes the work of Davey’s department.

At least 48 other lawmakers have put their name to the proposal, including Conservatives Zac Goldsmith and Peter Bottomley and Liberal Democrats Julian Huppert, Martin Horwood and John Hemming.

Lawmakers are scheduled to vote on the amendment tomorrow before sending the law to the upper chamber, the House of Lords, for approval.

Before it's here, it's on the Bloomberg Terminal.