MPs have warned that £100 billion needs to be invested before 2020 to meet national and international carbon dioxide emission targets. The House of Commons Environmental Audit Committee said that only half of the £200bn investment needed before the end of the decade had so far been raised.
Joan Walley, chair of the committee, said:
“Allowing the Green Investment Bank to borrow would boost green investment and create jobs, and should not be delayed even if public debt is flat rather than falling in 2015-16.
“In Germany, their green investment bank has driven a massive home energy efficiency programme by providing loans at lower than market rates through high street banks – and writing off some of the loan if refurbishment makes the house ‘near zero’ carbon homes standard.
“The Government could help insulate consumers against rising energy bills and support jobs in the home improvement industry by reducing the interest rate on Green Deal loans in line with the more attractive Help to Buy scheme.”
The committee has also warned that stock markets are over-valuing companies that own fossil-fuel assets, leading to the creation of a carbon bubble.
MPs called on the Bank of England’s Financial Policy Committee to seek advice from the independent Committee on Climate Change to help it monitor the systemic risk to financial stability associated with a carbon bubble.
“The UK Government and Bank of England must not be complacent about the risks of carbon exposure in the world economy. Financial stability could be threatened if shares in fossil fuel companies turn out to be over-valued because the bulk of their oil, coal and gas reserves cannot be burnt without further destabilising the climate.
“The record-breaking extreme weather events causing chaos across the globe should be a wake-up call. The transition to a low carbon economy will be much more painful if we wait until there is a climate crisis before recognising that more than half of the world’s fossil fuel reserves will have to remain in the ground.”
The Committee also said it was concerned that the European Commission’s (EC) proposed new rules for State Aid in the energy sector could limit the finance available to support community owned energy schemes.
The MPs want the Government to insist that the EC proposals, to reduce the threshold for small-scale feed-in tariffs to below 2MW, are dropped because they risk undermining the viability of community schemes. They said priority also needs to be given to securing early State Aid approval for the Green Investment Bank to invest in community energy.