The Environmental Audit Committee (EAC) has warned that the government will not meet its climate targets if investments in renewable energy and other low carbon sources continue to reduce.
UK’s low-carbon economy has fallen to its lowest level since the financial crisis in 2008
According to the Guardian, investment in the UK’s low-carbon economy has fallen to its lowest level since the financial crisis in 2008. After dropping 10% in 2016, funds into renewable energy fell over 50% in 2017.
The committee of MPs called on the government to follow the lead of other countries and raise a “sovereign green bond” to encourage investment.
The warnings follow the government’s clean growth strategy and a 25-year environmental plan to address climate change, pollution, biodiversity and other green priorities.
Chair of the EAC, Mary Creagh, commented: “The clean growth strategy was long on aspiration, short on detail.
“The government must urgently plug this policy gap and publish its plan to secure the [billions of pounds of] investment required to meet the UK’s climate change targets, and explore how a sovereign green bond could kick-start its strategy.”
Sovereign green bonds
Sovereign green bonds, issued by countries from Poland to Indonesia, are government-issued financial borrowing instruments that aim to raise funds for environmental improvement projects. Market investors will receive part of the return on the projects.
Such initiatives provide governments with the opportunity to take advantage of low borrowing interest rates, while the relatively low levels of risk attract investors.
Senior policy officer at the Aldersgate Group, Alex White, noted: “There are willing investors in the green economy, but not enough projects to invest in
“Boosting the pipeline of green infrastructure projects will be critical to meet the UK’s environmental goals and should be the first priority in green finance. Policy detail is key [for investors].”
It does also depend on the investment opportunities available. At Zestec, we have seen a real appetite for investments of the right quality and scale; there is a real understanding of the solid and reliable returns available to investors, however Government policy is always going to be influential in any market and there is definitely more that Whitehall can do can do. Above all, what is required in a broader sense is consistent policy.
Linking Bank of England’s work to climate change was essential
In addition to the EAC report, researchers and NGOs have called for a “greening” of the Bank of England to encourage clean growth and help meet carbon targets. Chairman of the Committee on Climate Change, Lord Deben, said that linking the Bank of England’s work to climate change was essential.
A spokeswoman from the Department of Business, Energy and Industrial Strategy said it would respond to the proposals made by the EAC in due course.
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