Companies warn Osborne on renewable power

Letter to UK chancellor criticises mixed signals on green policy

Some of the best known companies in the UK, including Microsoft, PepsiCo and Marks and Spencer, have warned George Osborne that mixed signals on green energy policy risk undermining investment in renewable power.

More than 50 companies, investors and industry bodies have written to the chancellor ahead of his speech to the Conservative party conference today urging greater clarity on the coalition’s commitment to a lower-carbon economy.

The companies, which also include EDF, the French energy group, and BT, the telecoms group, called on Mr Osborne to back a 2030 target for decarbonising the electricity sector, amid coalition tensions over the goal. “It is essential for government to provide investors with the long-term confidence they need to transform our electricity market and make investments capable of driving wider economic growth,” the letter said.

The 2030 decarbonisation target is endorsed by Ed Davey, the Liberal Democrat energy secretary, but Mr Osborne is wary. The chancellor has been calling for a significant role for natural gas in the UK energy mix until the 2030s and beyond.

Without specifically naming Mr Osborne, the letter warns that the government’s commitment to green power is being “undermined by recent statements calling for unabated gas in the power sector beyond 2030”.

Critics, including the government’s climate watchdog, have warned that heavy reliance on gas beyond 2030 would be incompatible with meeting legally binding emissions targets set under the 2008 climate change act.

Separately, SSE, the UK power group, has told the Financial Times it also supports a 2030 carbon intensity target because it “could provide much-needed certainty for low-carbon investors, showing developers that the government is committed to decarbonisation in the long term”.

The issue will come to a head when an energy bill is brought to parliament by Mr Davey later this year. The Commons energy committee, among others, says the 2030 target should be included in the legislation.

The letter to Mr Osborne was co-ordinated by the Aldersgate Group of green-leaning businesses. Peter Young, Aldersgate chairman, said it was critical to put an end to any political uncertainty surrounding the UK’s energy future.

“Both the Labour and Liberal Democrat parties understand this huge growth opportunity and backed a 2030 carbon target for the power sector at their party conferences,” he said. “Now the Conservative party must step up to the mark and provide the full cross-party support which businesses have been calling for.”

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