Businesses need firm commitment on green technologies in order to invest in environmentally friendly industries, warns IPPR
The government needs to offer businesses a firm commitment that it believes in green technologies if it wants companies to invest in environmentally friendly industries, a thinktank warns.
Research found ministers were sending “mixed signals” about their aims to reduce carbon emissions – initially promising ambitious targets before seemingly wavering about the effect they could have on the economy.
Ministers’ caution was making industry leaders in the energy sector jittery about investing in new forms of green technology, the Institute of Public Policy (IPPR) report said.
To shore up business confidence, it also recommended that the Treasury abandon plans to introduce a “carbon floor price” – a green energy tax which would set a minimum price for greenhouse gases.
The energy and climate change secretary, Ed Davey, has said the scheme, due to be introduced next year, would encourage firms to develop more environmentally friendly technologies. But critics have warned the tax will inevitably be passed on to consumers.
Reg Plant, a research fellow at the IPPR, said the global market for environmental goods and services was worth an estimated £2.27tn and was growing by 4% a year. He said: “An ambitious decarbonisation policy offers a route to long-term sustainable economic growth, and productive British businesses.
“But businesses need to know the government will provide consistent support for their investments – and at the moment ministers blow hot and cold on their commitment to a green future.
“But the government’s unilateral carbon price floor is a policy which should be scrapped. It is ill-designed as it reduces British competitiveness, won’t cut emissions and will drive up fuel bills pushing more people into fuel poverty.”
The report comes as there are signs the government could cut subsidies to onshore windfarms by up to 25%. Davey has previously said he was considering cutting the subsidy by about 10%.
Tory backbenchers and environmental campaigners have been lobbying the government to cut the subsidy further, saying the spread of windfarms is blighting the countryside.
Speaking in the Observer, industry leaders said cutting the subsidy by 25% would mean an end for onshore windfarms.