Carbon emissions in power sector must be cut, Osborne warned

Companies and investors have joined with trade unions, environmental groups and industry bodies to warn Chancellor George Osborne that support for gas power into the 2030s is undermining investment in UK electricity infrastructure.

In an open letter to the Chancellor on the day he addresses the Conservative Party conference, they demand a target in legislation to decarbonise the power sector to unleash a needed £110 billion investment in electricity supplies.

It is the latest twist in the battle over energy policy, ignited when Liberal Democrat Energy Secretary Ed Davey saw off Tory calls for significant cuts to onshore wind farm subsidies – at the price of support for gas up to and beyond 2030.

The Government’s climate advisers have warned support for future gas plants without technology fitted to cut emissions is not compatible with climate change legislation and is harming investment in low-carbon power such as renewables and nuclear.

Opposition leader Ed Miliband has spelled out his backing for a 2030 target for the power sector, and the Liberal Democrats have supported a target under the 
Energy Bill, to be included in secondary legislation to allow flexibility.

In their letter, more than 50 businesses and organisations warn that failure to act at sufficient scale and pace on climate change, energy security and commodity price volatility would undermine prosperity and see the UK missing out on the opportunities of a global shift to a low-carbon economy.

“The Government’s perceived commitment to the low carbon transition is being undermined by recent statements calling for unabated gas in the power sector beyond 2030 and the absence of a specific carbon intensity target,” they warn.

The letter points to a recent report by business group the CBI which estimates that while a third of UK growth in 2011/2012 came from green businesses, policy uncertainty could lose the UK £400m in exports in 2014/2015 alone.

“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.”

Major businesses such as Asda, Aviva, British American Tobacco, EDF, Microsoft, Marks & Spencer, PepsiCo, Philips, Sky and the Co-operative have signed the letter.