Green energy investment billions to go elsewhere, warns CBI

The Confederation of British Industry (CBI) has warned the government that the UK risks losing billions of pounds of investment, if more emphasis is not placed on environmental targets.

The CBI warning follows a series of announcements by major energy companies, including BP, Centrica and Shell, that they would terminate or reconsider investment in 'low-carbon' energy such as wind and solar power, and carbon capture for coal-fired power stations.

Richard Lambert, director general of the CBI, told the Guardian that 'politics and policy', not the recession, were delaying investment in the UK.

He described the government's policies as 'on the right path', but said companies were 'jittery' about investing in the UK, because of poor National Grid connections, slow funding for new technology, planning permission delays and uncertainty over long-term carbon prices.

Crumbling confidence in the green energy sector was further exposed as a survey revealed that more than three in four of Britain's green energy companies were struggling to gain vital access to loans and investment cash. The poll by the Renewable Energy Association found that 32 of the 39 member companies that responded were struck by a shortage of cash flow and other problems.

A new strategy by the CBI, one of four 'road maps' to a low-carbon economy, will call for immediate and short-term actions. Proposals include clear planning guidance to upgrade the National Grid and fast-track investment in offshore wind farms and nuclear power stations.

The Department for Energy and Climate Change said: "The government has been working to ensure that the short, medium and long-term environment for energy investment remains healthy in Britain and that any barriers identified are swiftly removed."

This month the incentive for offshore wind power was increased by 50%.