Recent energy policy announcements by the U.K. government, including the scrapping of a £1 million carbon capture and storage commercialization competition, have struck a blow to energy sector investor confidence, according to a March 1 report of Parliament’s Energy and Climate Change Committee. “We found that the Government’s actions have clearly had an impact on the confidence of many investors. While the effect is not as great as has been experienced in some other countries—where the implementation of retroactive policies has caused investment to collapse—there nevertheless has been a dip in confidence since the election in May 2015,” the report says.
Among reasons for the decline in investor confidence, the report lists that “policy inconsistency and contradictory approaches have sent mixed messages to the investment community about the direction of travel.” The decision to scrap the commercialization completion, for example, is stated to be in contradiction to the government’s stated position that natural gas will play an important role in the future.
“The Government has been slow to set out its new direction of policy: the Secretary of State’s “reset” speech was made six months after the election. The emphasis on gas in this speech, followed one week later by the abrupt removal of funding for carbon capture and storage have left many wondering how clear the Government’s long-term vision really is. This has led to questions about how, and whether, the Government will meet its long-term climate change and security of supply objectives,” the report concludes.
