According to a research launched this week by the Institutional Investors Group on Climate Change (IIGCC) the future of investment in low-carbon technologies and renewable energies might be put at stake because of retrospective policy changes that have characterised some states of the European Union.

The research presents the results of a survey of asset managers involved in the energy sectors and was prepared by Norton Rose to look into the private sector’s incentive to chip into the Union’s climate and energy policy. Not surprisingly, the research finds that a stable long-term institutional framework is necessary for setting the incentives needed to support investment in low-carbon technologies, with 90 percent of interviewees saying that changing policy and retrospective policy making in the absence of guarantees for grandfathering of existing investments is a barrier to investment in renewable energy. Other barriers to investment included permitting and planning problems (55%) and grid access and grid infrastructure issues (45%). The importance of setting a long-term agenda up to 2030 as a factor to spur investment was recognised by half of the respondents, while about 63 percent see lower carbon caps and the consequent higher carbon prices as important measures to support investment flows in low-carbon technologies. About 10 percent of respondents do not see the EU ETS as a strong enough signal to support the long-term price signal needed to spur investment in low-carbon technologies.

This research is published in the IIGCC paper Shifting Private Capital to Low Carbon Investment: An IIGCC position paper on EU climate and energy policy, available at http://www.iigcc.org/__data/assets/pdf_file/0016/12247/IIGCC-Position-Paper-on-EU-Climate-and-Energy-Policy.pdf.

Climate Policy News

• This news is extracted from the Climate Policy News : a CMCC weekly column that summarises the latest news on international climate change agreements, the updates on the carbon market and the energy and technology updates in the realm of climate change. Go to the web page and see all previous issues since March 2007.
• This week: Retrospective policy changes may dampen
  investors’ interest;Brazil: future change in cliamte policy?;NZ: agriculture committee for ETS; the carbon market this week – Download the September 27 – October 3, 2010 Newsletter