At a London summit last month, prime minister Gordon Brown, business secretary Lord Mandelson and climate change secretary Ed Miliband voiced concerns over Britain lagging in the ''global race'' toward a low-carbon economy. They also pointed out that the low-carbon economy could create hundreds of jobs in renewable energy.
However, according to the Renewable Energy Association (REA) these concerns appear to be primarily for public consumption. Jemma Robinson of the REA points out that there seems to be little to suggest that the government is serious about the new green deal as a decision by the government decided to suspend funding for the solar power schemes under its low carbon building programme, just four days after the summit.
Under the LCBP the government provides grants of upto £2,500 for installation of micro-generation technologies in homes and other public and private buildings.
The UK department of energy and climate change has announced the termination of Phase 2 with the remaining funds totaling £8 million to be returned to the Treasury when the LCBP comes to an end later this year in June. Meanwhile, the association is pressing for £625 million as immediate funding to shore up the renewables industry and to ensuring achievement of 2020 carbon cut targets.
However, with Britain having committed just £1.5 billion of its £25 billion reflationary measures to green stimulus, there seems to be a funding gap that has to be bridged to support the green initiative. The Stern report recommends spending £10 billion to match the sums spent by countries like Germany, France, the US and China.
The solution according to James Cameron, executive director of Climate Change Capital, a London-based investment and consultancy firm specialising in the low carbon industry, lies in ''carbon bonds'' on the lines of war bonds of the Second World War era. The REA has also leant support to the idea.
According to Cameron, the recession would encourage people to save as the bonds would score over other financial instruments now being increasingly viewed as risky. Also the bonds would also appeal to people's sense of duty and pride.
Meanwhile, The Confederation of British Industry (CBI) has warned of losses worth billions of pounds in investment in the UK if the environmental targets are not taken more seriously. The warning comes in the wake of major energy companies including BP, Centrica and Shell announcing that they would consider withdrawing from 'low carbon' energy initiatives such as wind and solar power and carbon capture for coal-fired power stations.
According to Richard Lambert, director general of the CBI, in the UK, 'policy and politics' seem to have hit investments in green initiatives rather than recession.
He said that the government policies were on right track, but companies are not keen on investing in UK. He ascribed this to poor National Grid connections, slow funding for new technology and delays in planning permission and uncertainty over long-term carbon pricing.
This has been buttressed by a recent survey that has highlighted sagging confidence in the green energy sector with more than three out of four of Britain's green energy companies finding it difficult to get funding. The survey conducted by the REA found that of the 39 member companies that responded 32 were hit by a shortage of cash flow and other problems.