The proposed UK carbon price floor lacks credibility, which has been thrown into doubt by plans for it to be a tax-based mechanism, environmental investment manager Climate Change Capital has claimed.
‘Investors will have serious doubts about the long-term credibility of the carbon price floor policy as it is currently conceived. This is because it is a tax-based mechanism subject to annual votes in Parliament,’ said Cameron.
‘If the carbon price support was actually guaranteed, it would increase certainty, reduce the incentive for investors to wait and see, and lower costs for investors and the economy.’
The UK Treasury has committed at least £3bn to the Green Investment Bank in its latest budget, triple the capitalisation that was written into the last Coalition government Spending Review.
Although this move has been largely welcomed by the renewable energy industry, Climate Change Capital has warned that the bank requires continual support to have any real impact on the industry.
The green investment specialist has called for the bank’s initial capital to be invested to attract further private sector investment.
Climate Change Capital vice chairman James Cameron said, ‘The budget is a pivotal moment in the evolution of the Green Investment Bank concept into a real and enduring institution.
‘It is also important that as the bank develops, its capital base is regularly reinforced with pollution permit auction proceeds and newly announced UK carbon tax revenues.’
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