A Treasury-led 'dash for gas' could make the UK's carbon targets under the Climate Change Act unachievable, the cross-party Environmental Audit Committee has warned.
In its Autumn Statement, the Committee is calling on the Government to restore investor confidence in the future direction of energy policy by setting a clear decarbonisation objective in the forthcoming Energy Bill.
The Committee warns that the Chancellor must reflect on his comments that present the 'environment' in opposition to the 'economy'.
Members say they are wrong and counterproductive adding: “Mixed messages from the Government on energy policy are undermining investor confidence in the green economy.”
They continue “A clearer route is needed, helping to rebuild investor confidence in the energy sector, which allows proper scrutiny to begin on definitive plans for our energy mix which move beyond the so far apparently illustrative and permissive nature of the energy 'pathways'.
“Such greater certainty would be signalled by the introduction of a carbon intensity target in the forthcoming Energy Bill.”
The Committee’s Report adds additional pressure on the Coalition, whose policies are being increasingly seen as pro-gas. The CBI recently called on the Prime Minister and Chancellor to invest in the green economy and today the WWF said David Cameron must take control of elements within his party because they are undermining investor confidence.
The Environmental Audit Committee said evidence to the inquiry confirmed the CBI's warning that ongoing policy uncertainty could mean that the UK loses out on millions of pounds of green investment.
Global competition for green growth is fierce and the UK is competing with other countries to secure renewables investment.
They say: “The Autumn Statement 2012 provides the Treasury with an opportunity to help secure the 'step change' in the pace of emissions reductions repeatedly called for the by the Committee on Climate Change.
“We support the Rio+20 commitment to eliminate environmentally harmful subsidies, and call on the Government to set out how it will implement this agenda in the UK.
“In the Autumn Statement, the Chancellor should set out a timetabled programme for eliminating such subsides, and explain why North Sea tax allowances announced during 2012 should not be regarded as subsidies.”
Chair of the Committee, Joan Walley MP said: "The Autumn Statement sets the course of economic policy for the foreseeable future.
“The Treasury must end the uncertainty on energy policy and give investors and businesses the confidence to seize the enormous opportunities presented by new clean technologies.
“A second 'dash for gas' could lock the UK into a high-carbon energy system that leaves us vulnerable to rising gas prices.
“The Government needs to reassure investors by setting a clear target in the Energy Bill to clean up the power sector by 2030."
MPs also challenge the Government over the slow progress it has made on environmental tax reform.
The Report adds: “We are disappointed by the slow speed at which the Government has addressed the tax definition recommendations in our report on environmental taxes.
The Government's decision to not count Fuel Duty and Vehicle Excise Duty as environmental taxes is short-sighted and reduces the policy imperative to tackle the significant social and environmental costs to society from motoring.
“And in the longer term, falling receipts from these taxes due to continuing fuel efficiency would challenge the future efficacy of these taxes. The Government should use the Autumn Statement as an opportunity to set out its longer-term ambitions for these taxes and how motoring taxes might be reformed more generally.
“The receipts from motoring taxes could be hypothecated to fund new transport provision. But new roads would be the wrong way to go. Instead, greater investment in public transport is needed and would benefit from a dedicated revenue stream. To demonstrate that it has embedded the principles of sustainable development, and to better illustrate the trade-offs reached, the Government should set out the relative social and environmental benefits of investment in the road network compared with similar investment in public transport.
“We repeat our July 2011 recommendation that to build greater stakeholder confidence, the Treasury should publish progress yearly against the Coalition Agreement commitment to increase the proportion of environmental taxes using both its definition and that of the Office for National Statistics.”
Responding to today's report, Andrew Raingold, Executive Director of the Aldersgate Group, said: "Ministers need to sit up and pay attention to the long and growing line-up of supporters for a 2030 power sector carbon target. The Environmental Audit Committee has today added its voice to businesses, industry bodies, energy utilities, NGOs and MPs across the country that have repeatedly made the economic case for such a target this autumn."
"If the Autumn Statement is going to kick start growth and jobs, it must provide the certainty on our energy future that businesses have been demanding. The policy grid lock is already damaging low carbon investment and capital allocation."