The investors, which include Hermes, Aviva Investors, Threadneedle, Schroders and the Methodist Church, have demanded a set decarbonisation target to be inserted into the Energy Bill to give investment certainty to power and manufacturing companies.
In June an amendment to aim to decarbonise the power sector by 2030 was narrowly defeated in the Commons. But in their letter to the Chancellor, who will today deliver his speech at the Tory Conference in Manchester, the investors warned that its omission in the Energy Bill is leading to a paralysis of investment.
The “lack of a meaningful 2030 decarbonisation target” is “exacerbating policy risk and investor uncertainty”, they said. “In many cases, this increases the cost of capital and deters major investors, manufacturers and project developers from investing in the UK and creating jobs.”
The letter, which is signed by investors representing £1trillion assets worldwide, comes amid intense focus on energy policy after Ed Miliband’s bombshell pledge to freeze gas and electricity prices.
The freeze, announced at the Labour conference last week, was condemned as “ill-thought out and irresponsible” by Michael Fallon, the energy and business minister. But the Tories are under pressure to come up with fresh solutions to mounting uncertainty as well as rising bills.