Green energy investment failings have created 'carbon bubble'

Current investment into green energy schemes has fallen, despite the continued funds being pumped into fossil fuel projects, a new report has found. The government's low focus on fighting climate change has meant that investors are concerned about the returns of renewable energy investments, meaning that the UK is around £100 billion short of reaching its emissions targets for 2020.

The report from the Environmental Audit Committee has found that the UK's energy finances are well below the level required in order to successfully fall in line with environmental targets. Investment in renewable technologies, such as solar panels, wind turbines and wave energy, is around half what is needed to help with the world's target of keeping global temperatures at two degrees Celsius.

The report suggests that the failure to attract enough investment is due the government's inconsistent support of green initiatives and renewable energy development. Currently, investment is running at under half of the £200 billion that is required between 2010 and 2020 to successfully limit emissions. 

The EU has already launched legal proceedings against the UK for failing to adequately reduce emissions throughout the country. This shortage of investment poses further problems for achieving the rest of Britain's legally binding targets and helping to reduce the impact of climate change on a global scale.

According to the report, global political effort is also to blame for the UK's failing to attract investors for green projects. It says that investors have been able to overvalue companies that produce or use large amounts of fossil fuels, effectively creating a "carbon bubble".

Joan Walley, chair of the Environmental Audit Committee, said that the Bank of England needs monitor the risk that is posed to financial stability because of the creation of the carbon bubble. She has also called on the government to provide information to investors concerning their "carbon exposure".

"The government and Bank of England must not be complacent about the risks of carbon exposure in the world economy. Financial stability could be threatened if shares in fossil fuel companies turn out to be overvalued because the bulk of their oil, coal and gas reserves cannot be burnt without further destabilising the climate," she said.