After eight months of study and hearing testimony, the House of Lords' EU Subcommittee for Agriculture, Fisheries, Environment and Energy last week released a report that sharply criticized the European Union and its member states for missing a golden opportunity to lure investors into green energy sector.
Member states' failure to quickly adopt binding 2030 targets for greenhouse gas emission reductions and the introduction of renewable sources into the energy mix is forcing institutional investors who have plenty of capital to deploy to instead sit on sidelines, the report said.
Meanwhile, the $1.3 trillion needed by 2020 to update the European Union's energy system is largely going unfunded in a "crisis of investment," committee Chairman Patrick Carter wrote.
"It is clear to us that investment is urgently required, notably in a low carbon, interconnected and innovative energy system, that makes us less reliant on imports of highly volatile and dirty fossil fuels," he said.
"Such investment would help to deliver secure and low carbon energy, boost European economic growth and stabilize household and industrial costs."
More than enough private funding to transform Europe's energy infrastructure and mix is available despite the slumping value of energy companies since 2008 and the constraints on public spending caused by the European sovereign debt crisis, the Lords' committee said.
"This should be a great time to invest in long term assets, such as energy, but clear policy is needed in order to release it," Carter said. "No country is an energy island, so EU policy is particularly important.
"We need leadership and direction from the EU and its member states in developing and agreeing an energy policy framework through to 2030."
The European Commission in March issued a "green paper" formally opening debate on setting new post-2020 targets, citing the need to provide certainty for investors in alternative energy projects by 2015.
Irish Energy Minister Pat Rabbitte, who has the rotating EU Energy Council presidency, said last month that while significant national differences remain on what form they should take, a broad consensus exists on the need for a new set of climate change targets after the current binding framework expires in 2020.
But many EU members, such as Britain, are hesitant to set binding targets for the introduction of wind, solar and other renewables into the energy mix, citing high energy costs that could harm Europe's industrial competitiveness, especially in light of the development of cheap shale natural gas in the United States.
The House of Lords' report nonetheless urged that a firm target for the percentage of renewables be adopted, saying the affect of the introduction of renewables on retail energy bills is "uncertain."
"Ultimately, retail bills ... depend on a combination of taxation, energy efficiency, and, most significantly, potentially volatile energy costs driven by business cycles and uncertainty," the report said.
Long-term bills are more likely to increase, it said, "if delays in developing a clear policy framework fail to ensure adequate and timely investment," something that needs to be "clearly conveyed" to energy consumers by EU governments.