Constraints raising finance threaten C02 reduction

DIFFICULTY RAISING FINANCE is one of the main issues holding back carbon reduction, a Deloitte partner has said.

Andrew Kaye, an energy partner at Deloitte, was speaking at the renewables 2011 conference, when he claimed market failure was more pronounced in the green industry, which slowed investment in environmental technology.

He said that if the UK hopes to achieve its reduction target of 20% by 2020 from 1990 levels then the Green Investment Bank must be operational by 1 April 2012.

"There are several financing issues acting as constraints on the level and speed of low-carbon investment, in particular both corporate and bank balance capacity and risk appetite for some green technologies," he said.

"Market failure is more pronounced in green infrastructure because there is a need for significant upfront capital investment that is reliant on long-term government policy.

"The Green Investment Bank is one of a suite of measures aimed at addressing this market failure and will seek to bring forward and increase private sector investment into green projects through co-investing, co-lending and risk mitigation."

Another issue that Kaye said needed to be addressed is a reform of the electricity market to provide greater clarity over future energy tariffs.