China lower risk than UK for green investors, claims Deutsche Bank

Study condemning UK energy strategy set to embarrass government as it prepares to unveil new climate change initiative
Terry Macalister
The Observer, Sunday 8 November 2009
Britain's claim to be a world leader in green energy investment has been called into question by an authoritative new study that will embarrass ministers as they prepare to launch an important climate change initiative tomorrow.
A report from Deutsche Bank says that the UK does not have the right climate change strategy to attract international investment and is lagging behind other countries, such as Germany, France and China.
Britain's energy strategy lacks the level of transparency and certainty required to encourage investment, according to Deutsche Bank's study on the best places to do business. It comes as ministers prepare to launch six draft national policy statements on energy and climate change policies tomorrow.
"What investors want is transparency, longevity and certainty – TLC – in policy regimes to mobilise capital," said Kevin Parker, global head of Deutsche Bank's asset management division, which is based in New York.
"Many major emitters such as the US and the UK do not have enough TLC in their policy frameworks. Our rankings show that China has a lower risk for climate change investors, as does Germany, but the research also shows that in order to avoid catastrophic climate change, they have demonstrated their ability to deliver scale."
The Department of Energy and Climate Change said its host of new initiatives to streamline planning and ensure the building of new infrastructure, such as clean coal plants, is proof of its positive commitment to moving to a low-carbon economy.
"You will have seen [from] the recent announcement from RWE and E.ON about spending £15bn and creating thousands of jobs here in new nuclear plants that investment does seem to be coming," said a DECC spokesman.
But Deutsche Bank says Japan and Australia are among the countries that represent lower risk profiles than the UK because they have more comprehensive and integrated government plans.
Parker and his colleagues are particularly keen on feed-in tariffs – which pay consumers to generate their own electricity and sell it back to the grid – to encourage green power, which have been very successfully used in Germany. Britain was originally opposed to this kind of incentive but has recently accepted that they should be introduced, although, crucially, ministers have yet to indicate what price utilities will pay to those consumers who generate their own power.
Deutsche Bank claims that the UK has attracted $17bn (£10bn) in capital investment as a result of climate change policies, compared to $36bn in Germany and $41bn in China. It admits the UK figure is still "substantial" but largely puts this down to the fact that the City is a major centre for the capital markets.
The national policy documents the government will unveil tomorrow will cover energy sectors including gas, the electricity grid and, in particular, nuclear. The nuclear document will give detailed analysis of the 11 sites put forward by developers for new plants and give initial verdicts on their suitability.
Those areas are expected to include those nominated already by EDF and RWE, such as Sizewell in Suffolk and Wylfa on the Isle of Anglesey..
Ed Miliband, the energy secretary, is also expected to give a draft "justification" statement explaining there is a national need for new nuclear stations.