Heads of major UK companies join calls for the government to introduce a target to cut power sector emissions by 2030
The heads of major UK companies joined calls on Monday for the government to bring in a target to slash emissions from the power sector by 2030.
In a letter to the prime minister, the companies criticised the split in the government over the future of energy supplies, including possible questions over the UK’s commitment to its targets to tackle climate change.
The uncertainty over the government’s plans was paralysing investment and undermining growth prospects in the country, they warned.
The government’s advisers on climate change have called on ministers to introduce a target to decarbonise the energy sector by 2030, so emissions are just a fraction of current levels, to drive investment in low-carbon infrastructure.
But while the Liberal Democrat energy secretary, Ed Davey, has indicated support for a low-carbon target, backed by a range of environmental groups and businesses, the Treasury has been pushing an agenda to promote new gas supplies.
The heads of Unilever, Doosan Power Systems, Anglian Water, Philips Electronics UK, B&Q owner Kingfisher, EDF Energy, Johnson Matthey and Heathrow airport have now joined the calls for a target to be introduced.
The members of the Prince Of Wales’s Corporate Leaders Group on Climate Change warned: “Attempts to set a strong economy at odds with effective policies on climate change are self-defeating.
“The only successful long-term plan to grow the UK economy will be one which takes account of climate change, both to reduce the risk of a changing climate to business and to support access for British business to the rapidly growing global market for low carbon goods and services.”
A low-carbon signal to investors is needed, they warned, and so an indicative emissions target should be introduced through secondary legislation to set the level of ambition for reducing greenhouse gases from the power sector.
They also said the government needs to be be very clear on how low carbon investment will be delivered in a cost-effective manner.
“This includes looking at the right incentives to support development of less mature low-carbon technologies and ensuring competitiveness impacts will be addressed, especially by securing comparable EU targets for 2030.”
The letter is being sent ahead of an expected meeting to discuss the issue of the prime minister, David Cameron, the deputy prime minister, Nick Clegg, the chancellor, George Osborne, Davey and the chief secretary to the Treasury, Danny Alexander.
The letter follows a similar one last week calling for a decarbonisation target, signed by an usual coalition of the trade bodies representing the renewable energy, nuclear power.
As political turmoil continues in the eurozone and solutions fail to materialise, the wait-and-see brigade are setting the pace
In what is starting to become an increasingly regular pattern, the markets spent the first half of the week soaring on high hopes of solid political solutions, only to fall back to its default position of caution when none was forthcoming.
The FTSE had a short week, meaning it had a lot of catching up to do, which it did with aplomb, jumping more than 2% on Wednesday – the biggest one-day rise of the year.
Excitement grew that the Spanish banking crisis could see a resolution, the Bank of England or US Fed would introduce more quantitative easing, and the eurozone interest rates would be cut.
In the end none of the above occurred and the markets had to make do with the wait-and-see brigade maintaining its all too familiar pace, sending the FTSE, French CAC, German DAX and Italian FTSE MIB closing lower.
The FTSE 100 was boosted initially by strong rises from the mining companies, especially after raw material lover China cut its interest rates, spurring hopes for more spending.
But by yesterday realisation dawned that China may be in trouble if it has to cut rates for the first time since 2008, marking Vedanta, down 50p, 5%, to 933.5p, Rio Tinto, down 146p, 4.8%, to £33.39 and Eurasian down 17.4p, 3.9%, to 424.3p, the biggest fallers.
Catalytic converter makers Johnson Matthey provided some much needed cheer to investors, reporting better than expected results and announcing a 100p a share special dividend – the first in its nearly 200-year history. Bosses also increased the final dividend by 20% to 55p, leaving shares closing up 196p on the week at £23.03.
Royal Bank of Scotland’s shares closed up 20p on the week at 220p, in its first few days of trading following a stock consolidation. The bank swapped one new share for 10 old ones to make the share price look more at home in the FTSE 100 and avoid the volatility that comes from what was starting to look like a penny share company.
It seems to be working, but the target price for the taxpayer to break even on their 84% investment now looks even further away at 500p instead of 50p at the old price.
Security group G4S held its annual meeting in secret this week amid protests at some of their practices, with some believing the board could be the next for the Shareholder Spring.
In the end the G4S board managed to control its shareholders, suffering the most minor of rebellions.
More troubling times were felt at pan-European publisher Mecom, which announced its second profit warning in as many months, sending shares down nearly 50%, closing at 75.5p. They had been as high as 230p in January.
Non-executive director Michael Hutchinson attempted to reassure the market, buying shares worth nearly £30,000. Unfortunately, none of the executive directors followed suit.
This week saw confirmation that hedge fund operator Man Group will be dumped from the FTSE 100 on 18 June and replaced by engineers Babcock in a reversal of the old adage: “Out with the old, in with the new”.
It wasn’t all bad news for Man, closing the week at 78.5p, getting an upgrade to “buy” from Citigroup. However, the reasoning from analyst Haley Tam was a back-handed compliment, suggesting “performance cannot get sustainably worse from here”.