I am of course aware that the Scottish Government have a great deal of involvement in energy policy, in particular through their renewables obligation certificates. If they want to, they have the levers to incentivise different energy development in Scotland. It is clear that some of the announcements—on feed-in tariffs, the renewables obligation and the climate change levy—and the quick succession in which they came created uncertainty among investors.
Another theme in the report was the lack of transparency around the decision-making process. What the Chair said about the sudden cancelation of the carbon capture and storage project came through very clearly. The manner in which the decision was taken caused concern among companies that had spent many months and years putting together their bids. I understand that the Government need to look at whether they are getting value for money for the taxpayer and whether they are delivering the necessary outcomes, but it is important that we have a clear policy direction. That came through in the investor confidence report.
I appreciate that there have been several reset speeches, but again we are now in a climate where the Brexit vote has happened, yet, judging by some of the quotes used, there has been a lack of long-term vision and concerns that there will be a policy cliff edge in 2020 unless we have clarity around the future of the levy control framework and carbon price floor beyond that year. In the short term, our dropping down the renewable energy country attractiveness index might in fact mask what is really happening. Pipeline projects are still coming through, so the real impact might only be felt in 10 years, when the successor projects to those part way through the process—the ones that have consent but are not built yet—are not there.
It is all change at the moment. Every Department will be looking at our European targets and at what we might do in the future as a nation, so it is really important that the Secretary of State confirm that her civil servants are looking at the direction of UK energy policy in the context of our leaving the EU and the risks for investment, particularly in renewables.
One other item that came through very strongly in our report was the risk premium for developers. It seems that some developers have very high risk premiums and are looking for returns of over 13% or 14%. They
cannot get that anywhere else in the market. It is very hard to find such high returns on other investments. I emphasise, however, that my poorest constituents—those least able to afford it—are paying for the green investment through the levy control framework.