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This follows RWE npower's announcement this week that it is due to invest £800m in a new gas-fired power station, bringing the company's total investment in gas-fired and renewable generation in the UK to £1.7bn.  In addition, the majority of companies have adopted their own carbon reduction targets. This includes schemes like EDF Energy's Climate Commitment to reduce carbon intensity by 60% by 2020.

David Porter, Chief Executive of the Association of Electricity Producers, said:
"Electricity companies want to invest in new low-carbon generation. We estimate that they have to spend at least £20bn by 2020 to fill the gap left by closing nuclear and coal-fired power stations. The vast majority of this investment will be in gas-fired plant, renewables and clean coal, as well as nuclear power, if the outcome of the current consultation allows.

"For investors to make these huge commitments, it is vital that electricity production is profitable. It is also vital that the regulatory regime for reduction of carbon emissions is clear and stable, with the limits on emissions known well into the future. At the moment, allowances beyond 2012 are still not known. Europe's politicians need to get that sorted out. When allowances are agreed, then investors should have the confidence to put up the money that is needed to complete the transition to lower carbon electricity and maintain security of supply.

"The EU Emission Trading Scheme, which has been the subject of a lot of criticism, will start to become much stricter next year and the Government's own carbon emission targets will send a further signal that carbon budgets are tightening. Clear and enduring policy is needed to avoid a slowdown in the investment this country needs."

Investments of over £7bn in 15,000MW of capacity have been committed; a further 8,000MW of clean coal projects and a considerable amount of renewable energy generation are under consideration.

Targets not on Target

This announcement comes as a leaked Government report suggests that the United Kingdom will not be able to meet its renewable energy targets of 20% by 2020.  In the spring, the Government, along with other European countries, committed itself to a 20% renewable target by 2020.  Austria has already surpassed the target at 21% and Germany is well on its way at 13% and hopes to reach 27% by 2020.  Meanwhile the UK's renewable energy sources only account for 5% of all energy produced.

According to the leaked document, the best Britain can hope for is to raise the level of renewable energy generation to around 9% by the end of the target period. It suggested ministers should consider "what options there are for statistical interpretations of the target that would make it easier to achieve."

Robin Webster, Senior Climate Campaigner at Friends of the Earth, said:
"There is a complete lack of ambition to delivering on renewable energy targets. It would be laughable if it weren't so serious. This is a betrayal of the British people and a complete self-fulfilling prophecy. The renewable sector needs confidence in order to invest and develop and this is very undermining.

"The UK has the best wind and marine resources in Europe - a fantastic potential to produce renewable energy. We are a windy country surrounded by waves and tides. Gordon Brown must personally commit his Government to developing a major new renewables industry. He must back the EU 20% target and instruct his civil servants to find ways of meeting it, not ways of getting out of it. He must copy Germany's ambition and use of effective policies like feed-in tariffs which have so successfully increased the production of renewable power. And he must reaffirm the UK's commitment to show leadership on climate change by introducing a strong climate change bill."