EU power sector facing €1-trillion shortfall: Lords committee

The House of Lords, which conducted an eight-month inquiry into the EU power sector, says a muddled energy policy was putting off big investors and has led to the sector facing a "trillion-dollar shortfall".

Investments totaling £846 billion were required by the  the end of the decade if the EU was to stave off an energy crisis.

Additionally, it pointed out there needed to be greater support for Europe's Emissions Trading System (ETS).

The Lords EU sub-committee on agriculture, fisheries, environment and energy gathered evidence from across several parties including the EC, power companies and environmental campaigners.

According to the report, there was an urgent need for investment in low carbon, interconnected and innovative energy systems. The committee agreed with the EC estimate that to ensure supply of green and cheap energy by 2020, a trillion euros would need to be spent on infrastructure.

The Lords said the money was there from institutional investors for the energy projects, but the lack of a clear policy about how to deliver secure and affordable power was holding them back.

According to the Lords there was sufficient money held by institutional investors to deliver the infrastructure required for Europe's future power needs.

However, it added, in the absence of a clear policy from the EU and member states, this was being held back.

The committe called for the establishment of a greenhouse gas reduction target of 40 per cent as against 1990 levels, rising to 80 per cent by 2050.

The report notes, such investment would help to deliver secure and low carbon energy, boost European economic growth, and stabilise household and industrial costs.

Noting that the value of energy companies had slumped since 2008, the public purse was severely constrained, however more than enough money was around with the investment community.

The peer warned that no country was an energy island meaning that the EU policy was particularly important and that the Union needed to show leadership and direction.