LONDON

THE Government's energy policy and attempts to reduce carbon emissions by favouring wind power show "a lack of coherence in establishing priorities'', says a damning new report by Ernst & Young.

The report, UK's Future Generation Mix, to be published this week, also blasts the Government for a "lack of long-term clarity on key aspects of policy''. It identifies a "critical need for greater regulatory and policy certainty''.

The report concludes that the private sector, which will plough pounds 20bn into new plant over the next 15 years, will suffer a "deferral of the necessary investment or, at best, short-termism in the evaluation and choice of technology''.

The Government encourages the development of renewable energy through the "Renewable Obligation'' subsidy. This requires energy users to buy a certain quantity of their electricity from renewable sources. The scheme is thought to cost them an extra pounds 300m each year. Ernst & Young argues that the scheme promotes certain renewables, particularly wind power. However, the report claims that this has been detrimental to other technologies, such as "clean coal'' and nuclear power.

Michael Cupit, an energy partner at Ernst & Young and author of the report, said the US has pledged $1bn over the next four years to develop "clean coal'' technology to cut emissions from coal-fired plants. The UK has spent just pounds 13m over the past six years on this technology.

The report says: "The present arrangements, to subsidise heavily a single way of reducing carbon emissions, do no favours to the environment, to security or to the economy, and should be reviewed.''

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