There is a “significant risk” that the UK’s progress on renewable energy generation will not be sustained, according to report out today.

Independent body The Committee on Climate Change has warned that “it is essential to provide more confidence to investors that the government is committed to sector decarbonisation”.

The warning comes in the CCC’s annual report to ministers, which states that while progress has been made on hitting emissions targets, more needs to be done to stay on track.

As well as boosting investor confidence in renewable energy, the CCC says the government must also focus more on carbon capture and storage and nuclear new build and put in place “arrangements to support ongoing investment programmes” for both technologies.

CCC chief executive David Kennedy said “there remains a very significant challenge” for the government to hit its own carbon targets – a 3 per cent drop in by 2018 – and he stressed that “action is required to develop and implement new policies. A failure to do this would raise the costs and risks associated with moving to a low-carbon economy.”

Greenhouse gas emissions in the UK increased by 3.5 per cent last year, due mainly to cold winter and a switch from gas to coal in power generation.

After taking these temporary effects into account, the CCC says emissions would have fallen by up to 1.5 per cent.

The report states that record levels of onshore and offshore wind generation capacity were added to the system in 2012, however it warns that “the slow movement of offshore wind projects into construction suggests that investments are now being delayed until implementing arrangements for Electricity Market Reform are finalised”.

The Electricity Market Reform is currently making its way through parliament via the government’s Energy Bill and is the biggest shake-up of the UK power sector in years. It will introduce contracts for difference – a price that the government agrees to pay power firms for the electricity that they generate. The price will differ for each technology, however no firm sum has yet been revealed for any form of power, which many in and out of the industry say is causing investors to stall investment in the UK.

The CCC report was welcomed by Rhian Kelly (pictured), director for business environment policy at the Confederation of British Industry, who said: “There’s no room for complacency if we are to make the move to a low-carbon economy.

 “The report shows just how urgently we need to get the Energy Bill on the statute books and see details of the Electricity Market Reform package.”

Charlotte Morton, chief executive of the Anaerobic Digestion and Biogas Association, said: “In difficult economic times, it’s the sustainable economy which is forging ahead: green businesses are outgrowing the rest of the economy and the anaerobic digestion industry alone grew by almost 50 per cent last year.

“Our industry is on the road to delivering the carbon savings and renewable energy which we need to meet our targets for 2020 and 2050.

“However, as the CCC’s report shows, there is still a huge amount to do to meet these ambitions. We need stronger co-ordination between departments to deliver policies which support our carbon and energy targets.”