In a report published today, the cross-party environmental audit committee (EAC) — which examines the government's green policies — said that the fall in investment was "dramatic and worrying", and it questioned the UK’s ability to meet its legally-binding carbon reduction targets.
Last year’s 56% investment slump followed a 10% decline in 2016. Annual investment in clean energy is now at its lowest since 2008, the committee said.
It blamed changes to policy in 2015, including closing the renewables obligation to onshore wind a year earlier than planned, reducing feed-in-tariffs for small-scale renewable generation, cancelling the zero carbon homes policy due to come into force in 2016 and scrapping the £1 billion (€1.14 billion) carbon capture and storage competition.
These changes damaged investor confidence in low carbon projects, the MPs said.
The UK’s vote to leave the EU has also contributed, MPs found. The European Investment Bank (EIB) contributed €15.7 billion between 2006 and 2016, according to evidence provided to the committee by Treasury minister John Glen. In 2016, it invested €5.5 billion, but this collapsed to €1.9 billion in 2017.
The government’s sale of the Green Investment Bank also raised a question mark over future investment under its new ownership, MPs added.
"I acknowledge that there is work to be done in terms of overcoming the challenge of working out how we transition to the new environment," Glen said.
"The chancellor has been very clear about the possibility of seeing it as mutually beneficial to continue to have that relationship with the EIB, but it is not something I can categorically tell you the outcome of because it is part of the wider negotiations.
"We are aware of the actual sums of money involved and the need to have an appropriate alternative mechanism to invest should that be necessary at the end of the negotiation process," Glen added.
Mary Creagh, chair of the committee, said the government’s clean growth strategy did not contain enough detail on how investment for clean energy would be found, and the policies outlined were not enough to ensure the UK could meet its climate targets.
"The government must urgently plug this policy gap and publish its plan to secure the investment required to meet the UK’s climate change targets.
"It should provide greater clarity on how it intends to deliver the Clean Growth Strategy by the 2018 budget, and explore how a Sovereign Green Bond could kickstart its Clean Growth Strategy," she said.
Earlier this month, consultancy Ernst and Young ranked the UK as the seventh most attractive country in the world for investing in renewable energy, rising three places from last year. This was due to a rise in renewables being built without subsidies and repowering of old wind farms.