After a long period of uncertainty, Europe's climate and energy future finally began to take shape last month. The European commission's proposals for the climate and energy policies that will guide Europe to 2030 had been long-awaited, not least by European investors, many of whom were increasingly concerned by the ongoing uncertainty.
This matters because private investment is critical to Europe's energy future.
With public budgets strained, policymakers are looking to private investors to finance European energy infrastructure. Many already have significant investments in European energy assets, but continued investment is far from assured.
A stable policy environment set for the long-term is crucial to enable forward planning for complex investments which can last for decades.
The impact on investment levels as a result of faltering policy is plain to see. According to Bloomberg New Energy Finance, global investment in clean energy fell again in 2013 to €185bn, some way short of the trillions needed to finance the transition to a low-carbon economy. And shrinking investment threatens to have serious consequences for Europe's energy security. New investment in low-carbon energy is needed to keep the lights on and meet climate targets.
So for investors, last month's proposals were a critical first step towards a policy environment which stimulates investment. The next step is for policymakers to show urgency and leadership.
The commission has proposed an emissions reduction target of 40 per cent, which the EU admits is the minimum needed to keep Europe on course for a low-carbon economy. Member states can agree this target as early as next month's European council meeting.
Acting with urgency will reassure investors and set a positive direction of travel. Europe should, however, be prepared to go beyond this and we support the calls for a higher target based on a global deal being agreed in Paris next year. A strong target would clearly signal Europe's commitment to a low-carbon future, galvanise international action and is in line with what the science says is needed to avoid dangerous climate change.
A key plank of the proposals is reform of the emissions trading scheme (ETS). [pullquote]A high and stable carbon price signal is essential because it enables investors to cost low-carbon investments over the long-term[/pullquote]. The commission's plans are a step in the right direction, but do not end the uncertainty.
There is some concern about what will happen when allowances which are temporarily withheld to boost the price come back on the market, with suggestions that the introduction of the proposed market stability reserve - which will regulate the number of allowances in circulation from 2021 - be brought forward to absorb any excess surplus.
Some have argued that the EU's climate and energy policies harm Europe's competitiveness, and a higher carbon price could force businesses to relocate. The issues here are complex.
As the international energy agency has said, competitiveness is not determined by a single factor such as the cost of carbon, but by a host of structural factors, including high natural gas prices and the cost of imported energy.
We take genuine 'carbon leakage' concerns seriously and protections that are fit for purpose are important. But these problems do not have a quick fix. As the world economic forum has said, a country's innovation environment, rather than its energy prices, is the most important indicator of competitiveness. And good climate policy can spur innovation.
Next month, European energy ministers and leaders meet to discuss these proposals. They should waste no time agreeing at least a 40 per cent emissions reduction target and moving reform of the ETS forward. A strong climate and energy framework is central to Europe's future competitiveness, not a drag on it.
Clear targets, long-term policies and a robust carbon price will stimulate the investment which guarantees the continent's energy security.
The institutional investors group on climate change represents 88 European investors worth a combined €7.5 trillion