The amendment, which would have mandated power generators to use renewable energy and carbon capture to lower their carbon emissions, was defeated by 23 votes although the government still has the power to introduce a target in 2016.
Despite disappointment from green campaigners and the renewables sector over the lack of a legally binding target, energy secretary Ed Davey remained confident that the bill would stimulate multi-billion pound investment in clean energy infrastructure.
“The positive vote for the Energy Bill is one of the biggest majorities this government has seen,” he said.
“This overwhelming majority is great news as the Bill now makes its way through the House of Lords. A clear message has been sent to investors that we are providing the security they need to work with us to revolutionise the energy sector and produce cleaner energy, keep the lights on and people’s bills down.”
He added that the government were still looking to urge EU member states to adopt a 2030 carbon reduction target of 40 per cent on 1990 levels, as an alternative to legally-binding renewable technology quotas.
REA chief executive, Gaynor Hartnell, said that the vote against inserting a decarbonisation target into the Energy Bill was counter productive.
She added: “It makes an EU-level renewables target for 2030 even more important, something the ‘greenest government ever’ is also opposing in Europe. Failing to decarbonise our electricity supply industry will have long term consequences both environmentally and economically. The government’s own advisors, the Committee on Climate Change, state that relying on gas will only save the country money in a scenario of low gas prices, whereas switching to renewables would save the country £25 to 45 billion by the 2020s.”
Mark Kenber, ceo of The Climate Group, added: “Today’s debate and the vote on the Energy Bill’s decarbonisation target has ended in utter disappointment.
“The UK has missed the opportunity to send a signal across the globe to low carbon industry that we are open for their business and investment.
“The UK has been an important location for investment in the green economy and we are fortunate to have world leaders in offshore wind, marine technology, low carbon financing and engineering on our shores. The lack of a decarbonisation target means we are a step closer to losing these talented entrepreneurs, and the socio-economic benefits they bring, to more supportive nations.
“Allowing high carbon energy generation and excluding low and no-carbon sources is a fundamental mistake, we are squandering the value we have already created and it will lock the UK into a high carbon pathway which will make it much more expensive for us to meet our domestic and international climate change obligations.”