Green investors breathed a sigh of relief after Britain cut clean energy funding by less than the average overall in its spending review, but many were still cautious about the country's low-carbon future.
Conservative finance minister George Osborne unveiled some 80 billion pounds ($126.3 billion) of cuts on Wednesday to reduce the budget deficit but committed over 3 billion pounds to green growth.
Overall spending on climate and the environment will fall by 5-8 percent, compared with overall spending cuts of around 20 percent over the next four years, HSBC analysts calculated.
The Green Investment Bank (GIB) and carbon capture and storage (CCS) were the hardest hit by the austerity measures, but businesses will also be surprised by changes to the corporate carbon trading scheme, the Carbon Reduction Commitment (CRC).
"The chancellor's statement leaves an air of uncertainty across a range of technologies, which will make investors wary until greater clarity is provided about which technologies will receive support," said Steve Lang, head of UK clean energy at Ernst & Young.
In its review, the government earmarked 1 billion pounds for the GIB, much less than the 4-6 billion experts say is necessary to help plug a 370 billion pound funding gap for a low-carbon economy.
It pledged a further 1 billion for just one commercial-scale CCS demonstration plant, out of a competition to fund four projects by 2020, just after E.ON pulled its facility from the competition.
