Pension funds have warned ministers that watering down electric vehicle (EV) sales targets will damage investment in Britain, as the Government comes under pressure from carmakers to soften the regime.
Fund management chiefs are understood to have told the Government that rowing back on the flagship zero emission vehicle (ZEV) mandate will have a chilling effect on confidence, undermining support for a range of net zero infrastructure projects.
Investment giants including Macquarie, M&G, Aviva and Schroders have poured money into charging points in recent years on the basis that the mandate would help to drive takeup of EVs.
However, funds are now concerned that their investments will be undermined if the EV sales targets are relaxed. It follows reports that ministers are poised to relax the rules to ease pressure on carmakers.
A policy change would threaten future investments across a host of green technologies, insiders said, from wind and solar farms to carbon capture. Many are based on separate commitments from Sir Keir Starmer and Ed Miliband, the Energy Secretary, on these green technologies.
The ZEV mandate requires 22pc of carmakers' sales to be electric this year, rising to 28pc in 2025 and then gradually to 80pc by 2030.
Carmakers argue that the sales targets are too high and do not reflect the true level of demand among drivers. On Monday, Louise Haigh, the Transport Secretary, met with Nissan amid warnings that the targets must be changed to reflect "reality".
Ms Haigh will join Jonathan Reynolds, the Business Secretary, for a wider meeting with the auto industry on Wednesday that will also include EV leasing companies such as Octopus and charging providers such as Gridserve.
At that meeting, the Cabinet ministers will be warned that any backtracking risks alienating the massive investment funds that have backed charging companies and are still needed to invest in a plethora of other green projects.
James Alexander, chief executive of the UK Sustainable Investment and Finance Association, said investments in projects such as battery factories were "highly sensitive to the policy environment ... and can be easily jeopardised by sudden policy U-turns which move the goal posts".
He said: "The ZEV mandate currently underpins billions of investment in the UK's automotive sector. Multiple large pension funds have expressed their serious concern at the prospect of any rollback as investors need certainty, not shifting sands.
"We would urge the Department for Transport to protect investor confidence by holding firm."