Energy investment in the UK is at a 20-year high, but could slow down without greater policy certainty, an industry-backed report has warned.

The study Powering the UK by accountants Ernst & Young for trade body Energy UK found that energy firms have invested £43 billion (US$69 billion) in the UK over the past four years, creating 54,000 direct jobs in the process.

And it predicted this trend would continue, with the total investment between 2010 and 2012 set to reach £30 billion by the end of this year and another £25 billion to £30 billion in the pipeline up until 2015.

Much of the investment has been driven by the need to replace aging power plants and increase renewable energy capacity as the UK seeks to meet its 2020 carbon reduction target, the report added.

But it also warned that ongoing sluggishness in the economy and policy uncertainty were now slowing down decision making and delaying new projects.

Based on interviews with stakeholders from energy companies, the report said the UK’s energy investment framework looked less attractive

Among the reasons for this, the report cited the eurozone crisis and growing investor uncertainty over the future direction and pace of change of UK energy policy.

Energy UK Chief Executive Angela Knight said: “There are challenges ahead and, worryingly, the investment climate is becoming more uncertain.

“The UK needs to move swiftly to give certainty to the industry and its investors by putting in place the right policies and the right regulations in place to ensure that the investment that is needed in new power generation and in the transmission network goes ahead.”

Tony Young, Head of Ernst & Young’s Energy Team, added: “This investment momentum has been the result of trust engendered by the historically clear path in energy policy. However the transition to a low-carbon economy, and the further acceleration of investment, means more needs to be done – and we are not presently on track.”