It is a great pleasure to be here today for the opening of the Carbon Show, and to see such energy and enthusiasm on display.
Emissions trading is an economic curiosity. It is a negative market. For the first time in human history, we are trading in consequences.
That the carbon market exists – and is successful - is testament to just how far we’ve come.
The US National Air Pollution Control Administration first modelled cap-and-trade forty years ago. Ironically, we adopted the ETS to make it easier to sell it back to the US. You can’t win them all.
Over the next forty years, we must hasten our emissions reductions and build a new kind of economy.
Because the next global growth sector is green. Countries – and companies – who do not see the opportunities before them will be left behind.
At this point of the business cycle, people are asking where the jobs will come from.
The answer is here. In this room, today.
The promise of the low-carbon economy is breathtaking. In jobs, in goods and services, and in finance, green opportunities are not just emerging. They are blossoming.
From wind turbines to eco-kettles, low carbon products form a multi-trillion pound market, with growth that outstrips world GDP.
With a vibrant technology and research sector, the UK is well placed to take advantage of the new clean tech markets.
From offshore wind to carbon capture and storage, we are already leading the way.
If we can convert our scientific advantages into hard commercial successes, we can cut carbon and lock-in profits. Making us more secure at home, and more competitive abroad.
We can do our bit to help. The Government is committed to an ambitious programme to reduce emissions – and close the gap between energy supply and energy demand.
Our approach is based on three simple principles.
Firstly, we need to save energy.
Every day, the UK’s housing stock leaks heat – and carbon. Later this year we will launch the Green Deal, a radical scheme to bring our outdated homes up to scratch.
26 million households will qualify for energy efficiency improvements under the Green Deal. And the cost will be offset against future energy bills.
Thousands of jobs insulating homes and businesses will be created across the country, with ripple effects across supply chains and local economies.
A whole new industry will emerge, one that can claw back the ground lost during the recession. This multi-billion pound nationwide retrofit will save money – and energy.
Homes and businesses will make huge efficiency savings. But there is room for improvement in power-hungry industries, too. The CRC Energy Efficiency Scheme is already causing ripples in the sectors which use the most energy.
No-one, least of all this government, wants to burden businesses with extra responsibilities without clear benefit.
We will keep a close eye on the CRC. Making sure it is effective, simple and streamlined; encouraging those industries that need it most. If it can be improved, we will make changes before the next stage in 2013.
Secondly, we need to clean our supply of power.
The replacement of our outdated energy infrastructure, and the creation of new low-carbon power plants, will present real opportunities for British business.
With £200bn of capital needed over the next ten years, investors and manufacturers alike can benefit from the shift to low-carbon power generation.
Again, we will do our bit to help.
The Green Investment Bank will help us catalyse private sector finance, bringing forward a new generation of low-carbon energy production.
By leveraging private finance on behalf of public policy aims, we can spend a little to secure a lot.
The next generation of wind, wave, and waste energy help us get off the oil hook – and onto clean, green growth. So that by the end of this Parliament, we will be the fastest improving European nation when it comes to renewable energy.
Two weeks ago I launched the world’s largest offshore windfarm, at Thanet in Kent. It is a spectacular creation; 300 megawatts of capacity, bringing our offshore total to 5 gigawatts. Each of the 100 turbines is higher than Nelson’s column, and to my mind just as majestic. Within the next decade, industry is aiming for a tenfold increase in capacity.
Few sectors are comfortable making claims like that in the current climate. Even fewer would expect to honour them. But I expect they will.
The growth in renewable power generation and the replacement of our ageing energy infrastructure make a compelling case. Green growth is the best bet for our future prosperity.
It’s also best for the future of our planet. A third of UK emissions come from electricity generation. Conversion losses compound the problem. Burning fossil fuels isn’t just bad for the atmosphere, it’s also an inefficient way of transforming energy.
We need to get the right mix of technologies and energy sources, so that we play to our strengths.
That includes cleaning our existing fossil fuel plants. With strong emissions performance standards, and a commitment to carbon capture and storage pilots.
Some dismiss CCS as a sticking plaster solution to a critical situation. But until we can produce our electricity cleanly, we must minimise the damage done by dirty fuels.
With a new coal powered power plant switching on every week in China, our ability to develop and export CCS on a commercial scale makes environmental and business sense.
Finally, it’s vital that we set out a credible path towards a global emissions deal. That means working with our European partners in support of an ambitious international climate change agenda.
And that is why, together with my French and German colleagues, I have called for a more challenging EU emissions target: a 30% reduction by 2020.
A higher target will strengthen Europe’s intent. Aspiration is important; it tells investors that Europe’s future prosperity is tied to the low-carbon economy.
At the moment, the EU ETS carbon price is not high enough.
It does not provide the long-term certainty investors need to commit to low-carbon generation.
As we announced in the Budget, we will publish proposals this autumn to reform the climate change levy to secure a more effective, more representative carbon price.
That will consolidate our first mover advantage, and open up opportunities for British businesses.
The Coalition agreement is clear: we will seek an ambitious, legally binding global deal on emissions reductions.
Such a deal is unlikely this year. Instead, we will focus our energies on rebuilding political consensus; and getting the right structures in place before the next round of negotiations.
The first step will be to bring emissions offers made since Copenhagen into the UNFCCC process.
Then we can strengthen the measurement, reporting and verification system. So that developing and developed countries have faith that progress is measured fairly and firmly.
And finally, we can clarify the structure and governance of long-term climate finance.
These are practical, achievable steps we can take to firm up the international climate change negotiations, and prepare the ground for a global deal.
- Action on energy efficiency, to manage our demand.
- Action on energy generation, to clean our supply.
- And action on the international stage, to secure a binding legal deal to cut emissions.
- These are the three principles that underpin our approach.
- They will drive us toward a new, low-carbon economy.
- One that is more competitive, more secure, and more sustainable.
Thank you very much.
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