Good morning. In making this speech I am delighted to be sharing a platform with two such climate and development luminaries as Nick and Simon.
Nick is surely one of the UK’s best-known and most respected authorities on these issues and I am extremely grateful to him for making time in his busy day to be with us here today.
And of course, I must also pay tribute to Simon who, in his imitable and ever-opportunistic manner has been encouraging me to give this speech almost since the day I became Secretary of State for International Development. We are lucky to have someone of your intellect - and enthusiasm - chairing the Climate Development Knowledge Network and I am grateful for all that you do to further our understanding of this subject.
The more observant of you may have spotted that by dint of careful planning we find ourselves in the Prince of Wales Suite. His Royal Highness has supported the cause of forests and we should acknowledge his contribution today. And on the subject of our location, I must also thank the British Council for hosting this event - I know that climate change is high on their agenda.
Ladies and Gentlemen, I want this morning to lay before you three arguments:
- First, that while climate change is undoubtedly a massive threat to poor countries it also presents real opportunities
- Second, that in climate change, the world has a real chance to take a new approach to solving global problems and seizing global opportunities
- Third, and most importantly, that we must get on with it. Whilst we work tirelessly towards a global deal we must not be paralysed into inaction on the ground. Helping developing countries adapt to the impacts of climate change - and to grow in a low-carbon way - will not only save lives but will also build the very confidence that can make a deal a reality.
Consensus on the Case
I don’t intend this morning to dwell on the science behind climate change. Those arguments have already been well-made by the Royal Society and many others.
Despite these arguments there will always be those who remain un-persuaded of the science. Not least, because this is an issue of probability and risk. But I don’t believe it’s the job of politicians or policy makers to second-guess scientists. As others before me have said, if 99 out of a 100 doctors tell you your child has measles, you don’t wait for the hundredth to change their mind before doing something about it.
The private sector certainly isn’t waiting around. Decisions are being made every day on where to locate, on investments and on insurance premiums. These decisions are based on the business reality of climate change. HSBC, in launching its Climate Change Fund said that it saw climate change as one of the biggest investment themes for the foreseeable future.
The sad truth, well-known to this audience, is that the poorest people in the poorest countries are already suffering from climate change - and are suffering the most. Tragically, they will suffer even more in the future. Left unchecked, climate change will cruelly impede our progress towards meeting the Millennium Development Goals - disproportionately so in the case of women - and will jeopardise our existing gains.
Add to this, massive population shifts, severely depleted resources and the consequent tensions and grievances that can so easily lead to unrest - and the picture is not a bright one. At a time when this Coalition Government has proudly led the world in being the first G20 country to live up to its commitment to spend 0.7 per cent of GNI as aid from 2013, we are in danger of turning on the tap with one hand while removing the plug with the other.
Yet, there is a solution. It is possible to tackle climate change while also addressing development. It’s just that it’s a different sort of development, one that marries good development outcomes with low-carbon, climate-resilient growth.
Climate change as an opportunity for developing countries
This brings me to my first argument. We should in no way underestimate the havoc and destruction that can come from climate change. But I think the time has come to recognise first that if we act now we can manage, or even avoid, the most severe impacts. And second that tackling climate change now is not only cheaper than dealing with its impacts, but actually opens up huge opportunities.
Yes, the challenge is great. Current projections show that without action, the population will grow to 9 billion by 2050. To avoid catastrophic climate change we need to reduce average emissions to less than 2 tonnes per head. That’s less than a tenth of what some rich countries emit today.
But there are things we can do now that will make a real difference and do not cost the earth. We could cut carbon emissions by 2020 by as much as a third simply by avoiding unnecessary deforestation. And more than 70 per cent of the energy-related emissions savings we need to make in the next ten years could come from using energy more efficiently - saving money in the process. Admittedly, achieving substantial cuts in other areas will be tougher, but the technologies exist to help us deal with it - provided we work together.
Of course, we have to face facts. The carbon that is already in the atmosphere means that adaptation presents a far tougher challenge, bigger than any we’ve seen before. And there are some areas where no amount of action on our part will save us from the deepest impacts. The risk to small islands, for example, is immense.
Waiting around to tackle climate change, however, will be both expensive and painful. On Nick’s figures, action today will cost us 2 per cent of global GDP a year. Now, no-one is suggesting that this isn’t a huge sum but contrast it with the 20% of GDP that our inaction could cost us in years to come. And Nick has said that the Stern Review may even have under-estimated those costs. We must summon the political will to act now rather than leaving our children and grandchildren to pick up the bill - a much bigger bill - later.
The challenge we face in international development is this. Can countries continue to grow and prosper in a way which uses energy and resources in a different way? Can energy be used more sparingly? Can cleaner ways be found to generate it? Can agricultural techniques, building designs, social support systems, insurance packages - be developed to help the world’s poorest people cope with more extreme weather and natural disasters? Can governments develop the incentives that could unleash the transformative power of the private sector?
This should be the most inspiring, exciting and overwhelming series of challenges to today’s generation of bright, young people. As well as to wise, experienced, older hands. We are at the threshold of nothing less than a new industrial, agricultural and technological revolution.
We know from previous industrial revolutions, that investment flows to where the leadership is. Whichever country seizes the opportunity presented by low-carbon growth, will reap the economic reward. The same is no less true of companies and citizens.
Our Coalition Government has been alive to this from day one. Our spending review was the greenest ever. We are positioning the UK to be a world leader in off-shore wind. And, together with Norway, the United States, Australia and China, we are investing in carbon capture and storage. On the global stage, the UK has led the way by committing to cut emissions by 80 per cent by 2050.
But crucially, there’s a massive opportunity here for developing countries too, an opportunity that will help them to pull in low-carbon investment, placing them firmly on the front foot. Some are already acting. Costa Rica has led the world in making forests worth more alive than dead. Brazil is now attempting to do this on a massive scale, using satellite technology to track progress. Ethiopia has pledged zero net carbon emissions by 2025. The Maldives aims to be carbon-neutral by the end of the decade.
Then there’s the immense potential of natural resources - sun, wind, rivers, tides - that developing countries often possess in abundance. By exploiting these resources, they can sell carbon credits and develop exciting new technologies. Imagine North African countries exporting solar power to Europe. Or those with significant hydropower - from Nepal to Mozambique - exporting to neighbouring countries such as India and South Africa.
Or take adaptation, where early action is not only cheaper but also opens up yet more opportunities. Let me give you a couple of examples. Vietnam saved over £4 million a year on maintaining its dykes simply by planting 12,000 hectares of mangrove forest. The cost? Less than a £1 million. Some developing countries are currently replanting their mangroves to protect themselves from tsunamis - and in so doing are supporting biodiversity and fish nurseries. In Bangladesh, poor farmers are using “scuba rice” which can survive underwater for up to two weeks. In Sub-Saharan Africa, some countries are developing new agricultural techniques, including drip irrigation and low-till planting, to save water and reduce emissions.
Of course, just because opportunities exist, it doesn’t automatically follow that developing countries will be able to exploit them. I will return to this theme later by suggesting ways in which richer countries can help them to do so.
Tackling climate change presents a chance to work in a new way globally
I come now to my second argument: that this vision of a new revolution will not - cannot - be achieved without global leadership and co-operation. Companies and citizens can only do so much on their own. Ultimately, they need a stronger, more long-term signal from their government. In turn, governments find it hard to show that vision, unless they see other governments making matching commitments.
I won’t dwell here on the fact that we need an ambitious, fair and effective global deal. Or on what we expect from Cancun. Chris Huhne, my colleague, spoke on this eloquently, only yesterday.
I must however, take a moment to highlight those elements of that deal which will make it truly fair for developing countries. It is a blatant injustice that those who have contributed the least to climate change will be affected the most.
A deal must be ambitious enough to keep the world’s temperature below a 2 degree rise, with effort fairly shared out. Those who are historically the highest emitters must do the most and the newly-high emitters the next most.
A deal should build trust by including commitments to be transparent. We need to be able to hold each other to account, not only for emissions reductions, but also for the finance we provide. The UK is leading the way on transparency and has promised to report openly on our Fast Start commitments. In common with other EU states we have already provided the latest information online. The Government’s UK Aid Transparency Guarantee was a testament to our determination to be open and transparent about how we spend taxpayers’ money and we are abiding by that promise.
A deal must include sufficient finance to support developing countries on a low-carbon and climate-resilient development path. Through the Copenhagen Accord, richer countries committed to securing 100 billion dollars a year from 2020, from public and private sources. Now the Advisory Group on Climate Finance has shown that this target, while challenging, is achievable. Indeed, it suggests that developed countries could collectively mobilise some 50 billion dollars - or even more - from new public sources. It goes on to say that private finance could take us considerably beyond this sum. And let me make clear that I hope we can make progress at Cancun towards establishing the Green Fund that was called for in the Copenhagen Accord.
Carbon markets are a key piece of the financing jigsaw and another area where leadership is needed. To create viable markets, we first need developed countries to sign up to ambitious emissions reductions targets. The UK is pushing for the higher cut in EU-wide emissions of 30 per cent by 2020. Tough targets will help set a carbon price that is sufficiently high and stable - the AGF talks about 20 to 25 US dollars per tonne - to create incentives for innovators and investors to develop low-carbon solutions. But, ladies and gentlemen, we want carbon markets to be really effective. We need to reform the way the market works. In particular, this must include improving access for poorer, developing countries so that it is not just the more advanced countries that are able to benefit from carbon market finance.
If we are to achieve a fair global deal, if we are to succeed in opening up the carbon markets, indeed, if we are to make any real progress on climate change - we have to accept that the old style of bargaining won’t work any more. The days of the zero-sum game must come to an end. It’s simply not good enough for countries to talk to each other only when the spotlight of the world’s press is on them. We need the quiet diplomacy as well, the diplomacy that builds relationships rather than tests them. And we need new relationships, with new partners as well as old friends.
We also need a more even playing field. Michael Howard called for this some years ago in the context of trade negotiations. I think we should do the same for climate change. So today, I would like to announce our support for a Climate Advocacy Fund. The Fund will provide access to legal, technical and logistical support to the poorest and most vulnerable countries - countries whose full participation is essential if we are to achieve an equitable deal. I hope this will provide valuable help to those countries that have previously suffered such an unfair disadvantage.
We will also strengthen our relationships with emerging economies. Under the Foreign Secretary’s leadership, Coalition Cabinet colleagues will develop a more strategic approach to these partnerships. Within DFID, I intend to set up a Partnership Secretariat that can build common cause with key emerging economies on global justice issues, including climate change. It’s worth remembering, that leadership needn’t come from the richest countries. China long ago recognised the potential of green growth and is now showing others the way.
Then there’s the wide range of progressive and vulnerable countries from the Maldives to Mexico and Malaysia, from Bangladesh to Brazil and Burkina Faso. Yes, we may have to find new ways of working - we have no template - but we will find an approach that works. And in this new era, that approach will include networks of civil society, alliances working across borders, the private sector not just governments. And let me say here and now - we will use the tremendous network that is the Commonwealth. We all have a mutual interest in securing an ambitious, fair and effective deal.
If we do all this, if we embrace new ways of working together in order to solve this most global of global problems - then we will be in a good place to tackle food security, water security or whatever other shared challenges may lie ahead.
Action on the ground
I come now to my third and final point. It’s essentially a very practical point about action on the ground. It is here that we need to roll up our sleeves in three key areas: adaptation, low-carbon development and forests. By building confidence in our ability to respond to these difficult issues, we will also help to lay the foundations for a deal on climate change.
Making sure that development is climate-resilient and that developing countries are equipped to adapt to the inevitable consequences of climate change is central to everything we do. After all, adaptation is simply development in a harsher context. That’s why Chris Huhne and I believe that a substantial amount of climate finance should be spent on adaptation. There’s absolutely no reason why we can’t make progress on adaptation before a global deal is done.
We’re already discovering what works and what doesn’t. In Malawi, we are helping farmers to withstand extreme climatic events by investing in drought-resistant crops. In Bangladesh we have made it possible for some 90,000 homes to be raised on earth platforms in order to protect half a million families and their livestock from seasonal Monsoon floods. We will need to strengthen our support for Disaster Risk Reduction, an approach which we know delivers results and value for money.
Getting on with the job also means being prepared to learn and to take risks. That’s why it’s so important that we develop a strong evaluation framework to measure the success of our investment.
On low-carbon development, we will give greater emphasis to partnering developing countries to help them attract private investment, a subject upon which I touched in my wealth creation speech at the London School of Economics last month. We will pioneer innovative approaches, working with the City, the multilateral development banks and with individual companies. But we should never ask developing countries to sacrifice short-term growth in the interests of making that growth green. Instead, we will support the investments that deliver green growth for those who need it.
We want to stimulate investment in the renewable technologies that can be life-changers for the world’s poorest people. We have had some small-scale successes in the past. The Lighting Africa programme has helped six private companies and social entrepreneurs to develop solar-powered LED lighting products for the African market. These sell for as little as £15 each and could be sold even more cheaply if carbon finance were available.
We want to build on examples like the Lighting Africa programme to promote the kind of creativity that public money is uniquely-placed to stimulate. As I speak, there are one and a half billion people across our world who lack any means of accessing energy. We can make it possible for them to get new forms of energy in new ways, freeing them from dependence on governments and on monopolies.
We will also explore how innovation prizes might be used to reward fresh thinking on inclusive technologies, working alongside the X-Prize Foundation and others with experience in this field. We will support Climate Innovation Centres in countries such as India and Kenya, so that local entrepreneurs can turn ideas and technologies into viable businesses.
I want CDC, the UK-owned development finance corporation, to start investing more of its assets in innovative projects, taking risks and delivering real and sustainable benefits for the world’s poorest people. We are currently consulting on how this might be achieved and I don’t think it’s unreasonable to assume that climate-related initiatives could feature in its portfolio. I will also urge the Multilateral Development Banks to do even more to support a shift to climate-smart investment and lending. Alongside this I will expect the substantial resources we have provided through the Climate Investment Funds to deliver transformational change. These promise impressive results.
We’re also working on two new public-private partnerships that will target low-carbon and adaptation investments in Asia and large-scale renewable energy in Africa. They will use public money to leverage private finance and direct it to where it is most needed, securing up to £9 of private investment for every £1 of public money spent.
If successful, the Asian initiative could, over 25 years, create up to 5 gigawatts of new renewable energy, generating massive opportunities, including 60,000 jobs, and removing 150 millions tonnes of CO2. In Africa, we are exploring a cash-on-delivery mechanism with a view to delivering enough electricity for over 4 million rural households, avoiding emissions of up to 900,000 tonnes a year. We hope to launch these partnerships next year.
Meanwhile, the Government’s Capital Markets Climate Initiative is bringing key players from the City of London together with financiers and policy-makers from across the world. And where better to site a global hub for green finance than in the Square Mile, a centre of global trade since Roman times? There are massive opportunities here for British businesses to show the entrepreneurial flair of which we are so justly proud.
The Coalition Government is committed to ensuring that UK Trade and Investment and the Export Credits Guarantee Department become champions for British companies that develop and export innovative green technologies around the world, instead of supporting investment in dirty fossil-fuel energy production.
Finally, I want to say something about forests. Time and again, I have been struck by how much potential there is here. In Nepal, British aid is helping more than half a million households to make a living from the local forests. In just five years, this has contributed to an increase in the average household income of some 60 per cent as well as helping to save an estimated 1.2 million tonnes of carbon a year.
As the Environment Secretary said when she helped to secure a deal at Nagoya, reducing deforestation can also increase biodiversity, protecting fragile habitats and endangered species. It is also a large and relatively low-cost part of the solution to climate change, representing 17 per cent of emissions but, at around four dollars per tonne, the low-hanging fruit in terms of the difference we can make.
We want to agree urgent on-the-ground action here too. 1.2 billion people depend on forests for their livelihoods. We already have a good model emerging, in the REDD+ Partnership which is currently being pioneered in Brazil and in some other Rainforest Nations. Through REDD+ - REDD stands for Reducing Emissions from Deforestation and Forest Degredation - you can see why we use the acronym - through REDD+ we help countries to lay the foundation for a system that rewards forest-managers for keeping trees standing.
The action we want to agree might focus on helping developing countries to reach agreement on land rights or to improve controls over illegal logging. Or it might be about the development of crucial monitoring systems. Once these blocks are in place, public funding can leverage the private finance that enables countries to offer a set price for every tonne of avoided deforestation. At the same time, we are therefore helping to facilitate the longer-term entry of forests into the carbon market.
Last but not least, the Coalition Government has an important job ahead of it, in giving force to the new EU Legislation - which came into being very recently - and which seeks to prevent the import of illegally-logged timber. By working with the private sector and with those governments that play by the rules - in other words those paying taxes on legal timber - we’ll be able to weed out those employing dodgy and damaging practices. It also means that we can help cash-starved developing country exchequers to collect the taxes that are due to them. Over the last ten years alone, our efforts have brought in some 6.5 billion US dollars. We will ensure that the UK is in the vanguard of this effort. We will press others to follow our lead and we will explore how we can extend this approach to palm oil and agricultural techniques.
Viewed from the perspective of poor countries, the distinction between adaptation and low carbon development interventions is ultimately meaningless. As we look ahead, our role - in partnership with developing countries - must be to find a solution that tackles the challenge of climate change, while meeting development goals and facilitating long-term growth. CDKN calls this climate-compatible development. We saw this inter-relationship neatly captured in the Nepal example where one really good plan managed to cut emissions, give people a living and promote long-term economic growth.
We need more of these solutions, solutions that work today but that will last beyond tomorrow. It’s not beyond our wit to do this and I firmly believe that the UK, with its very public commitment to development and climate change, is well-placed to lead the way.
To achieve those solutions we will need to demonstrate strong leadership at a global level while also taking a climate-smart approach to development.
We have already shown the strongest of leadership on finance. The Coalition’s commitment, even in the face of great financial hardship, to spend 0.7% of national income as ODA from 2013, has enabled us to create an unprecedented £2.9 billion International Climate Fund that will not only meet our Fast Start pledge but will enable us to ramp up our funding up to 2015.
This position gives us the credibility to: press other donors to meet their own 0.7% commitments; to press them to make more resources available for tackling climate change; to press the multilateral development banks to continue increasing and strengthening their climate lending; and to press for that vital agreement on new and innovative sources of finance, as set out by the Advisory Group on Climate Finance. Our focus will, above all else, be on results.
We will also provide leadership through the sharing of expertise. The UK has a vast reservoir of knowledge and skills and we will continue to make this available where it is wanted. We will invest more in building that knowledge so that we can have a better understanding of how countries can adapt to the consequences of climate change, scale-up their access to clean energy and protect forests and water-resources. CDKN will play a key role here, and on this point, let me say how pleased I was to learn that the Dutch government has now joined the UK in funding the CDKN.
Finally, we must show leadership in terms of the UK’s own low-carbon and climate-resilient development. I outlined earlier some of the ways in which the Coalition Government might do this and indeed, Chris Huhne spoke on this very theme yesterday.
In doing this, we will not forget about the day-job, where we can be leaders on the ground. We will build up our own experience of which interventions work best and where, and we will apply our increased aid budget in a way that is consistently climate-smart. So that when we lay a road, when we build a school, when we plan a programme - we will take climate change into consideration. That is why in DFID’s new business plan, I have asked every country office to carry out a strategic review of its entire portfolio so that climate change is taken into account in everything it does. And I want to see all the multilateral agencies that DFID supports making sure that their operations are climate-smart too. We will use the UK’s leverage on their boards to achieve this.
Ladies and Gentlemen, if we fail to act today then we will pay the price tomorrow not just in pounds and dollars but in human life. As in so many other areas of international development, the moral case is a clear, overwhelming and compelling one. But - and again this theme runs through so much of our work - action is very much in Britain’s interests too. We cannot have food-security, water-security, energy-security - or any form of national security without climate security.
It’s for these powerful reasons that this government must, and will, play a progressive role in pursuing the global deal we so badly need. History has shown us that whenever there’s an industrial revolution, it is always those who are prepared to embrace change who win through. It’s time that all of us - governments, civil society, private sector and individuals put our shoulders to the wheel and got on with the job. Only then can we secure a future for this planet and a better, safer and more prosperous life for all who live on it.