Edward Davey delivers the Dudley Newitt Lecture on the Energy Challenge
This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
The Secretary of State speaks about the importance of engineering in meeting the challenge
Let me begin by saying what an honour it is to have been invited here this evening.
Dudley Newitt possessed quite an exceptional character.
A chemical engineer, an educator, an inventor, a pioneer.
But also a man of action, a soldier and a great servant to his country.
I’m told that when Dudley developed technology for the Special Operations Executive during the Second World War (I guess you could call this his ‘Q’ period), one of the inventions of his team was a new design of folding bike – one that weighed less than 23lb and was strong enough to be dropped by parachute without protection.
So many a London commuter has Dudley to thank for his ingenuity.
And having commuted from Surbiton myself for many years I can see why battlefield technology has translated to the London rush hour.
The Importance of engineering
But the work that Dudley did back then surely demonstrates the whole purpose of engineering – exploiting basic scientific principles and findings to produce products and processes that meet a genuine need.
Whether it be developing a folding bike, or building a nuclear power station, engineering is central to progress, the onward march, improving the way things work, more efficient, safer, more cost effective, more useful.
Making sure great and grand ideas are translated into the smallness of our individual lives.
So it is truly an honour to give the Newitt Lecture here at Imperial.
I’m told that I am the first non-chemical engineer to give this lecture, so I hope you will forgive the fact that my talk will likely be different from those you have received in the past.
I did get an “a” grade at chemistry - O-level.
But my wife delights in telling people she didn’t marry me for my DIY skills.
My confession isn’t just that I am a politician, not a great start – but to make matters worse, by trade, I’m an economist.
With that background, coming here to the Chemical Engineering Department is a little like walking into the lion’s den.
Because one of the things politicians and economists tend to have in common is a rather ‘novel’ approach to the concept of evidence.
When an economist or a politician says the evidence is ‘mixed’ it often means the theory says one thing and the data quite another!
But…..as an economist, as a politician, and, particularly, as Secretary of State for Energy and Climate Change, I recognise the huge contribution chemical engineers make to Britain.
As an economist, I see the benefits of a vibrant, productive chemical industrial sector.
A report prepared by Oxford Economics suggests that, as a whole, chemical related industries are responsible for around a fifth of the UKs GDP – over £250bn a year - and 15% of exports.
As a politician, I am grateful for the 6 million jobs this supports across the country and for the inward investment it brings to our communities.
And of course this is just the tip of the iceberg in terms of what chemical engineers contribute.
In any trade where there are complex systems, from the food & drink industry, to pharmaceuticals, from the iron & steel industry, to water, you can see the fingerprints of chemical engineers.
Imperial can be proud of the Chemical Engineering Department here and the work of its alumni.
Because of Imperial - and because of …let’s say a few other places…. the UK’s chemical engineers have a reputation for excellence as does the UK’s academic, R&D and practical science base.
This encourages businesses from all over the world to choose to locate themselves here.
And encourages the investment required to make the engineering breakthroughs that benefit our society and underpin future economic growth.
And that is why as Secretary of State for Energy and Climate Change, I am particularly grateful for the contribution that chemical engineering makes.
Because, in the coming months and years, we will need all the ingenuity, all the innovation and technological development we can muster to tackle what I think is the greatest challenge of our time.
My job as Secretary of State is to help the Government fulfil two missions.
Powering the country, now and in the future.
And protecting the planet from catastrophic climate change.
How do we, as a nation, and as part of a global family, meet future energy needs, future development needs - and at the same time, reduce carbon emissions?
This is what I want to talk to you about tonight.
The Energy Challenge.
The solutions we need.
And the technology we require.
So let me begin by setting out the scale of the challenge.
Age of transition
We are living through an age of global transition.
The UN estimates that by 2040, the world’s population is likely to be around nine billion people.
Around two billion more than today.
And as this happens, the relative economic balance is likely to continue shifting, with new centres of power emerging, creating a truly multi-polar world.
In Asia, in South America, in the Middle East, in Africa too.
New centres of world trade, commodity production and consumption.
The emerging super economies of China, India, Brazil are already energy hungry, just like the established economies in Europe, North America and the Pacific Rim.
Global energy demand is already twice as high as it was 30 years ago.
The International Energy Agency estimates that it will grow by over a third again by 2035.
By then total annual global usage will be equivalent to 17 billion tonnes of oil.
China will be by far and away the greatest energy user on the planet.
Demand in India will more than double.
Together, these two countries alone are likely to make up just over 30% of world energy consumption by 2035.
By some estimates, meeting the new levels of demand will required a 37 trillion dollar investment in the world’s energy infrastructure.
This is all equates to a huge shift in just a few short decades.
A geo-political shift, as the political heft of the new super-economies is felt across the world.
And a resources shift, as the new super-economies take an increasing proportion of available fuel, food and water.
If, as is likely, global energy supply struggles to meet growing demand, we can expect upward pressure on prices.
And, if we see rapid increases in demand to which supply cannot react quickly, we will see rapid price spikes and wider market volatility.
We can already see how this may affect our own citizens here in the UK by the current sustained high level of oil and gas prices.
Global gas prices were 50% higher in the five years to 2011 than in the previous five years, and they have continued to rise.
This has taken some by surprise.
Well because, in the past, prices have tended to fall when the developed world has experienced recession and low growth.
But today, with the demand growing in the economies of Asia and elsewhere, world oil and gas prices have remained stubbornly high, and are likely to remain high.
Even when we take into account shale gas and other sources.
The realities of the new age
This brings me to two realities.
First: looking out to 2035 and beyond, the vast majority of global demand will continue to be met by fossil fuels.
Demand for other energy sources will rise – nuclear, bio-energy, renewables - partly as a result of the volatility in the fossil fuel market.
But even on the most generous predictions, those sources will provide no more than a third of the worlds primary energy demand.
And this include the UK, even with our ambitious plans for the growth of low-carbon energy generation and use.
This scenario means global CO2 emissions of around 37 gigatonnes a year by 2035 - if that fossil fuel generation is unabated.
This brings me to my second reality:
As a planet we cannot go on using unabated fossil fuels at the rate we are now and keep climate change below 2°C.
Of course, the basic chemistry of climate change is irrefutable.
You will understand this far better than I.
Greenhouse gases warm the atmosphere and cause changes to the climate.
55 million years ago global average temperature was about 7°C warmer than today.
It is thought that the warming was caused by large-scale release of greenhouse gases from volcanic activity over many thousands of years.
Widespread acidification of the ocean and extinction of many marine organisms.
This is not of course a good analogue for today or the next century, but it does illustrate the danger of the green house effect.
Today CO2 levels in the atmosphere have increased by over 40% since the beginning of the industrial revolution.
They are now higher than for - at least - the last 800,000 years.
All the evidence points to the fact that human activity is significantly contributing to the warming of our planet.
And as our understanding of the changing climate grows, so does our understanding of what those risks might mean for our people.
As Barack Obama put it last month in his inaugural address:
“Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires and crippling drought and more powerful storms.”
On the basis of any normal risk assessment – weighing probability against impact, the cost of acting against the costs of inaction – taking a gamble on climate change is incredibly unwise.
The Stern Review of 2006 remains one of the most persuasive treatments of the issue of risk when it comes to climate change.
It makes for uncomfortable reading, but the message from Stern is absolutely clear.
The costs of acting now to tackle climate change may prove significant, but they will be far outweighed by the long-term costs if we fail to act now.
The energy challenge
So the question is, how do we square the circle between the realities I set out?
The growing energy demand met largely by fossil fuel and the realities of a world heating up?
The answer is actually well-known.
We need to limit climate change to manageable levels by lowering, on a global scale, emissions of greenhouse gases – effectively de-carbonising the way our societies function, as our energy demands increase.
This is the Energy Challenge.
Ultimately we need to forge a global consensus at the negotiating table in the United Nations – because we need to sustain the emissions reductions on a global scale over the long-term.
But to be successful at the UN, we will need to meet the Energy Challenge in other places too.
In national Parliaments, setting legal frameworks for emissions reduction and incentivising a transition to low-carbon transport and energy.
In our homes, in our industries, reducing the amount of energy we use.
In the boardrooms of businesses considering investment decisions.
And in the laboratories, research establishments and testing facilities of those developing new technologies.
So I want to turn to what we are doing here in the UK before looking at one or two of the technical challenges that I think will be of interest to you.
The Climate Change Act of 2008 was groundbreaking – and ambitious.
The first comprehensive economy wide climate legislation of its kind, committing the UK to achieve at least an 80% cut in carbon emissions by 2050.
It was also the subject of a wide – and unprecedented – political consensus, with only 3 votes against.
But the Climate Change Act is essentially framework legislation.
It commits the UK to legally binding targets, but doesn’t set out how to achieve them.
So that is what we have been working through.
In my area – Energy - action here in the UK is on 3 fronts – saving energy, making existing low carbon energy generation cost-competitive, and encouraging new solutions.
So let me start with, energy efficiency.
To meet our targets we’ll need to cut our energy use by between a third and a half by 2050.
Heat is the single biggest reason we use energy in our society, taking up 44% of final energy consumption.
With domestic buildings responsible for a quarter of UK emissions, the cheapest way of cutting carbon – and cutting bills for consumers – has to be to become far more efficient in the way we use heat.
A fifth of the housing stock in the UK was built before the first world war, and another fifth before the second – all designed before the widespread use of modern central heating.
We have some of the oldest and most inefficient stock in Europe.
Designed to vent through chimneys, not prevent heat escaping.
So our idea is to create a market in energy efficiency, so there are incentives for private companies to invest in new products, new services, to get the work done.
And incentives for individual s to invest themselves.
And there are a whole host of initiatives to do this because it is so critical.
The roll out of smart metres so that people can monitor their energy use and understand it more..
Renewable heat initiatives to change the way we heat buildings in the first place.
And the Green Deal, a new market to retrofit the housing stock to make it energy efficient.
The second front for action is to meet the UKs energy demand increasingly from low-carbon sources.
And this is quite a challenge in the short-term because around a fifth of the UKs power stations are due to close this decade.
Replacing that capacity means a massive investment in energy infrastructure over the next 10 years, nearly half the whole infrastructure investment the UK needs to do in this period.
The capital costs of over £110bn will be the equivalent of building 10 more tunnels to France.
Unusually for a UK politician, I’m pro-European, but even to me 10 new tunnels to France seems excessive.
To attract this investment – and to make sure that demand is increasingly met from low carbon sources – from nuclear and renewables - we have to create the right environment.
The Energy Bill currently going through Parliament is designed to do that.
It will incentivise renewables by enabling new low-carbon technology to compete against established fossil fuel technology.
This is designed to harness the ‘pull’ of the market to bring new or enhanced technologies to the point where they can attract the private sector investment required to deploy them at a commercial scale.
For the UK won’t meet its low carbon targets with current technologies at current costs.
Innovation will be absolutely essential.
Many low-carbon technologies are either still on the drawing board or not currently cost-effective.
A chemist may propose the most elegant solutions – but it takes a chemical engineer to point out that if the process requires copious amounts of Astatine and Francium – it is no solution at all.
We’ve got to bring low carbon technologies on stream at a commercially viable rate.
The engineering challenge here is in relatively established areas – wind, tidal, new nuclear, including the massive challenge of decommissioning.
But we need to keep developing, keep innovating, keep inventing.
This is the ‘push’ to the market’s ‘pull’.
Government has a role here – so this brings me to my third strand of action - Research and Development.
Research and development
Last month, the Minister for Universities and Science, David Willetts, set out the 8 great British technologies underpinning the Government’s Industrial Strategy.
And set out £600m of Government funding being spent on projects in these areas.
Data, Space, Robotics, Synthetic Biology, Regenerative Medicine, Agri-Science, Advanced Materials and last, but certainly not least, Energy.
Energy is one of the largest themes in Research Council funded research.
And we are world leaders in some areas - offshore wind deployment for instance.
In tackling Climate Change, we can’t go forward expecting a game changing breakthrough.
The most likely scenario, rather than a single game-changer, is for a diverse mix of emission reducing technologies in many different fields, to make the difference.
The government expects to invest in excess of £800m in this spending review period to directly support a broad portfolio of innovative low carbon technologies helping to boost jobs, expertise and skills in this sector.
Let me talk about three areas in particular that have potential.
First Carbon Capture and Storage (CCS).
CCS can remove, and securely store, carbon dioxide emissions from fossil fuel power stations and industrial sources.
Together with industry and scientists like those here at Imperial, we are working hard to reduce the cost of CCS and to test it at commercial scale.
Most of you will be more knowledgeable about thermodynamics than me.
You will be familiar with the Carnot cycle and the Rankine cycle.
Some of you may have heard of Rodney Allam – he was Head of Technology at Air Products and was awarded the Global Energy Prize in 2012.
One day, the Allam cycle may be taught alongside these at all the best engineering schools.
DECC is working with a company called Netpower to produce the first power station to make use of the Allam cycle.
Instead of steam, high pressure CO2 is used as the working fluid.
As a result, it could be possible to produce power with high efficiency, no emissions and at a lower cost than conventional methods.
The UK is one of world leaders in academic excellence for CCS – with the best CCS scientists in Europe.
I want the UK to retain this position which is why, together with the Engineering and Physical Sciences Research Council (EPSRC), my department set up the £13m UK CCS Research Centre.
The Centre aims to promote and coordinate UK research capability – including the work being done at Imperial.
And it will be important as we go forward that we work with partners around the world, including the United States, where interest and investment in CCS is rising.
Second, Energy Storage.
While UK consumption peaks at 60GW, the UK has generation capacity of 80GW but storage capacity of only 3GW.
Greater energy storage capacity can save money, reduce the national carbon footprint at the same time and help maintain security of electricity supply.
Energy storage systems are currently at different stages of development and cover the full range of engineering disciplines: flywheels and other mechanical solutions; compressed air and liquid air systems; electrolysis and many types of batteries.
But we need to reduce the technology costs to secure viable, cost-effective energy storage.
DECC is currently running a large-scale energy storage technology demonstration competition.
This has attracted bids from leading universities and businesses of all sizes from across the UK and more widely who have brought forward novel ideas for storage.
We hope that one of these demonstration projects will help to make energy storage a cost-effective solution.
It is too soon to say with certainty what role hydrogen can play in our energy system but it is important we have the option to use it if needed and if it can be developed.
Hydrogen applications are at the demonstration stage, but there is some evidence to show commercialisation is approaching rapidly.
Leading automotive manufacturers have publicly committed to introducing fuel cell vehicles in selected markets from 2015.
I want the UK to be one of those markets.
So I am pleased that DECC, together with two other departments – the Department of Business and the Department of Transport - is involved in UKH2 Mobility.
This is a ground-breaking industry-led project to analyse the benefits and build a business case for the simultaneous investment in hydrogen fuelling infrastructure and vehicles.
UK support for the development of fuel cells and hydrogen energy technologies has resulted in the creation of some world-class companies.
These include Intelligent Energy (which provided the fuel cell systems for a fleet of black cabs which was used to ferry VIPs during the Olympic Games last year).
The Carbon Trust’s PEM Fuel Cell Challenge is supporting innovations by ITM Power and Acal which should significantly reduce costs and improve durability, thereby helping to facilitate mass deployment.
If you look around other countries, they are investing in Hydrogen too.
I want the UK to be a world leader.
So this is the real prize.
Designing in long-term emissions reduction through systemic change.
Designing carbon out of the power chain, whether it be from the power that runs factories, heats homes, or drives engines.
Taken together with other initiatives reaching into all corners of Government – from transport to defence, agriculture to education – we are determined to live up to the ambition of the Climate Change Act.
Incremental, nation specific action like this has to happen.
But to meet the Energy Challenge on a global scale we need to act on a global scale and reduce emissions over the long-term.
Some look at the international negotiations and despair - despair for a legally binding successor to the Kyoto Treaty.
I understand that.
There is a huge gap between what we need to achieve and where we are now.
Frankly, we will need all the political artistry we can muster to bring 190 odd countries into alignment over this issue.
Those representing the huge super-economies of Europe, America, China, Russia, India, Brazil, Japan;
Those representing developing countries;
Those representing the most threatened by climate change;
And those who believe, quite wrongly, they are somehow cushioned from the impact.
But I believe this is achievable.
Let me tell you why.
Over the next year, I will be part of a concerted push by like-minded countries at EU level to commit to a 30% reduction target in 2020 and to agree a further strong emissions reductions target for the EU for 2030.
China is adopting targets to decrease both the energy intensity and the carbon intensity of its economy by 2015.
And China has targets to increase the share of non-fossil fuel energy in the power sector to 15% by 2020.
Japan’s target is to reach 30% power generation from renewables by 2030.
Australia has a new Clean Energy Act, and is now linking its emissions trading system to the EU’s.
In the US, the Clean Energy Standard Act is before Congress and will set the first nation-wide targets for lower-carbon generation.
Mexico has targets, South Korea has targets
And action is not confined to the developed world.
Bangladesh, one of the countries most threatened, most vulnerable to climate change, is acting on both the adaption and emission front.
Kenya has climate change legislation going through Parliament.
Too often, we are told by those who op[pose these moves that those who go low-carbon first will sacrifice their economic competitiveness.
We have to take this argument on.
The real danger we face is being outpaced by other countries who are investing in clean, low-carbon economies.
This is actually a boom market of £3.3 trillion, growing at 3.7% a year globally, with investment in renewables outpacing that in fossil fuels.
So I think this drive for low-carbon energy is a real engine of growth for the UK and economies around the world.
President Obama recognised this in his inauguration speech in which he challenged America to claim the promise brought by low carbon technology – green jobs, green industries, new economic vitality.
So why does this make me hopeful for a legally binding global agreement?
I am given hope, because the momentum is with those countries who are acting, not with those countries who are failing to act.
I am not saying it will be easy or straightforward – and I’m not saying the result will be perfect.
But we will agree a global, binding treaty, because it will be the next obvious, natural step to consolidate the actions we’re already taking.
I am given hope that we will get there, by our faith in human ingenuity – to find a way through problems and develop solutions.
We now have three critical years leading to the end of 2015 to get the international politics aligned.
Politicians will have to make balanced choices.
To meet their responsibility to look after the interests of those they directly represent, while trying to work for the greater good.
Of course political results are rarely clean and neat.
But it is much easier to come to a reasonable and altruistic position if the technological challenge is in hand and the results of the work of scientists and engineers are already coming through are beginning to show.
So my final message to you is this.
Don’t leave it to the politicians to save the planet.
As I said earlier.
This has to be a whole of society effort – a global society effort.
The solution to the energy challenge includes actions in homes, in businesses, in boardrooms, in the classroom, in the labs, out in the field engineering solutions.
And this brings me back to Dudley Newitt.
One of Dudley’s earliest tasks in service of the country was designing plant for the liquefaction of methane to be used as a substitute for petrol in time of war emergency or shortage.
Dudley understood the need then for alternative power sources.
At that time programmes with wartime objectives were voraciously devouring funding.
For many scientists of his generation, the war effort was a defining task.
Well there is a new defining task for scientists of this generation to apply themselves.
Addressing climate change, meeting the energy challenge, working out how we power the country and protect the planet.
That challenge is this generation’s responsibility.
Let’s not fail.