I want to start by extending a warm welcome to all our visitors from Canada especially my Ministerial colleague, Bob Hamilton.
There exists an enduring partnership between our countries.
Our common history, tradition of parliamentary democracy, shared values, and partnership on global issues bind us together.
Our partnership will be key to both countries’ ability to meet the many challenges that the world faces.
Already, the UK is Canada’s third largest investor, with investment more than doubling over the last decade to 56bn Canadian dollars.
The UK is also Canada’s second biggest destination for investment abroad, with investment currently at eighty six billion Canadian dollars.
The EU/Canada Comprehensive Trade and Economic Agreement, once implemented, is exciting and will be worth billions.
We also have huge amounts to gain from bilateral co-operation on the energy challenge we face: together we face increased global energy consumption, with the rapid expansion of Asian economies bringing more competition for energy resources.
At the same time, technological developments will bring new resources on-line, making the map of global energy production ever more diffuse. And together with the whole world we must tackle climate change.
Never has international co-operation on energy and climate security been so important.
Our co-operation with Canada, both bilaterally and multilaterally, through organisations like the IEA, G20 and G7 plays a crucial part of meeting these challenges.
Our partnership is already deep and strong.
Canadian companies such as Talisman, Nexen-CNOOC, Canadian Natural Resources and Suncor play a vital role in the economy of our North Sea. These companies have invested because the North Sea remains a productive place in which to operate.
Our aim is to maximise economic recovery of our hydrocarbon reserves, to boost growth, energy security, and jobs. To succeed we need to ensure our business environment remains attractive to investors and operators.
That is why we asked Sir Ian Wood to fundamentally review our activity in the North Sea.
Sir Ian concluded that with the right architecture, recovery of an additional three to four billion barrels of oil and gas could boost the UK economy by two hundred billion pounds over the next 20 years.
We are implementing all the review’s recommendations. Just last week we announced Andy Samuel as chief executive of the new regulator.
This new regulator, not unlike Alberta’s, will proactively manage the UK Continental Shelf, improve collaboration between operators, resolve disputes and hold operators to account for the performance of their assets.
We also need a tax and fiscal regime that has the right balance of risk and reward to encourage investment. In March, we announced a review of our oil and gas tax regime, to ensure it continues to incentivise economic recovery as the North Sea basin matures. On both the regulatory and the fiscal fronts we want to work with industry to get the details right.
But the UK energy scene is not all about the North Sea. Shale gas production onshore has the potential to increase the UK’s energy security, jobs and economic growth.
Developing Shale is therefore one of my personal and departmental priorities.
We value highly the discussions we have had with you on how, safely and sustainably, to make the most of our shale resources. We are taking a number of projects forward, including a secondment from my Department to Alberta’s Energy Regulator, to enhance our cooperation with Canada on shale gas, and to deliver Canadian expertise and experience into our own industry.
I look forward to future cooperation, and welcome the interest that Canadian investors are showing in UK shale gas exploration.
UK investment in Canada
As important as Canadian investment in the UK’s energy security is, I’d like to highlight the contribution British industry makes to the energy sector in Canada.
Shell and BP contribute to Canada’s economic strength, at the cutting edge of efforts to promote and deliver innovation in the energy sector, both individually, contributing to the work of COSIA, in the oil sands, off Nova Scotia, and supporting your efforts on Carbon Capture and Storage.
AMEC has been in Canada for over a century, and has been involved in virtually every major mineable oil sands development in the last 25 years
Centrica, which owns British Gas in the UK, has been expanding and is now a top ten gas producer in the Western Canadian Sedimentary Basin, investing over $1bn primarily in natural gas assets.
Oil & Gas campaigns
We want to see more British companies active in the energy supply chain across Canada. We have seen success in new British exporters entering the market.
But we want to see more leading British companies making a positive difference.
We are global leaders in subsea engineering, project management, design engineering, asset and operational management, research and development, safety management, and training and education.
The British Columbian Government’s plans to see major LNG operations active in the coming decade are impressive. Shell and BG are among the list of major companies actively developing projects ahead of Final Investment Decision.
One can’t address energy issues without considering the impacts of the global energy industry on the environment and our climate.
As the IPCC report this month amply demonstrated, we need to cut emissions to avoid dangerous Climate change.
The UK believes that a legally binding UNFCCC deal in Paris in 2015 is crucial for addressing climate change. An ambitious global deal makes good economic sense and is in everyone’s interest. And reducing carbon is best done in a way that opens new markets and reduces technology costs. The prospects for a global deal are looking increasingly positive, particularly in the light of last week’s announcement by the US and China on their intentions to reduce greenhouse gas emissions. Taken alongside agreement within the EU to cut greenhouse gas emissions by at least 40% domestically by 2030, it demonstrates that major economies are serious about getting a global deal in Paris next year.
And we must make and win the case that choosing between fighting climate change or growing the world’s economy is a false dilemma.
Rather, we must tackle climate change in a way that brings down costs.
The killer question is how?
We believe our Energy Market Reforms will help us achieve our climate change goals, removing barriers to investment and gives developers the confidence to take forward projects that will help deliver secure, low carbon and affordable energy
Our Contract for Difference mechanism means we have competition for subsidies for renewable electricity investment – bringing costs down and putting us firmly on track towards a low carbon future.
We expect a further 3.2GW from Hinkley Point C; the first new nuclear power plant built in the UK in 20 years which will generate enough electricity to power nearly 6 million homes.
Carbon Capture & Storage
I know that all here understand the need to develop our resources in the most sustainable fashion.
One answer with potential is Carbon Capture and Storage.
Recent analysis suggests that for the UK, successfully deploying CCS could cut the annual cost of meeting our carbon targets by over thirty-two billion pounds by 2050.
Of course CCS is in early stages. But last month saw two very important developments.
First, in Saskatchewan, SaskPower flipped the on switch on unit 3 of the Boundary Dam power plant - the world’s first coal fired power plant fitted with CCS on a commercial scale. Canada’s leadership is showing the rest of the world that CCS is viable at scale and is happening. Mike Monea is here today and it is terrific to hear from you, that the project is commercially viable.
We are playing our part. Shell, with support from the Albertan government, is developing its “Quest” project at one of its oil sands processing sites which could reduce emissions by a million tonnes of CO2 a year.
Second, in the UK we have two projects – White Rose and Peterhead - working to see if we can make CCS work too. They are making good progress on their planning and engineering studies so that final investment decisions can be taken early in 2016.
As we develop cleaner technologies, we must share our expertise. So I very much look forward to signing a joint statement with my Canadian counterpart on our future co-operation on CCS.
All of this work to reduce carbon at the lowest reasonable cost is vital, and vital to strengthening our national energy security too.
Russia’s isolation in the international community, following its actions in Ukraine, is deepening.
The UK is not reliant on Russian gas - we have a very small amount coming into our system.
But Europe as a Continent is, and urgently needs to be less reliant on that big single source of energy.
I have a strong interest in Canada’s plans for more LNG terminals and the prospects of more Canadian oil and gas coming to Europe, reducing our reliance on unreliable countries and instead relying on our oldest friends.
The enduring strength of the UK-Canada relationship allows us to face together, the global energy challenges that tomorrow will bring. In doing so, there remains great potential for deepening our energy relationship further, including delivering more British investment in Canada’s energy industry, or growing Canadian investment in the UK.
Together we must develop infrastructure innovation and science to underpin the creation of a low carbon low cost economy in the UK, in Canada, and around the world.
And it gives me great pleasure, with my Canadian colleague, the Deputy Minister for Natural Resources Mr Bob Hamilton, to join me on another step on this shared path, as we sign the UK-Canada Joint Statement on Carbon Capture & Storage.