Stephen Lovegrove, Permanent Secretary for the UK Department of Energy and Climate Change (DECC) is visiting Copenhagen on 30 September and 1 October. He will be meeting Danish companies, organisations and politicians to discuss Denmark and the UK’s experiences with the transition to a low carbon economy and how this can drive economic growth in both countries.
Stephen Lovegrove spoke at the CONCITO conference on the UK Climate Change Act - a symbol of the UK’s long-term commitment to reduce our carbon emissions – which has served as an inspiration for Denmark’s recent climate policy plan.
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Full speech below:
I want to take this opportunity to share some of our progress so far in the UK. As well as some of our on-going challenges, how we are tackling them and why we believe that in realising the transition to a low carbon economy we a driving economic growth now, and laying the foundations for a more-prosperous, more-resilient economy in the decades to come.
In the UK we are gathering momentum: we have put in place one of the worlds’ most-attractive markets for inward investment; we have established a green investment bank to partner private funds; we have built the structures to provide long-term confidence to investors, and we have embarked on some of the most ambitious low carbon projects anywhere in the world.
At a time when other countries are re-evaluating their commitment, we are re-doubling our efforts to welcome investment and make a reality of our low carbon energy system.
We are open for business. And look forward to delivering substantial low carbon deployment this decade.
But I want to start by looking backwards - to highlight how our work and successes over the last five years have been spring-boarded by a strong but sensible legal foundation in our Climate Change Act and the mechanisms it established.
As many of you will know, the UK passed its Climate Change Act in 2008. This set our 2050 target to reduce greenhouse gas emissions by 80% in statute, established a forward guidance system through Carbon Budgets, and put in place an independent and expert advisory panel – the Committee on Climate Change – to provide the analytical support and scrutiny needed to guide our response to climate change.
It is encouraging to see consensus building for a similar act in Denmark.
For the UK, the Act has provided a symbol of our ambition.
But most importantly, together, its three elements provide the UK with its framework for progress – a legally-binding, long-term ambition, and the toolkit to guide government decision makers on an emissions reduction pathway that is considered, effective but also responsive to changes in the scientific, technological and economic contexts.
At the heart of this toolkit is the Carbon Budget system, which set out a series of 5-year emissions caps between now and 2050 – each one decreasing as we move toward 2050. In doing so the budgets lay out a road map for the UK that is challenging, but flexible enough to not dictate year-on-year progress nor precise technology mixes…The system’s design, in effect, striking the right balance between the need for open, robust analysis, and the practicalities and uncertainties of governing in a modern economy.
Nevertheless, clearly this sort of system only works if it is also underpinned by high-quality advice that is both far-sighted and impartial. So it is the job of the UK’s independent Committee on Climate Change to recommend the levels of each carbon budget around 12 years in advance. And the job of the UK Government to set out how it will reach them, or where it proposes any changes.
So how are we doing? The good news is that it looks like we have achieved Carbon Budget 1, which ended last year. And with our historic switch from coal to gas, increases in energy efficiency, and support for new low carbon technologies in electricity generation and heating – we are on track to meet Carbon Budgets 2 and 3.
By the end of Carbon Budget 4 – in 2027 – the UK’s energy system will be substantially different to today’s – with more-efficient houses, a significantly decarbonised electricity grid and a more-competitive market – supported by smarter grids and smart meters – that better serves consumers.
In 2011 we set out our plans to deliver this change in the Carbon Plan¸ and since then we have been establishing our platform for delivery, in particular, through reform of the UK’s electricity and energy efficiency markets.
These are ambitious plans that call for both financial and political commitment in challenging economic times.
Let me set the scene. Right now the UK has some of the least-thermally-efficient buildings In Europe that need to be radically improved in the coming years. And we have an electricity system urgently in need of new capital and new capacity following decades of under-investment.
So this year we have launched a new market framework for energy efficiency – The Green Deal - that will act as a single point of advice for consumers. And where access to money is a barrier, enable consumers to put future savings on their energy bills towards the upfront cost of installing measures.
And also this year we have set in motion radical reform of our electricity market to support unprecedented new investment in low carbon technologies. Up to £110bn of investment this decade (that’s nearly 1 trillion Krone) will drive the deployment of low carbon technologies like wind, nuclear and Carbon Capture and Storage.
These reforms will establish long-term contracts based on a system of strike prices designed to give investors the vital, long-term confidence to invest in low carbon capacity, while also ensuring taxpayers don’t over-subsidise when commercial returns are fair.
Alongside this we will put in place a capacity market to support the deployment of intermittent renewables at the scale we need.
Finally, across the economy we have also introduced a Carbon Price Floor. The logic of this is clear and unavoidable, but so too is the need to provide businesses and industries with long-term clarity on the cost of carbon - providing the time they need to adapt and remain competitive, and only ramping up after industries have had a chance to prepare.
In all of this Government’s resolve is tested and the cost questioned.
But we are doing this because we continue to recognise the very real threat to our prosperity posed by Climate Change.
And because we recognise the growth potential of our energy sector – in new jobs, new industries, skills and exports.
We are seeing this already. For example, since 2010 £29bn has been invested in UK renewables creating around 30,000 jobs - up and down supply chains and across the UK – many in some of the most-deprived areas far from economic centres.
And in the coming years as we move from a period of policy development to a period of delivery, we will see a lot more.
The UK is committed to realising a dynamic, revitalised energy market that: secures the trust of investors and the public; ensures fair returns for investors and fair prices for consumers, and ultimately, through the deployment of low carbon technologies, reduces the impact of rising wholesale prices on bills.
So we are establishing markets that support new investment, new technologies and new providers.
And implementing policies that give a good deal to businesses, consumers and the taxpayer, and that work in practice.
In doing so we aim to demonstrate, domestically and internationally, that our policies are good for the environment and good for the economy.
This brings me to our last, principal focus – ensuring the UK continues to act as part of a concerted, European and global effort.
The UK is a small part of the global emissions picture. But through strong European leadership beyond 2020 we can amplify the impact of our work and the clarity of our commitment.
Strong EU action is vital if we are to tackle climate change and deliver our goal of limiting global temperature rise to 2 degrees.
Leaders have agreed an EU GHG reduction target of 80-95% for 2050. And just as the UK benefits from challenging intermediate targets through the carbon budget system, we now need an intermediate EU target that is consistent with this ambition and demonstrates the EU’s commitment and leadership.
Studies show that an EU target of 40% is not the right level if we are to remain on a credible trajectory to 2 degrees and deliver our fair share in the context of an ambitious global deal – but that 50% is.
It is important for the EU to lay the foundations for a binding global climate agreement in 2015, when our French colleagues will host the UN climate conference. This major event will be on EU soil and the EU has a particular responsibility to show global leadership.
As I am sure you appreciate, this is why the UK Government is calling for an EU-wide binding emissions reduction target of 50% by 2030 in the presence of an ambitious global climate deal, or a unilateral EU 40% target in the absence of a global deal.
A 50% target is ambitious for 2030, but a strong 2030 target will cement EU leadership, and resonate with the industries and governments around the world that we need if we are to turn European leadership into global action.
And if we are flexible in how we aim to hit it a 50% target, it will be cost-effective too - contributing to growth and maintaining competitiveness.
We strongly believe the GHG target needs to be delivered in a flexible, technology neutral way that builds on the breadth of momentum across Europe, and is supported by a robust, reformed emissions trading system.
But let me close by again reflecting on the past few years. In the UK and across Europe tremendous progress has been made: in electricity, transport, heating and energy efficiency.
It is an exciting time for the industry, and a vital moment for policy makers. So it is tremendously encouraging to see Denmark, like other European partners, putting in place long-term mechanisms to match long-term commitments.
I look forward to working with EU and industry colleagues to ensure we build on this momentum within member states, and use it to put in place an EU target that reflects and re-energises this drive – and keeps us on track to meet the challenge of climate change.