Thank you very much, Matthew [Spencer, Green Alliance]. It’s my pleasure to be here today.
This gathering, so kindly arranged by the Green Alliance, is titled ‘Europe: looking ahead on climate change’.
It is a perfect name. In many ways, Europe is looking further ahead than its regional rivals.
And it is poised to take full advantage of its status as the world’s early adopter of decarbonisation.
The launch of the European Climate Foundation’s 2050 roadmap is another contribution towards realising that ambition.
It sends a signal to individuals, industries and governments around the world: that the low-carbon transition is achievable, beneficial, and cost-effective.
Providing business with a clear analysis of the path to 2050 is the key to securing continued investment in energy and technology. The ECF’s roadmap mirrors our UK 2050 Pathways study, which described the routes we might take to a low-carbon economy.
The UK’s ambitions are clear. We are determined to be the greenest government yet. We are dedicated to achieving a comprehensive international deal on climate change. And we are committed to reducing the UK’s carbon emissions by 80% by 2050.
To do so, we must take action on energy saving.
For too long, the debate around energy has focused on supply at the expense of demand. Practical, achievable energy savings have been neglected.
As we move toward a low-carbon future, of course we need to clean and green our supply of energy.
But just as important - and often overlooked - is the need to drag our outdated housing stock into the future.
The facts speak for themselves.
A quarter of all UK emissions come from the home. We use more energy heating our homes than Sweden. The average household spends over £1300 every year on energy and heating bills. And cold housing has been linked to tens of thousands of deaths every winter.
The Coalition made a commitment to improve the energy efficiency of new housing. The Green Deal is our pioneering response to the problem of energy inefficiency in existing properties.
By allowing householders and businesses to offset the cost of energy improvements and recapture savings made on energy bills, the Green Deal will save carbon, save energy and save money.
The potential benefits are vast: 26 million homes could benefit. Thousands of jobs could be created in a market worth tens of billions.
It’s a radical program. It will change the way people think about their homes and their energy.
It could also help us to achieve the Coalition’s wider aims.
Getting unemployed people back into work.
Reducing health inequalities.
Creating jobs, boosting the economy, and making energy efficiency affordable for all.
The most pressing challenge facing the Government is to secure the economic recovery and promote growth.
If we return to an outdated economic model, we cannot hope to succeed.
But if we have the courage to build a new kind of economy, we can ensure global competitiveness, protect ourselves from price shocks and tackle climate change in one fell swoop.
It must be a low-carbon, sustainable economy.
One founded on green growth. Where investment in new, clean technologies cuts our dependence on imported resources and also cuts carbon.
The UK gets just 3% of its power from renewables. Beaten only by Malta and Luxembourg in the race to the bottom of the European league.
That has to change.
The Government will create a Green Investment Bank, which will help the UK meet the low carbon investment challenge.
It will catalyse private sector finance to address the investment needed over the next decade.
It will bring forward a new generation of low carbon energy, supporting the wider transformation to a genuinely low carbon economy.
It will help set the tone for a new focus on green growth, with new business and job opportunities.
And it will help re-establish the UK’s position within Europe: as one of the most innovative and ambitious Member States when it comes to climate change.
Europe is a way for us to deliver British national objectives on the global stage.
We are stronger with our neighbours than we would be alone.
We often share the same analysis of the problem.
And when we work together and act together, we can change global opinion.
European action to secure Russia’s ratification of Kyoto is a perfect answer to critics of greater continental co-operation.
We are committed to working in the EU to ensure Europe is equipped to face the challenges of the 21st century.
That means pushing forward our own decarbonisation, and encouraging the EU to focus its resources on the things that matter: not just delivering growth, but also improving energy security and tackling climate change.
The Government wants Europe to do what only it can do; and to do it well.
On interconnection of national power grids, on vehicle standards, in global negotiations and when setting ambitious internal targets, Europe can - and must - lead the way.
Over the coming months, the European Commission will produce strategies on energy policy and infrastructure, and further roadmaps to 2050. Together, these must set out a compelling and coherent vision of the low-carbon future - and how we will get there.
We need to make sure the EU’s budget supports this vision, without neglecting the need for fiscal consolidation across Europe.
The Europe 2020 strategy names “sustainable growth” as one of its three main economic aims.
We must use all the tools available to make this happen, working closely with our European partners during negotiations on the next 7 year financial perspective.
We have a unique opportunity to work within Europe to set a global standard for regional, international co-operation.
The European Commission should focus on doing fewer things, better.
Action on climate change is one of those things. The move to a low-carbon economy is one area where the European model can excel.
Last month, together with my French and German counterparts, I argued that sticking with the 20% reduction target would send Europe to the back of the global low-carbon investment class.
Instead, we must set our sights on a more challenging target: a 30% reduction in emissions by the next decade.
We won’t be alone in our ambition. Despite the failure to secure a global deal, others took their cue from Copenhagen and are taking action. Japan is not waiting for an international agreement; it is preparing to cut emissions by a quarter.
Europe needs to get ready for 30%. And to stay competitive within our own continent, we need to be prepared for a the reality of a more ambitious emissions strategy.
A higher standard would prompt a carbon price rise across Europe. Sending a clearer signal to investors and boosting our regional economy.
Yet not everyone shares our belief that businesses and investors will benefit from a tougher target.
Some feared increased cost of fossil fuels would drive businesses to less ambitious parts of the world. Moving to 30%, it was claimed, would reduce EU output.
We commissioned a study from Cambridge Econometrics and Entec which suggests otherwise.
The study looked at whether a 30% target would cause emissions-heavy sectors to move outside the EU to cut costs.
For most sectors, the results suggest the reduction in EU output would be negligible. In the few sectors that might be affected, a proportion of free emissions allowances would enable firms to absorb cost increases, and reduce the risk.
I understand the caution. I once ran a company assessing global risk, so I appreciate the weighing of factors behind every business decision.
In order to make the right investment choices and secure the economic recovery, we need - and businesses need - a sound analysis of the impact of policy decisions.
That is why my Department, together with the Department for Business, Innovation and Skills, is working on a joint project looking at how our policies will affect energy intensive industries.
If we follow the evidence, our ambition need not affect our competitiveness.
If we have the courage to reach for a higher ambition, and the integrity to follow promises with action, we can secure a greener, more sustainable future for Europe’s citizens.
And a more active global leadership role for the EU in international negotiations.
That leadership will be critical. Other countries will take their lead from Europe’s example.
We are committed to securing an ambitious international agreement on climate change.
Sceptics say global agreements can’t work. But events suggest otherwise: the Montreal Protocol is closing the ozone layer, just as Kyoto is cutting UK emissions.
At the UN negotiations in November, Europe can showcase what developed countries can achieve when they work together as a bloc.
That is why I have been meeting with my French and German colleagues: to push Europe to build momentum ahead of the next round of talks.
Cancun is the first opportunity we have to get the process back on track. Rebuilding trust, and banking agreements as we look ahead to Cape Town.
On finance, technology and collaboration, there is a compelling story for Europe to tell. We can demonstrate through our actions that global political differences need not halt regional progress.
We also have a chance to show what Europe can achieve when it uses its collective strength in support of a common purpose.
The EU will be a major player in the creation of a global carbon market. And it could pioneer direct engagement with other countries on emissions trading and low-carbon technology standards.
That is why the Roadmap 2050 is so useful. It makes a technical case for the transformation of Europe’s economy on more sustainable terms.
The Roadmap’s principal economic finding is that the price we pay need not decide the path we choose.
The higher initial investment needed to kick start a high-renewables energy system is offset by the higher operational and resource cost of fossil fuels.
Put simply, spending a little more now saves a lot more later.
The long-term benefits are clear. The technology that made the first industrial revolution possible is still with us today.
As iron gave way to steel, and steam to oil, so our current energy system will yield to a third industrial revolution. A green revolution.
Growing pressure on resources, growing awareness of our impact on the world around us, and the relentless human drive for efficiency. All this combined to move steam power from the steel mill to the museum. In our lifetime, we may see the internal combustion engine go the same way.
The clever money is on an electric future. Doubling demand by 2050 as electricity powers our cars and heats our homes.
Technically, it is within our grasp; financially it is viable. Our challenge is to create the right policy framework, together with our European partners, to make it a reality.
That means working together: on better integration, and more interconnection.
Our recent history is marked by exponential growth in information sharing. In science, medicine, and business, the better our connections, the more productive we are.
The latest broadband connections can transfer an encyclopaedia volume in under two seconds. In ten years’ time that will seem hopelessly inadequate. Broadband connectivity is so important that it is now a key economic indicator. In every way, connecting makes things better.
Yet until recently, artificial borders have set meaningless boundaries between energy sources. Turning what should be energy networks into fractured energy enclaves.
This Balkanization of power is a driver of waste.
And the result is a double-shot of inefficiency. Countries are generating power which is unused, and building capacity into the system only for it to be artificially curtailed. Capital and carbon are sunk into generation projects to achieve excess capacity.
The answer, as the roadmap suggests, is better interconnection between national grids - and a co-ordinated European wholesale power market.
That is why this Government encourages the EU to be ambitious on interconnection in the Energy Strategy. We must break out of closed-circuit thinking, pushing for a more sustainable, carbon-free energy network.
By connecting across borders, we can harness Spain’s sunshine and Germany’s wind. Sidestepping geography and saving energy.
By creating a European framework that puts integration at the heart of planning decisions, we can bring reliable, efficient energy markets to the fore.
And by shaping demand through smart grids tied in to smart meters, we can improve energy consumption at home and abroad.
It may seem a long way off now.
But today’s discussions are another step towards a low-carbon reality.
With a strong, coherent European policy ensuring energy security and delivering green growth.
With the UK out front, saving energy at home and exchanging it abroad.
And with this government, the greenest ever, leading the way.
Thank you very much.