This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
Thank you very much. The ‘perfect storm’ that gives this conference its name is now two years closer. But are we any safer? You have already…
Thank you very much.
The ‘perfect storm’ that gives this conference its name is now two years closer.
But are we any safer?
You have already heard from climate and environment experts.
Today, I will tell you what Government is doing to tackle climate change and boost our energy security.
In autumn 2000, more rain fell on England and Wales than had done for 230 years. 10,000 homes and businesses were flooded.
The floods cost the UK insurance industry £1.3 billion. Taking the last 10 years compared with the previous ten, the cost of insurance claims for flooding has tripled.
In 2003, a heatwave gripped Europe. Drought and wildfires put health services and national infrastructure under huge pressure.
Thousands died. Forests were destroyed by fire and crops by drought. Energy and transport were hit.
The UN estimated losses from the 2003 heatwave at over 13 billion euros.
Probability and risk
We can’t say for sure that climate change caused these extreme weather events. But the science tells us that as our climate changes, the likelihood of these events also increases.
In 2004, research suggested human action had doubled the risk of a European heatwave.
And now, for the first time, scientists have been able to say what role global warming played in a major flood.
Using new methods, researchers found that human greenhouse gas emissions may have roughly doubled the chances of the autumn 2000 floods.
That is a significant step up the ladder.
We can now clearly link extreme events and their effects to the rise in man-made greenhouse gases. And we can put a number on how much more likely they are.
Although the UK is responsible for just 2% of the world’s emissions, the consequences of climate change will not respect our borders.
That is why we must do everything we can to secure a global solution.
We are making good progress. The UN climate change talks at Cancun were the most important since Kyoto.
For the first time, both developed and developing countries made a political commitment to take targets and actions to mitigate climate change.
We made good on the bellwether issues.
Agreeing that the average global temperature increase should be kept below 2 degrees.
Strengthening the reporting of emissions reductions with a genuine peer-review process.
Establishing the Green Fund, Adaptation Committee, Technology Mechanism and REDD+ mechanism.
The agreements at Cancun prepared the ground for a global deal on climate change.
We have reaffirmed our faith in the process; now we must make sure it delivers.
But we should be realistic: this will take time.
And after the mid-term elections in the US, Senate ratification of any climate change treaty is off the agenda for now.
But a deal will happen.
The evidence for human influence on climate change is even more compelling.
We have a chance to show through our actions that climate change is neither distant nor inevitable, but a clear and present danger - and one that we can do something about.
Why am I so confident?
Because around the world, there is already too much invested in tackling the problem.
The future is here
Take China. In 2009, they poured $34 billion into their low-carbon economy.
China now leads the world in solar photovoltaic production. Six of the biggest renewable energy companies in the world are based in China.
Last year, 1 million people sat the Chinese civil service exam. The most popular post got 5,000 applicants. It was ‘Energy Conservation and Technology Equipment Officer’.
China will build 24 nuclear power stations in the time it takes us to build one. By 2020, their nuclear capacity will have increased tenfold.
They will complete 16,000km of high-speed rail in the time it takes us to go from London to Birmingham.
They have the most installed hydro capacity and the most solar water heaters.
And they are forging ahead on wind power, offshore and on.
So China knows what’s coming.
And despite what the mid-terms suggest, so does the US.
Last year, in the face of serious lobbying - and lots of money from special interests - the Californian public voted to overwhelmingly support the State’s ambitious climate change laws. The eighth-largest economy in the world is still committed to going green.
And the Northeastern States are leading the way on renewables, on emissions and on energy efficiency. They’re investing in renewable heat, trading carbon, and legislating for clean energy.
The US Navy will get half of its energy from non-fossil fuel sources by the end of this decade. Half of its bases will be energy neutral. They’ve already launched their first hybrid drive warship.
President Obama used his State of the Union speech to call for a reinvention of energy policy. He challenged the best minds in America to come up with clean energy ‘Apollo projects’. And he set a new goal: for 80% of America’s electricity to come from clean sources by 2035.
Conventional wisdom has it that China and the US are not signed up to the climate change agenda.
But if you look at what they do, not what they say, a rather different picture emerges.
That is because policymakers understand - like we do - that climate change is real, is happening, and is worth defending ourselves against.
An ounce of prevention is worth a pound of cure. The best thing we can do to help adapt to climate change is to stop it happening in the first place.
That means yes - we must keep pushing for a global deal on climate change. But we must also do everything we can at home: moving further and faster to a low-carbon economy.
What does that mean?
First, we must stop wasting energy.
A quarter of the UK’s carbon emissions come from the home. Our housing stock - the oldest in Europe - is costing us the earth.
So we have set up the Green Deal, a national refit to bring our homes into the twenty-first century. Businesses will pay the upfront costs of energy efficiency improvements, getting their money back from savings on energy bills.
Have no doubt: this can make a real difference. After transport, heating is the second biggest driver of energy demand in Britain.
British Gas research suggests that householders who put in energy efficiency measures cut their gas consumption by 44%.
Better insulated buildings will do much of the work for us. But we must also look at renewable heat technology.
More combined heat and power schemes, putting waste heat to better use. More district heating schemes.
And more electric air and ground-source heat pumps, drawing warmth from the outside world to heat the indoors.
Better insulation, smarter homes, and more efficient heating can help us cut our energy demand.
So can the next generation of vehicles.
Every month, new electric cars are coming to market. The shift from the petrol pump to the electric plug is revolutionary. And it is already underway.
So the second point about the low carbon economy is that it will be overwhelmingly electric.
The next decades will see a massive increase in our demand. Electricity use could double by 2050, as we turn to the grid to charge our cars and heat our homes.
That demand must be met with secure, affordable low-carbon supply.
But our current energy system is not up to the job.
We will lose a fifth of our generating capacity over the next 10 years, as our ageing power plants shut down. We cannot afford to replace them with more of the same.
But with long lead-in times and high capital costs, we must act now. Otherwise, we face an energy crunch.
Our plan for affordable low-carbon electricity rests on three pillars.
The first is renewable energy. Like onshore and offshore wind; Wave, tidal stream, and micro-hydro power; solar, biomass, and energy from waste like anaerobic digestion.
The second is new nuclear - without public subsidy.
Half of my Department’s annual budget is spent cleaning up after past generations of nuclear and coal. Next year, it will reach two-thirds.
Never again. That is why we have passed the cost of nuclear liabilities on to developers, who will pay the full cost of waste disposal and decommissioning.
And the third element is clean coal and gas, delivered by carbon capture and storage. Giving us flexible and reliable backup without the carbon consequences.
Cost and portfolio
No-one knows what the most successful low carbon technology will be in thirty years time.
The only way to ensure a secure, affordable low-carbon energy supply - to keep the lights on and the skies clean at the lowest possible cost - is to build an energy portfolio.
It is exactly the same principle as a pension fund. When we’re planning for the future, we don’t put all our eggs in one basket.
It would be irresponsible for us to try and play god with the country’s energy future.
So we must create a policy framework that lets us discover and then use the lowest cost options.
That means thinking about a range of scenarios.
At one end may be a world where fossil fuel prices are exceptionally high. We will rely overwhelmingly on renewables and nuclear. With pumped storage to meet peaks in demand.
At the other end, some argue that plentiful gas from unconventional sources will cause gas prices to tumble. Then we would rely much more on clean gas, with carbon capture and storage.
Our policy is about keeping our options open between technologies, but ensuring that we are on the road to the low carbon economy.
We have set a direction. We don’t yet know which particular technology will get us there.
But we know that the fundamentals of the low carbon economy are not going to be expensive.
Nick Stern estimated overall costs at no more than 2% of GDP by 2050.
If our economy doubles in forty years, that means a 98% increase instead of a 100% increase.
Even that simple calculation depends on other factors.
If we relied on oil and gas, and the price stayed relatively low at $80 a barrel then consumers will pay more under our policies - about an extra 1% on their bills by 2020.
At the oil price reached this month - $100 a barrel or more - consumers will pay less through low carbon policies than they would pay for fossil fuel policies.
And if the US administration is right, and the price is $108 a barrel in 2020, then our consumers are winning hands down.
Energy security is about price as well as supply. Without both, we have neither.
So there’s another economic advantage, one that makes a powerful case for the low-carbon revolution: insulation from oil and gas price shocks.
Thanks to a decade of missed opportunities on renewables, our energy import dependence could double by 2020.
I asked economists at DECC to look at how a 1970’s style oil price shock would play out today. They found that if the oil price doubled, it could lead to a cumulative loss of GDP of around £45 billion over two years.
And this is not just far-off speculation: it is a threat here and now.
The Office of Budget Responsibility forecast that if oil prices rose by 20% - as they have since October - the total cost to the economy would be four and half billion pounds.
Oil and gas will play an important role in the low-carbon shift. But in the long term, getting off the oil hook will make our economy more independent, more secure and more stable.
Britain can lead the way. Our scientific, research and engineering strengths will stand us in good stead.
Look at our record on CCS, where British scientists top the tables when it comes to academic citations.
We can turn that laboratory lead into an economic success story.
But we must be more ambitious. Pushing hard for a higher EU emissions target - a 30% reduction by 2020 - to drive innovation in Europe.
Showing business that the EU is serious about a low carbon transition. Securing investment in green technology and infrastructure, so we can compete with fast emerging economies who are investing billions today.
Sending a clearer signal through the carbon price. And working towards that binding global deal at the UNFCCC.
This is an exciting journey.
By moving to a low-carbon economy, we can build a shelter against energy price and security storms. And we can tackle the defining threat of our age: climate change.
We are already making progress.
Carbon emissions are down. The international negotiations are back on track.
The low carbon transition has begun. It is up to us to see it through.
Thank you very much.