Introduction Thanks very much, Paul [Noon, Prospect]. And many thanks also for agreeing to start a little early. If only the Cabinet Office…
Thanks very much, Paul [Noon, Prospect]. And many thanks also for agreeing to start a little early. If only the Cabinet Office could be so flexible when it comes to negotiations.
I am delighted to be here today. And to address an audience which has been a leading voice in the energy and climate change debate.
The strength of this advocacy should come as no surprise. The challenges we face in creating a low-carbon economy speak to the TUC’s founding principles.
Fairness. Sustainability. Equality. The knowledge that by working together in pursuit of common aims we can achieve more than we could manage alone.
These are Liberal beliefs, too.
On social justice. On environmental responsibility. On inequality and on the role of the state, we share more than we differ.
I suspect we share the same diagnosis of the financial crisis, too.
Unrestrained capitalism led to economic inbalance. The Square Mile proved no substitute for a rounded economy.
And the cost of taming the biggest ever peacetime budget deficit will be with us for years to come.
But out of the wreckage of the past can come a new economic future. This time, our economy must be greener, cleaner and more sustainable.
The Coalition might not be the government you expected. It might not be the government you wanted.
But it is the Government that will respond to the defining challenge of the next few years: securing the economic recovery and promoting green growth.
Today, I can give you a sense of where the Coalition is going, and how we intend to get there.
Setting out our priorities and our policies.
And asking how we can work together better in support of our shared ambitions.
Our first priority is to build a new kind of economy. One where green growth leads to green jobs. A low-carbon economy that will help us recover at home and compete abroad.
Our second priority is to reshape radically our energy system. Saving energy to tackle demand. Producing greener energy to clean up our supply.
And pulling in the investment we need to update our ageing power plants, so we are ready for an increasingly electric future.
And finally, we must secure a fair, firm and binding global deal to halt catastrophic climate change.
Together, these priorities match the problems we face: an unsustainable economy, built on unsustainable energy, in an unsustainable global climate.
It is an ambitious agenda.
It would be ambitious even without the aftermath of the recession.
In the face of an unruly budget deficit and the hardening of international attitudes, success demands a clear, consistent framework from Government.
Our approach is based on three principles.
Helping businesses and households save energy. Making it easier to fund new energy. And showing ambition and leadership on the global stage - starting in Europe, and going to the UN in Cancun.
So let me deal with each of these in turn.
Saving energy is still the cheapest way of closing the gap between supply and demand.
At home and at work, the UK’s draughty buildings leak heat and waste carbon.
A quarter of UK emissions come from housing.
We spend more heating our homes than Sweden, where the sea freezes and the average winter makes Aberdeen look like Australia.
So our response is the Green Deal: a radical program to refit our houses and our workplaces. Money spent on improving energy efficiency will be paid for out of the savings on future energy bills, giving landlords and tenants the motivation to save energy.
There has never been anything like it.
It is important to realise the scale of the ambition.
We estimate that every single one of our 26 million homes could benefit from the Green Deal, with a market worth billions. Some 2.8 million businesses could also take advantage of the Green Deal to cut their carbon and save their energy bills.
And up to 250,000 jobs could be created across the country, boosting local economies from Bournemouth to Bradford.
As so often with energy policy, the numbers are huge. And they span the length and breadth of the country.
Because the big picture of the green economy is one of growth.
Not the casino capitalism that caused the meltdown; but sustainable, green growth.
With opportunities not just for private finance, but in innovation and research.
In manufacturing and installation.
In maintenance and supply chains across Britain.
In our homes everywhere, from Penzance to John O’Groats. And there’s no regional bias here - to the South East or anywhere else.
To meet our renewables targets, we’ll need new infrastructure that rivals the great 20th century civil engineering projects.
It’s estimated that offshore wind could employ an extra 70,000 people by the end of the decade, in a market worth £6 billion.
The global trade in low-carbon goods and services will reach £4 trillion by the end of this Parliament.
Last year the British share of that market was worth £112 billion.
Over a million people will be employed in low-carbon goods and services by 2015. It’s just over 900,000 now.
That’s a workforce - and a budget - to rival the NHS.
We must match our capital investments with investment in people. My Department will be working closely with the Department for Business, Innovation and Skills, and will work with the Sector Skills Councils, and the National Apprenticeship Service to ensure low carbon skills are brought within the wider skills framework.
Early feedback from the Low Carbon Skills Consultation suggests businesses need to recognise that skills development doesn’t stop.
I will make the case to businesses and employers that career development will be critical to ensure jobs created by green growth aren’t one-shot wonders.
To make sure jobs are sustainable in the long term, we also need to make it easier for business to invest in clean energy.
From Carbon Capture and Storage to offshore wind, we must create the right conditions to allow investment - and innovation - to bloom.
Since the financial crisis, big numbers are commonplace; a billion here, ten billion there. But new energy investment is about real money: £200 billion by 2020, to replace our creaking energy infrastructure and deliver the new generation we so desperately need.
The TUC have led the way. In 2009, you argued for a multi-billion pound green stimulus to secure a sustainable economic recovery.
And just last month, your General Secretary called for ‘much more emphasis on investment to stimulate green growth’.
The Coalition Agreement set out our plans for a Green Investment Bank. And last week, the Prime Minister’s conference speech showed just how serious we are. The Bank will help us meet the low carbon investment challenge, bringing private finance to bear on a public policy problem.
It is increasingly clear that for the UK, the future will be electric. We predict a doubling of demand for electricity by 2050.
To secure long-term supply of low carbon electricity, we also need to reform the electricity market.
Later this year, we will create a new market framework for electricity; one that encourages low-carbon investment and gives consumers a fair deal.
Our work on electricity market reform will look at how the carbon price, emissions performance standard, feed-in tariffs and the other levers at our disposal can deliver a secure, affordable, low-carbon electricity mix.
The first step is to get the evidence base right.
Next month, we’ll publish the technical consultation document, before launching a White Paper and then of course the legislation.
With input and support from our partners in industry, business and the unions, we can create the right conditions for affordable electrification - and for low-carbon growth.
I know many of you will be concerned about how ambitious emissions targets will affect the industries that use the most energy - and produce the most emissions.
Industrial processes present tough challenges.
Not only are emissions-heavy sectors a vital part of our economy, but we will depend on them to deliver the raw and manufactured materials we need to turn our economy off fossil fuels and on to clean growth.
Our 2050 analysis suggest that energy intensive industries can have a long term future within a low-carbon UK.
That’s why we’re working closely with the Department for Business, Innovation and Skills on an Energy Intensive Industries Strategy.
The strategy will look how key energy intensive sectors can reduce emissions, checking the short, medium and long term efforts to cut carbon.
It will factor in improvements to industrial processes as well as alternatives - and take account of the impact on supply chains for UK firms at home and abroad.
Again, it’s vital that we get the evidence base right. That’s why I welcome the study commissioned by the TUC and the Energy Intensive Users Group, which will be fed into the strategy.
Because we can only achieve the transition if we work in partnership. With business. With unions. And within government.
Everyone has a stake in the green growth agenda. We all need to play to our strengths.
It’s for government to set the right framework to support the move to a low-carbon economy.
It’s for businesses to step up and provide long-term investment on the scale we need.
And it’s for unions to keep fighting for fairness, for jobs, and for skills.
And to continue to enthuse and support your members as we move toward a low-carbon future. Because this really is an enormous opportunity, not just for businesses but for unions, and I encourage you to grasp it.
There are real opportunities for us to work together. At all levels, we’ll continue to engage with the unions. Ministers will meet with union leaders, and my door is open. Officials from DECC, Defra and BIS will work with you as we develop the strategies to take us to a low-carbon future.
And we will be relying on your contribution to the debate.
When a policy feels like it’s headed in the wrong direction, I know you will speak up.
I am sure that, in her remarks, Frances will not hesitate to tell a few home truths.
But just as there is a need for government to make hard decisions to secure the low carbon transition, so there is a choice for organised labour, too.
Jobs are important. Jobs are crucial. Growth is important. Growth is crucial. But we cannot support dirty fossil fuel generation uncritically.
Instead, we must trust in new green technologies to pick up the slack.
Yes, the state of our finances means the future is uncertain.
The Government will not be able to fund everything we want to fund. But we must play the long game; encouraging the sectors we know will be part of our energy future.
After all, it is in everyone’s interest. Jobs in unsustainable industries are by definition unsustainable jobs.
Unions should represent the industries of the future, not the past.
Short-term protectionism cannot triumph over the long-term health of our economy - or our planet.
And there’s another important role for unions.
It speaks to one of your traditional strengths: advocacy.
Bringing members and stakeholders together, to explain the size of the task ahead and create a more constructive dialogue.
We need people to engage with the scale of the challenge, so that the unthinkable becomes credible.
An energy crunch is coming. In its scale and its impact, it could rival the credit crunch. But if we are still hooked on oil, there will be no bailout.
Unions can play a crucial part in broadcasting the benefits of the transition to a more sustainable, low-carbon economy. Not just in terms of jobs and skills. But making the wider case for change - including on the international stage.
I know the TUC supports our ambitions for global action on climate change.
Just as governments come together within the UN process, so you work with trade unions globally through the ITUC.
As with the transition to a low-carbon economy at home, progress toward an international deal is a shared challenge.
I believe the best way to get there is to start leading by example. A higher emissions reduction standard within the EU would prompt a carbon price rise across Europe.
Sending a clearer signal to investors and boosting our regional economy.
That’s why, together with my French and German colleagues, I have argued in favour of more challenging target for 2020: a 30% reduction in emission, not 20%.
It is ambitious, but achievable. And I believe it is absolutely necessary.
For consumers, who cannot and should not be held hostage by energy companies’ creative billing.
For the public who depend on stable, affordable energy to heat their homes and move their goods.
And for the economy, which, in its fossil-fuel dependency, is vulnerable to price shocks and instability.
Before I leave, perhaps there is time for one final thought.
For many Britons, the 1970s were synonymous with two things: inflation and an energy crisis.
At DECC, we’ve been looking at the impact of a 1970s-style oil price shock on our economy.
We found that a doubling in the oil price would lead to a cumulative loss of gross domestic product of around £45 billion over 2 years.
If we can secure the transition to a low-carbon future, we can protect ourselves, our economy and our jobs against oil shocks and resource risks. If we can work together - on jobs, skills and green growth - we can do our bit to keep below that 2 degree limit - which is the objective of our international negotiations.
I look forward to working with you to meet what I passionately believe is the biggest challenge of our time.
Thank you very much.