Effective and efficient reductions in carbon diooxide emissions are needed worldwide to combat the threat of global warming

Climate change is one of the largest challenges facing both the developed and developing world in the 21st century. There is no doubt that climate change is a reality. Globally, the 10 hottest years on record have occurred since 1991. Recent UK research has strengthened the Intergovernmental Panel on Climate Change’s 2001 conclusion that “there is new and stronger evidence that most of the warming observed over the last 50 years is attributable to human activities”.

Indeed, the UK’s recent “Avoiding Dangerous Climate Change” science conference at the Met Office headquarters in Exeter reinforced this message, concluding that man-made climate change is increasing the risks to the world. The science conference looked specifically at what technological options are available to stabilise greenhouse gases in the atmosphere. The conference concluded that faster deployment, cost reduction and development and transfer of clean technologies are crucial. There are many different options already available and all should be developed.

These include energy efficiency improvement, renewable energy, decarbonisation of fossil fuels through carbon dioxide capture and storage and use of gas. Biomass, on and off-shore wind and solar energy, biological carbon dioxide sequestration and reduction of non-carbon dioxide gases in industry, waste management and agriculture also have key roles to play. Climate change is a global problem that affects every nation. This year will provide some key opportunities to reinvigorate urgently-needed action to combat climate change.

It is in this context that Prime Minister Tony Blair outlined in his recent speech to the World Economic Forum in Davos the UK’s three main aims for the UK’s G8 Presidency to combat climate change. He said that his intention was to create a solid foundation on the science to highlight the issues relating to climate change; to secure agreement on the development of the science, technology and other measures necessary to tackle the problem of climate change; and to engage with non-G8 countries that have growing energy needs to identify ways of meeting those needs sustainably.

Developing a package of practical technology measures to cut emissions will involve working internationally to increase the uptake of low-carbon technologies that already exist, as well as increasing research and development into new technologies.We need to maximise energy efficiency, use more renewable energy sources, make fossil fuels cleaner, such as clean coal, and avoid waste. The UK is currently developing ideas on improving energy performance, cleaning up fossil fuels and accelerating research and development, including capture and storage, and specific G8 events are planned for later this year.

As part of our G8 Presidency, the UK will be hosting a work on Innovation and Research into Energy in May, which will be part of the follow up to the Evian Action Plan on Science and Technology that was agreed in 2003 under the French Presidency of the G8. Researchers from the G8 and key emerging economies will attend the workshop, which will provide an opportunity to exchange information on research and innovation programmes. As a working level meeting, the aim will be to help researchers find partners for international collaboration.

The UK is also hosting in March an Energy and Environment Ministerial Roundtable for G8 nations and 12 of the world’s countries with significant energy needs. G8 nations need to engage with rapidly-developing countries such as India, China, Brazil and South Africa, to form a partnership, with the goal of finding a way for their economies to grow and develop as low-carbon economies. This is vitally important if efforts to tackle climate change are to be effective. By 2030, coal-fired energy plants in developing countries could produce more carbon emissions than the entire power sector within the Organisation for Economic Co-operation and Development (OECD) does today. The level of huge investment provides the world with a great opportunity to develop more efficient power plants.

These are important issues for the international energy industry that create risks, but also opportunities. Many countries are now rightly linking climate energy-to-energy policy. In the UK, we believe we are leading the way and have set a target of reducing carbon emissions by 60% by 2050. The policy framework is evolving. In February, we saw the Kyoto Protocol coming into force and the launch of the emissions trading scheme in Europe. Gradually, carbon is becoming money, across the world. Industry with foresight is grasping this, and adding it to their investment and financial management systems.

We have had our differences over the Kyoto Protocol. The UK remains supportive of Kyoto and is on track to meet its targets. But we need to move beyond Kyoto. Business and the global economy need to know this isn’t an issue that is going away. It is now a question of how and on what timescale we confront the issue; not whether. But we need to act now. Delay will only increase the seriousness of the problem and the cost of transitioning to a lower carbon economy. If action to reduce greenhouse gas emissions damages our economies it will not succeed. However, this need not be the case.

Tackling carbon provides the prospect of significant business and economic opportunities. In Europe, the European Emissions Trading Scheme will be a powerful driver to a more sustainable means of energy generation, industrial production and to business activity. In Britain, our economy grew by 36% between 1990 and 2002, while greenhouse gas emissions fell by 14%. By using market-led policies, we predict that cutting UK emissions by 60% by 2050 will only cost us around six months of Gross Domestic Product growth. Companies, too, have achieved significant competitive advantage.

Improving energy performance, while reducing greenhouse gas emissions, has been clearly shown to be profitable in the business sector. Between 1998 and 2001, BP reduced its greenhouse gas emissions by nearly one fifth. The company achieved this through an internal carbon trading system. BP spent approximately $20m to implement its reduction strategy, but in the process realised almost $650m in financial savings within just three years.

The UK notes the achievements of the California Fuel Cell Partnership, which is an industry–government collaboration to advance a new vehicle and fuelling technology that could move the world towards practical and environmental solutions. The Partnership has impressive backing from car manufacturers, energy providers, technology companies, government agencies and transport firms. Partnership supporters are involved in demonstrating hydrogen fuel cell vehicles under real day-to-day driving conditions; testing alternative fuels and demonstrating the viability of an alternative fuel infrastructure.

While full commercialisation of such technology is years away, the Partnership is helping to increase public awareness of hydrogen vehicles. And observers generally agree that fuel cell cars will supersede the internal combustion engine by the middle of the century.

The prospect of energy-efficient car use is very appealing to the UK. Indeed, the UK has been involved in running its own fuel cell demonstration in London involving three hydrogen buses. This forms part of a wider European project involving 27 buses in nine European cities – probably the largest demonstration of fuel cell buses in the world to date. The development of fuel cell technology in the UK was highlighted in our Energy White Paper, which backed the idea of the establishment of an industry body to create a unified vision for the UK fuel cell sector.

Fuel Cells UK was established in 2003 and has been undertaking a range of activities designed to bring the developing UK industrial sector together and to increase its profile, both at home and internationally. Currently, Fuel Cells UK is working with the sector to develop a Fuel Cells Technology and Market Roadmap, which is expected to be completed by April 2005. Fuel cells offer virtually zero emissions at the point of use, with water as the only byproduct, applications include stationary power or combined heat and power, portable applications, with fuel cells replacing batteries used in mobile phones, lap-top computers and power tools, and transport, as a replacement for the internal combustion engine.

The UK government has also launched the Low Carbon Vehicle Partnership, which demonstrates both government and industry’s commitment to promoting the shift towards the use of low carbon vehicles and fuels. A Low Carbon and Fuel Cells Centre of Excellence is being established with funding of up to £7.5m. The centre, which will be based in Loughborough, will be operational later this year. Towards the end of 2005, the UK government will host an international, environmentally-friendly vehicles conference. The event will coincide with the UK’s G8 Presidency, but will also include European Union and large emerging economies. The conference will host an exchange of best practice from across the world on how to get people to buy clean, fuel-efficient cars.

Carbon dioxide capture and geological storage, or sequestration, also represents an important option for reducing emissions from the use of fossil fuels. The oil and gas industry is already very active in this area, especially in research and demonstration projects. The UK is working closely with the US through the International Carbon Sequestration Leadership Forum.

The UK too has held talks with oil companies about the possibility of pumping carbon dioxide from coal-fired power stations into declining oil and gas fields in the North Sea. The cost of pumping the liquid carbon dioxide into the wells would partly pay for itself because it would force more oil out of the ground, extending the life of oilfields which would otherwise be abandoned.

A portfolio of options, which without doubt will change over time, is needed to help bring about effective and efficient reduction in carbon dioxide emissions. We need to use all the available technologies, with close collaboration with all parties, ranging from governments, states and business across the world, to help combat the increasing threat posed by climate change.

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