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A chance for change
The long-term global challenges of energy security and climate change are inextricably linked. As Sir Nicholas Stern’s review of the economics of climate change concluded, the science of climate change is indisputable and requires urgent action at home and internationally to tackle it.
The Stern report shows that the cost of inaction would be far higher in the long term than taking action now. It also explains that the costs are lowest if we all work together. His message is clear. There is still time to avoid the worst impacts of climate change if we act now and if we act internationally. Here in the UK we have shown our determination to ensure we have a secure, clean energy mix.
 Canary Wharf boasts some of the largest and highest green roofs in Europe |
Our starting point for tackling these challenges is the need to save energy. The measures we propose in the review conclusions will help us save energy in our homes, in businesses and in our public buildings, saving carbon and saving money. Underlying all our proposals, and at the heart of our policy, will be incentives for business and individuals to reduce carbon emissions. These proposals are a significant step in the right direction, getting us on course to achieve real progress in emissions reductions by 2020 and on the right path to achieving our goal of cutting the UK’s CO2 emissions by some 60% by about 2050.
We are determined to ensure the UK market is as resilient as possible in the future through effective and secure gas supply arrangements. The UK is entering a new era for energy supplies. For years we have been self-sufficient in gas and oil, thanks to North Sea production. There are still many years of production there, but, as reserves decline, we will increasingly depend on imports to meet demand. We are already seeing investment of around £10bn in new gas infrastructure and in two years’ time there will be additional gas import capacity equivalent to 70% of Britain’s annual gas consumption.
Second, there has to be a significant increase in the amount of clean, green electricity we produce from renewable sources. We set out plans in the review for a five-fold increase in the amount of renewable energy in the UK. We are working towards having around 20% of our electricity coming from renewables by 2020. We have been consulting industry, investors and others on how to reach this goal. For example, we’re considering changes to the Renewables Obligation to better support emerging renewable technology so it develops at a faster rate.
There is no doubt that reaching our 2020 target will be tough. It means we must do everything we can to generate more power from offshore wind farms and other emerging technologies, like biomass and wave and tidal, while maximizing the contribution from those technologies that are already being deployed.
We have a strong and long-term commitment to renewables. But the reality is that renewable energy simply will not be able to provide all the new electricity generation we need, in the time scale we need it. We also believe that we cannot go down one route to the exclusion of others, and that a balanced approach is necessary. This means investing in the future. The UK must become a world-leader in developing vital new low-carbon energy technologies and this is why the government is establishing the Energy Technologies Institute.
By bringing together the efforts and investments of both public and private sectors, and a combined budget of up to £1bn over the first 10 years, the Institute will have the potential to make a huge impact. For business, there are challenges and opportunities to be seized from the future energy and environmental agenda. Businesses are already becoming acutely aware of the fact that failure to take action to reduce their carbon dioxide emissions is going to cost them not only money but customers. Increasingly the green credentials of a company are as much a selling point as competitive prices.
 The world needs a revolution that defines the low carbon age |
There are huge opportunities that will be good for business and the world in which we live. New “green” markets could be worth many billions of pounds in the coming years. The UK already has a reputation for having strong aerospace and pharmaceuticals industries. But, with a value of £25bn in the UK alone, the environmental industries sector in Britain is as big as both of those industries combined. Over the next decade it is predicted to double, and globally it is predicted to reach $800bn by 2015. That’s the size of India’s entire economy.
In the future, we know that if we are to avoid the devastating effects of climate change, we will need to have found new, innovative, low-carbon ways of running our economy, and producing and using our energy. For a young entrepreneur starting out in business today, this change will have taken place in his or her lifetime. It is perhaps the greatest opportunity to face a generation of entrepreneurs.
Just as the steam engine did for the industrial age and the internet did for the digital age, we need a revolution that defines the low-carbon age. Who will commercialize carbon capture for burning coal and gas? Who will work out how to provide cost-effective low-carbon homes? Or TVs that only use a fraction of the power they use today? Who will make tidal energy a reality? And who will bring the hydrogen Model T to market?
The next successful entrepreneur will be the one who can answer these questions and more; the one that understands the needs of a low-carbon economy; and, the one that leads both the UK and the world in making the changes needed now, rather than waiting for the competition to do it.
We want to be a low-carbon economy with secure and affordable energy and policies that mean business can make the right investments at the right time. It is now for us – at national, regional, international and local level – to take the journey down that path. There is no doubt that the challenges in front of us are huge. There is also no doubt that the technology is being developed to face up to those challenges. In many cases the technology already exists. It’s making sure that we apply it in the best possible way. The key is to work together to make difficult but, ultimately, exciting decisions now. This is vital for this country’s future prosperity and the health of our planet.
For further information on the Stern Review, visit:
Website: www.hm-treasury.gov.uk
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