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Statement on Clean Energy Systems

The Rt. Hon. John Hutton MP,  Secretary of State for Business, Enterprise & Regulatory Reform
Aomori, Japan,  08 June 2008

Introduction

Mr Chairman, with your permission I would like to make a brief introduction to this debate about the transition to a clean energy system.

If we are to meet the twin challenges of climate change and energy security, we must find the most cost-effective way of significantly reducing carbon emissions over the decades ahead.

As world energy demand soars, the pressure to find answers grows.

Effective energy markets are vital to the delivery of a diverse mix of cost-effective low carbon energy sources.

Role of the market

Open, transparent and competitive energy markets give business the confidence and certainty to invest. This must be central to our efforts.

Governments can help to stimulate markets and incentivise the deployment of new technologies. Those interventions should focus on achieving our policy outcomes. For example, by setting a cap on carbon emissions and incentivising the market find the best way to meet that goal.

Clean energy mix

The IEA’s technology roadmaps give us an idea of the breadth and scale of the investment required. 17 key technologies; with research, development and demonstration costs of $3.6 trillion globally; and commercial costs of $45 trillion up to 2050.

And at a time of rising energy prices and wider global economic uncertainty we must meet this investment challenge while keeping costs low as a possible for consumers and taxpayers.

The IEA’s roadmaps show nuclear, renewables and CCS could deliver around half of the world’s effort in cutting CO2 by 50% by 2050. I want to briefly touch on each of these areas.

Nuclear

First, I believe there should be an increasing role for nuclear power.

The IEA estimates 32 nuclear reactors must be built globally every year if we are to halve emissions by 2050.

In the UK we recognise the contribution nuclear can make and have recently given the green light to a new generation of nuclear power stations. The market believes the first new reactors could be operational in the UK by 2017.

The rapid transition to a low carbon energy system means technologies that are proven and provide baseload capacity are critical.

The debate about the role of nuclear power in the UK has shifted in recent years. There is a positive recognition that nuclear can play an important role in securing our energy supplies and reducing carbon emission.

UK regulators have been in discussions with French and US regulators on the scope for shared approaches to regulation. We should look to extend such co-operation further.

Renewables

Secondly, we need to see a major expansion of renewable energy.

Renewables could provide a fifth of the emissions cuts we need and half of global electricity by 2050.

For wind, this could mean annual increases in capacity of around 14,000 large onshore wind turbines and around 3,750 offshore turbines. This is significantly above current trends.

The question for us today is what more can we do to accelerate growth in renewables?

I think we should focus on increasing our commitment to R&D in this area. We must also rapidly increase the deployment of the most mature renewables - for example, wind - through focused deployment incentives.

In Europe, we have set a target to source 20% of our energy from renewables by 2020. Meeting this ambitious target will be tough. Shortly we will publish our initial analysis on how the UK could deliver a ten fold increase in renewable energy capacity within 12 years.

But there is also an economic opportunity for all of our economies. The potential for millions of new skilled green collar jobs in the decades ahead.

A real economic dividend in the fight against climate change.

Carbon capture and storage

Third, with global coal demand set to rise, developing and deploying CCS technology must be a priority.

I strongly endorse the recommendation that, globally, we must have 20 large scale demonstrations launched by 2010, if CCS is to play its full part by 2020.

We should discuss the G8’s contribution to this goal. We must lead the development and deployment of this new technology.

How can we ensure the successful delivery of this new goal by the Canadian G8 Summit in 2010? How can we help other developed nations to demonstrate this technology and work together to ensure that the major emitters of the future can deploy CCS?

Financing will be critical. We will not achieve the goal of 20 projects launched by 2010 unless we find a way of incentivising their development.

We should also explore how we can work together to develop a common understanding and approach to the regulatory framework that should govern the deployment of CCS across the world.

Some countries already have plans to build commercial scale demonstrator plants. In the UK we are managing a competition to build a commercial scale post combustion coal fired CCS powerstation. We want to see this project operational by 2014.

In support of further progress I am pleased to invite the international community to London next year for the next Carbon Sequestration Leadership Forum ministerial conference.

Conclusion

To conclude Mr Chairman, global problems demands global solutions.

Nuclear, renewables and CCS will not only help meet the challenge of climate change and provide our countries with secure energy, but will reduce our dependency on oil. They will provide the platform for hybrid and pure electric vehicles which must become part of the mainstream of transport technology within a generation.

The G8 has a leadership role in defining global solutions and acting. We must resist the temptation to demonise those emerging economies who are seeking better living standards for their people. We must accept our responsibility to carry the burden of the transition to a low carbon economy just as we have benefited from the industrial revolution during these past 150 years.

There will be costs in this transition. But the benefits of action far outweigh the risks.

And the prize of creating a low-carbon, successful economy will help us thrive and prosper in the future.