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Lord Truscott, Former Parliamentary Under Secretary of State for Energy
London, 12 June 2007
SPEECH TO ROYAL INSTITUTE OF CHARTERED SURVEYORS, 12 June 2007
It’s a great honour to be giving this keynote speech to the Royal Institute. And it is very timely too: as you know, we published our Energy White Paper just a couple of weeks ago. And last week the meeting of G8 leaders in Germany made real progress towards international agreement on how to tackle climate change.
Let me start with the White Paper. Its significance cannot be over-stated. It’s about tackling two challenges – climate change and energy security - which pose a fundamental threat to the global economy and to our way of life. So there is an awful lot resting on it.
The two challenges are interlinked. And we cannot afford to succeed on one at the expense of the other. First, we must tackle climate change by reducing carbon dioxide and other greenhouse gas emissions both within the UK and abroad. Most carbon dioxide emissions come from the production and use of energy. At the same time, we must ensure we have secure and affordable supplies of energy, as we become increasingly dependent on imported fuel.
Neither of these challenges has a single solution and nor can they be solved by the UK alone. That’s why we stress throughout the White Paper that we must help deliver international cooperation as well as take action at home.
We must also be honest about the gaps in our knowledge and foresight. We cannot know everything today, for example the outcome of international negotiations on climate change, or how the costs of different technologies will evolve. We have designed our strategy to be able to cope with these uncertainties
In a moment I will say a bit more about the UK’s approach to energy policy. But first – because the international context is so crucial in rising to these challenges – let me speak about the G8 summit which took place last week in Heiligendam, Germany.
Climate change was central to the Prime Minister’s discussions with other G8 leaders in the run-up to, and during the summit. This commitment has contributed to a hugely successful outcome: a statement that represents a step-change in international climate change efforts. It will re-invigorate UN climate change talks in Bali this December. It sends a message to the world that developed and developing countries together are ready and willing to act.
The UN is the forum through which all binding commitments to combat global warming will be agreed, and the G8 has given a strong negotiating steer for talks to begin developing a comprehensive, global post-2012 framework - to be agreed by 2009. This represents a major achievement, and demonstrates the UK’s success in leading the international debate in recent years.
In particular, The G8 has stated that a global emission reduction goal must be agreed, involving all major emitters, and taking account of the European goal to reduce emissions by 20% by 2020, or 30% if international agreement is reached. This is the first time that the G8 has announced the need for a goal against which global efforts should now be measured.
The US has, for the first time, seriously committed to engaging in discussions on a post-2012 international climate change framework. The US has also demonstrated its increased engagement by pledging to host a meeting of major energy consuming and greenhouse gas emitting countries that will support and add momentum to the UNFCCC process.
G8 leaders also discussed the rapidly growing movement towards the establishment of emission trading schemes globally at national and sub-national level, and the importance of sharing experience on emissions trading as a precursor to the future linking of these schemes. This is not yet a full endorsement by the US, but recognition that of the potential for the market and a carbon price to deliver incentives to the private sector.
The UK has also succeeded in realising its key ambitions of agreeing strong commitments on technology development, deployment and transfer, support to developing countries for adaptation and the establishment of mechanisms for reducing deforestation.
Let me return now to domestic matters, and the our overall approach we have taken in the White Paper. We have two guiding principles:
The first is the principle that independently regulated, competitive energy markets are the most cost effective way to deliver secure energy supplies and lower emissions;
And the second is that the best way to deal with the uncertainties of the future is to give the market access to all the options available, so we can have a diverse and increasingly low carbon energy mix. This will enable us to respond to the rapidly changing challenges we will face in the future.
So what is the Government’s role within these competitive markets?
It is to encourage development of a wide range of low carbon technologies, so that the market can help us minimise the costs and risks to the economy of achieving our goals.
We will do this by providing the right information and incentives for producers and consumers of energy and removing barriers to action - for example by giving the market confidence that there will continue to be a price on carbon emissions for the long term. In this White Paper, we are strengthening the framework in which the market operates and companies make their investment decisions to ensure we meet our long term goals.
What about the specifics?
We need to accelerate the UK’s transition to a low-carbon economy - how are we going to do that? How can we cut UK emissions by more than a quarter by 2020 relative to 1990 levels, even though the economy will have doubled in size in the same period? As the White Paper explains, we will:
Let me turn now to a subject which I know is close to your hearts – planning. A week before the Energy White Paper, we published a Planning White Paper to show how we will make fundamental reforms to the planning system.
Clearly, much of the success of our energy policy rests on the success of our planning reforms: whether we are talking about major gas and oil infrastructure, new electricity generators, connections to offshore wind plants, or more local and distributed energy facilities, including installation of microgeneration products like wind turbines and solar panels on homes and buildings.
Spatial and transport planning more generally also has a large impact on energy use.
We stated in the Energy Review (Chapter 7) that we are committed to introducing fundamental change to the planning system for major energy projects. We have already introduced streamlined inquiry rules.
And we will support investment in new energy infrastructure for example by introducing a new information service later this year – the Energy Markets Outlook - to provide in-depth and clear forward-looking energy market information and analysis.
DTI has played a key role in shaping the Government’s response to the Barker and Eddington Reviews and have worked as part of a cross-Whitehall team to deliver the White Paper, Planning for a Sustainable Future.
Together the Energy and Planning White Papers give greater clarity on what planning reform will mean for the energy sector.
We are aiming to create a clearer framework of national policy and a clearer framework for consultation and engagement. This should increase transparency and ensure there is greater predictability for development where national policy has identified a national interest. The reforms proposed create three main stages in the process:
These reforms are aimed to ensure speedy and efficient investment in our energy infrastructure. As I have explained, this is vital for a number of reasons – not least because of the challenge of generating low carbon electricity. Which brings me to nuclear power, a subject which never fails to generate heat, if not light!
Nuclear is an important part of our energy mix at the moment. We currently get about 18% of our electricity from nuclear power stations, which are a low carbon form of making energy. Most of these power stations are set to close over the next two decades.
Let’s consider the case for nuclear:
It’s low carbon. Compared with an equivalent gas fired station, every year that a modern nuclear reactor operates saves 2.6m tonnes of carbon dioxide being pumped into the atmosphere (based on 85% load factor). Compared with an equivalent coal fired station, this equates to 5.5m tonnes of CO2.
According to our modelling, nuclear is currently the lowest cost low-carbon technology.
It’s proven and we know it works. We’ve been getting our electricity from nuclear for over half a century.
Nuclear gives us a regular and steady supply of electricity. It does not suffer the intermittency problems that we face with some renewables, which need back up generation to ensure a secure supply.
The fuel for nuclear comes from a wide range of sources, like Australia and Canada. This diversity is good for our security of supply at a time when we know energy supplies are becoming more politicised.
We need to make a decision now on whether we should continue to get some of our electricity from nuclear. Time is pressing on this - we need to make this decision this year, because these stations take a long time to build.
In conclusion, there are also important decisions to be taken internationally: on the post 2012 Kyoto framework for tackling climate change; on the future of the European emissions trading scheme; and on how to implement the EU’s recent agreement to cut emissions and boost renewable energy.
The long term direction of our policies is clear. We must not hold up the progress we can start to make with the measures we are announcing today. We must start implementing now.
