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'Energy Challenges in the 21st Century'

Malcolm Wicks MP,  Minister of State for Energy
The Royal Geographical Society ,  26 March 2008

The 21st century is only a few years old, but I think we can already list three of its major challenges with reasonable confidence: energy security, climate change and social justice.

Many of the decisions we make now in these areas will have implications for the next fifty years at least.

Climate change is a global problem, clearly requiring international solutions. But it goes hand-in-hand with the geopolitics of energy supply and demand, which have emerged for governments around the world as a crucial factor in national peace of mind, and which featured prominently in the National Security Strategy published by the Prime Minister earlier this month.

With such powerful forces at play, it’s important that we remember the weak. The energy revolution of the 21st century must not be allowed to create a new underclass of energy-poor, either people within our own society priced out of the warmth they need, or developing nations having, in order to compete, to accept high levels of pollution or to replace the food crops they need with biomass for export.

Climate Change

We are fortunate in this country that there is no longer any serious argument over the fundamentals of climate change. The scientific evidence is overwhelming: the climate is changing, and we have to act.

We know that the effects of global warming become extremely severe with a temperature rise of over 2 degrees Celsius, and that much of the world faces a rise of over 4 degrees if we fail to act.

We also know that carbon dioxide emissions are largely to blame, and that fossil fuels used in energy production (including heat and transport) are responsible for the majority of those CO2 emissions.

The latest World Energy Outlook report from the International Energy Agency predicts that, under current policies and trends, global carbon dioxide emissions will rise nearly 60% by 2030.

Sir Nicholas Stern’s report pointed very clearly to the economic imperative of addressing climate change quickly - showing how the cost rises exponentially if we wait, with the risk of wiping at least 5% from global GDP each year.

And the seriousness of the ecological situation was brought home to me personally when I visited the British Antarctic Survey team. This is, of course, where British scientists first discovered the hole in the ozone layer. The young researchers there undertake vital work on ice cores, which document the impact of fossil fuels on the climate.

I was struck by their very real concern, both as scientists and as citizens, about the dramatic changes they’re witnessing, not least in terms of sea level.

The IPCC calculate that the global average sea level has risen since 1961 at an average rate of 1.8 millimetres per year, and since 1993 at 3.1 millimetres per year, with contributions from thermal expansion, melting glaciers and ice caps, and the polar ice sheets.

Of course, it is always likely to be the poor who are most at risk. For example, projections show that long-term sea-level rise in the 21st century could displace around 17 million people in Bangladesh, one of the world’s poorest countries.

Energy Security

Now let me turn to energy security. The finite nature of the planet’s reserves of fossil fuels is very apparent, and high energy prices are no surprise when global demand is also rising dramatically, not least as a result of the success of China and India.

The World Energy Outlook predicts, under current policies, that the world’s energy needs will grow by 55% between 2005 and 2030, with fossil fuels accounting for 84% of this.

Developing countries contribute 74% of this global increase, with China and India alone accounting for 45%.

Here, stocks of oil and gas in the UK continental shelf are declining, currently by about 8% per year. Having enjoyed a period of being a net exporter of oil and gas, the UK is now a net importer; by 2020 we will be importing the majority of our gas.

With around half the world’s coal reserves in the US, Russia and China, big gas reserves in the Middle East and Russia, and with oil overwhelmingly concentrated in the Middle East, it is clear that we need to avoid over-dependence on any one region of the world for our supplies.

Our strategy

Faced with these twin challenges of climate change and energy security, it is clear that we must move as quickly as possible towards being a successful low-carbon economy.

This means cutting our carbon emissions dramatically while still powering our economy, and taking action now to ensure that the secure energy supplies we’ve enjoyed in the last fifty years are replaced by new but equally secure supplies in the next fifty.

So we are the first Government in the world legislating to impose a binding target for reducing CO2 emissions on ourselves - we’ve committed to a 60% reduction in CO2 by 2050, and will consider tightening that target up to 80%.

The EU Emissions Trading Scheme is vital as we work to meet that binding target. It puts a price on carbon, giving industry both an incentive and a mechanism to cut its emissions in the most cost-effective way.

And we are working to reform the Scheme, to make it more effective and to bring in aviation and carbon capture in the future.

London is already a leading centre for carbon trading - as usual, there are economic opportunities as well as costs in tackling climate change. And the global carbon market that we want to see in the longer term will help to extend clean technologies to the developing world.

Energy efficiency is vital. What may seem small things - insulating homes so they’re cheaper to heat, replacing light-bulbs with energy-efficient ones, even just turning the TV off rather than leaving it on standby - can make a big difference.

But energy still needs to be generated.

So we need to bring on low-carbon sources such as renewables and nuclear. We have huge momentum in renewables now. This year we expect to become the world’s leading country in terms of installed offshore wind capacity. And we are studying the feasibility of harnessing the tidal power of the river Severn, whose estuary has the second largest tidal range in the world, capable of meeting 5% of the UK’s electricity needs.

And while we continue to move forward very rapidly with renewable deployment, this summer we will be consulting on our strategy to make the further step-change we need in order to meet our share of the EU target of 20% renewable energy by 2020.

Nuclear power is a low-carbon energy source, and we have asked energy companies to come forward with proposals for new nuclear power stations as the current ones near closure. Companies will have to provide up front for their waste management and decommissioning costs, meaning that new nuclear power stations will not be subsidised by the taxpayer.

But we also have to be realistic and recognise that we will still be burning fossil fuels for decades to come - and so, more importantly, will countries like India and China.

We are therefore leading the way in the search for technological solutions that will make these fossil fuels cleaner. We are supporting the world’s first commercial-scale demonstration project for post-combustion carbon capture and storage on a coal-fired plant. This technology has the potential to capture 90% of carbon emissions, and is a crucial tool in the global fight against climate change.

Our approach remains a market-based one, because we know that markets produce efficient outcomes. But intervention is sometimes needed to ensure that the vulnerable do not suffer at the hands of the market.

Fuel poverty in the UK reduced year-on-year from 1997, until last year, when the increase in global energy prices started to reverse some of our good work in this area. That’s why we are now working harder than ever to address this problem, and of course it’s why the Chancellor’s announcement in the Budget of a substantially increased Winter Fuel Payment this year was so welcome.

The citizen

I’d like to finish by saying a word about the role of the citizen. I believe the 21st century will not be an age of state control - it will be an age of the informed citizen, empowered like never before by technology. An age of choice.

So I hope that people will play an active and informed part in politics and public affairs, applying pressure to local and national Government to make us make the right choices.

I hope we all will take personal action, for example by recycling as much of our waste as possible, by choosing low-carbon products as consumers, by improving the thermal efficiency of our homes, and by taking care with our modes of transport.

And finally, I hope people will be prepared to make mature judgements about energy infrastructure projects - or at least to accept that Government has to. Green pressure groups sometimes suggest that renewables and energy efficiency alone can provide a complete solution. That’s simply not realistic.

Meanwhile, even those renewables projects are often controversial, with many people happy to support the principle but, for example, opposing some wind turbines near their village.

I believe we can meet the great challenges of energy security and climate change in the 21st century, and in a way that allows for social justice. But it will require a mature approach, and that means saying yes sometimes.

With that mature approach, we have a unique opportunity to set a positive direction for the coming decades, and I believe that is what we are doing.