143/07
12 December 2007
Speech by the Chancellor of the Exchequer, the Rt Hon Alistair Darling MP, at HRH Prince of Wales's Accounting for Sustainability Conference at St James's Palace
I want to start by congratulating "Accounting for Sustainability" on what you have achieved in just one year, in bringing together over 150 organisations from the public and private sector, and in doing so making practical proposals on the way we go about our lives.
And I want to congratulate His Royal Highness for his leadership over many years in arguing and acting on the need for us all to lead our lives in a more sustainable way as you say, considering what we do, not just in terms of ourselves and today, but also of others and tomorrow.
For me, ensuring a strong and a sustainable future is essential.
But I will admit it wasn't sustainability that drew me into politics over 25 years ago.
What drew me in was tackling the big problems we then faced. High unemployment. The loss of opportunities for so many.
But today, few problems could begin to rival the need to ensure a sustainable future and in particular the challenge posed by climate change.
The evidence is compelling and the need for action urgent.
What was once a minority pursuit is now at the heart of the political debate.
When I entered Parliament 20 years ago, I would not have predicted that the 2008 budget would be heavily influenced by sustainability.
Yet it is sustainability that will be at the heart of the next budget.
This is not an optional extra. It is essential for all our futures.
There are of course costs to tackling climate. But there are greater long-term costs if we do nothing here and across the world.
As Sir Nicholas Stern showed the costs of not taking action are potentially enormous - business as usual emissions could lead to damages equivalent to as much as 5 - 20 per cent of global GDP.
We cannot let short-term costs stop us acting now. And as Chancellor, I will not have a Treasury that only sees the cost of acting, but a Treasury that sees the cost in not acting.
Ultimately, there cannot be a trade off between a strong economy and sustainable future. And that is my key message today.
And this is a task for us all:
- For individuals. All of us can play our part. Just turning off the standby on our TVs and DVD players is the equivalent of a medium sized power station than can power three quarters of a million homes.
- For businesses. The Energy White Paper I published in May showed how business can generate huge savings in energy as we ensure sustainable and secure low carbon energy suppliers.
And I am pleased leaders of two of Britain's most successful companies have spoken here today and so many companies have been part of this project.
And for businesses there are huge opportunities. By 2050 the worldwide value added of the low carbon energy sector could be as high as $3 trillion per year by 2050.
If Britain just holds to its share of the current market, over the next twenty years that could mean over a million jobs.
As the Commission for Environmental Markets we set up last year has reported last month:
"By making the UK one of the best locations in the world to develop and introduce low-carbon and resource-efficient products, processes, services and business models, the country can attract the investment today that will help create tomorrow's prosperity and jobs, as well as contributing to a cleaner environment". And that is what I am determined to do.
And it is a task for governments. Both by example - we have committed to making the whole of the government estate carbon neutral by 2012, and the conclusions of this project will help us in this.
And also by making the right long term policy decisions that will ensure we meet our long term responsibilities to generations to come.
First, by putting in place the international framework, because - to state the obvious - we are facing the most international of challenges.
Just last month the Intergovernmental Panel on Climate Change has set a clear objective: global greenhouse gas emissions peaking within the next 10 to 15 years and then halving by 2050.
The goal: a low carbon global economy.
That is the aim of the United Nations Climate Change Conference taking place now in Bali.
And it is essential at Bali that we make real progress.
This means putting in place the mechanism for carbon trading so emissions reductions can be achieved in the most effective and efficient way.
The international carbon market is already worth $30 billion, with London as its centre. We will do all we can to build that further.
The foundation of this carbon market is the EU Emissions Trading Scheme, so European cooperation is essential:
We will champion the next stage to develop a deeper and broader market that drives low carbon investment, to reach the EU's target of a 30 per cent reduction in emissions by 2020 if an international deal can be reached.
To make this work means binding emissions caps for all developed countries. More and more countries are recognising their responsibilities - in the last few days Australia has signed the Kyoto treaty.
It means as part of this putting in place the system for financial transfers so developing countries can increase their prosperity in this century without the pollution that went with increasing ours in the last.
To help this happen Britain has committed £800 million to support development and poverty reduction through protecting the environment in poor countries.
And it means each country playing its part. And I am determined this country leads.
In our environment policy.
In our economic policy.
And in particular our energy policy.
And let me take that as an example.
In the last four years we have championed low carbon sources of energy - more than doubling the contribution of renewable sources to electricity generation, and our Energy White Paper policies are set to triple today's level in just eight years.
We have committed to meeting our share of the European target for 20 per cent of energy to come from renewables by 2020.
On Monday John Hutton announced proposals to open up the seas to a massive expansion in offshore wind energy.
Local energy must play a bigger part. That's why I made more distributed generation - as its called in the jargon - a key part of the Energy Review when I was at the DTI.
We're streamlining planning permission procedures and supporting people installing local energy generators like solar, wind or ground-source heat pumps.
Last month we launched the competition for Britain's, and one of the world's, first carbon capture and storage projects. We are carrying out a feasibility study into how to capture the energy in the Severn Estuary.
And we have concluded our consultation on nuclear power, and will report early next year.
These are big decisions. They are difficult ones. But if we are to ensure a strong and sustainable future, we will have to make them. And we will.
And with up to a third of our energy being wasted, we must also do more to improve our energy efficiency. With bold decisions we can make a difference.
Take homes. Just a few years ago the idea of a zero carbon home was just that.
In ten years time every new home will reach that standard. We are legislating to require it.
And to help achieve it, we are exempting all new zero carbon homes worth up to half a million pounds from stamp duty. A green tax discount.
We will look at what more we can do to encourage their development. And because the carbon footprint of what has already been built will always outweigh what we build from scratch, we also need to look at what more we can do to encourage existing buildings to become lower carbon.
Setting standards for the future is essential. As is taxing pollution, while incentivising individuals and businesses to cause less pollution; and encouraging investment in greener technology and making it cheaper for consumers to choose the greener alternative.
The Government and the Treasury in particular can bring major contributions on the progress we make.
Professor Julia King will report to me at the Budget on how we can do this with cars.
Her interim report showed that by choosing the cleanest cars already on the market, people can cut emissions and their fuel bills by up to quarter; and by bringing to the market the next generation of cleanest cars, average emissions could be halved.
If we are going to reduce the harm caused by road transport we need the right incentives and the right rules to cut down on polluting cars, whether it is for the cars themselves or the fuels and energy that power them.
The basis for Britain's approach in the future is the new environment framework that will be established by the Climate Change Bill currently before Parliament.
This will be the first legally binding framework committing a nation to a low carbon anywhere in the world. It is one of the most radical pieces of legislation we have introduced.
It will mean that for the first time the amount of carbon we can emit is set out and defined in law.
This new framework and the new Committee on Climate Change as part of it will have as profound an effect on environmental policy as the Government's framework and the Bank of England's monetary policy committee did for economic policy when it was introduced ten years ago.
As with the economic framework:
- the new environmental framework sets a clear long term objective;
- it increases transparency with annual reports to Parliament and ensures accountability against our commitments;
- it brings independent advice on which Government will base its decisions,
- and it responds to the requests from business to provide the certainty necessary to bring forward investment and innovation.
In establishing this framework we are creating what amounts to a parallel currency and a parallel budget that will have to be managed alongside the revenue and expenditure the Treasury manages today.
Just as our public finances must balance over an economic cycle for the health of the economy, we must live within our new carbon budgets for the health of the wider world; and play our role in avoiding the threat of catastrophic climate change.
As part of this one of the first tasks of the newly created Committee on Climate Change will be to look at the scientific and economic evidence and the international context and advise us whether we should increase our 2050 target for cutting carbon by at least 60 per cent to up to 80 per cent.
It will also make its recommendations next year for three five year carbon budgets, setting out to 2022 the framework for achieving our targets - and in doing so show more clearly than ever before what we all must do to achieve them.
The Government cannot ignore it, no matter how inconvenient its advice might be.
And we will not.
Too often people see their environmental obligations as an imposition: they tell you what you can't or shouldn't do.
But I believe that there is a huge opportunity here, for businesses and for us as individuals
There cannot be a trade off between a strong and sustainable future.
Sustainability is not an obstacle to long-term success; it is essential for it.
"Accounting for Sustainability" has shown what can be done.
Your success can give us all confidence that we can all work together on meeting the challenges to securing a strong and sustainable future for us all.