Good morning it’s a real pleasure to be here and great to see some old friends in the audience. I’m really proud to be asked to open what I think is going to be an incredibly productive day, not only because Ben Caldecott is a master of this stuff, and knows far more than me, but also because I think we’re kind of at a tipping point in this whole debate about environmentalism and climate change.
And I’ll talk a little bit about that, but Al Gore – I don’t know if anyone saw his second movie, there are many things about Al Gore that aren’t to love, he didn’t invent the internet, let’s be clear – but he described us as being in a sort of ‘yes we can’ moment when it comes to environmental solutions, and I think that is true both in the UK and I think that it is also true globally, and in a couple of weeks I’ll be off to the 23rd Council of Partners which is the UN’s negotiating panel, and its very striking how the renewed commitment to the Paris Agreement is being expressed by countries attending, and also very practical actions are coming together – Ben [Caldecott] talked about the phase out of coal, when we have the country that built the industrial revolution on the back of our fossil fuels underground will be one of the first to phase out unabated coal-based power production and we’ve been joined by Canada and we will be launching a global ambition with other countries signing up.
So there is a real kind of momentum in this area, but if you’ll forgive me I want to take you back a few years because when I came into this brief, and I’ll tell you a little bit about my journey, it was in the knowledge that the sort of core conservative principle of stewardship – of actually taking for a relatively short period of time responsibility for an asset and preserving it, and enhancing it, and handing it on in a better place – was something that had been very profound and had run through the Conservative Party for many, many years. I wanted to quote from three speeches that have been made over the last couple of decades to illustrate this.
So come with me to 1989, a speech made to the United Nation’s General Assembly and remember this is the point of the falling of the Cold War, a feeling of incredible political change but also a move towards political stability if you like in the world for the first time in many generations. And our speaker said this: “we have become aware of another insidious danger, the prospect of the inevitable damage to the atmosphere, to the oceans, to the earth itself. It is mankind and his” – or her, that wasn’t said at the time but perhaps it should have been – “activities which are changing the environment of our planet in damaging and dangerous ways.” Growth that does not protect the planet today – we should be looking for growth to protect the planet today and does not leave our children to deal with the consequences tomorrow. And modern multi-national industry is effectively the way to deliver this – we rely on them to deliver the research and find the solutions to our problem, and was left with the rallying cry that: “no generation has a freehold on this earth, all we have is a life tenancy.” And that of course was Mrs Thatcher, who was a scientist, who was an environmentalist. The pressing problem at that point was acid rain which we had suddenly woken up to as being a consequence of having south-westerly prevailing winds and large power stations. But the first speech ever made on the floor of the General Assembly, and I think those themes are as relevant today as they were then.
Now, we’re in 2009 in Britain. In the depths of the longest and deepest economic contraction in the economy for Britain and for the world since World War Two where all sorts of questions were being asked about: “how is this affordable?”, “how can we possibly be investing money in these long-term solutions when we’re actually struggling to deal with funding the automatic stabilisers that happen in a recession?”, and our speaker said this: “fighting climate change is costly, some say it is unaffordable especially at the time of recession, and that environmentalism is purely sacrificial, effectively looking forward to a deep-green future where our quality of living standards are much lower. But, investments in energy saving measures are not just costs, but they clearly generate returns on investment. And investment now saves the cost of mitigation and adaptation further down the line, and also improves our energy security.” And this speaker set our ambition for the UK to be the world destination for sustainable energy investment and to promote investor confidence. And that of course was Greg Clarke, my current boss, who was the shadow Secretary of State for Climate and Energy in 2009.
2015. A speaker from our party said: “I do not accept it has to be a choice between future prosperity and safeguarding the future of our planet. It is not a zero-sum game. The costs of doing nothing are catastrophic, and many of the measures we take now to mitigate climate risk will stimulate economic growth”. And that was Philip Hammond, speaking at Conference in 2015.
So I think this narrative of optimism, actually – because I think one of the things that does distinguish our political beliefs is a belief in optimism, that the future will be better – an idea that we have responsibility in stewardship, actually improving things that we pass on, and an interest in working with the private sector to deliver the change that we require.
And for me, I became a Conservative in 2006 – and I know many people in the room will have had [Conservative] Party membership for a lot longer – but I did so because I had been active in a number of environments, all of them had never been political and I’ve voted all over the place, never joined a party, and in 2005/2006 when we started the policy work, things like ‘don’t give up on two degrees’, I felt convinced that the solutions the [Conservative] Party was putting forward were the answers to many of the long-term challenges we faced, including the challenge of environmentalism and mitigation – and that’s what led me to join the [Conservative] Party. So when I was offered this job in June, and it seems like a long time ago, I bit the Prime Minister’s hand off metaphorically speaking, and it was absolutely brilliant brief because a) I am fascinated by it, b) I am passionate about it, and c) we are at this tipping-point I think in the way that we approach this problem and the way that we deliver solutions.
And I spent pretty much all summer producing this baby, and I carry it around – it’s now a very dirty copy of the Clean Growth Strategy – because this started as a rather dry, deep-green to deep-green document talking about meeting our carbon budgets. And one of the reasons why Britain has led the world in this space – and we have led the world – if you look at what happened in terms of economic growth and decarbonisation – because clearly the best way to cut emissions is to have a massive recession – that’s very helpful, but we don’t want that, we want to prosper and grow whilst decarbonising. Britain has led the G7 pack in decarbonisation and economic growth since 1990. Now that is not a fact that we ever talk about. I was stunned to learn that – I don’t think that had ever really featured – and it was that sense of sort of getting out of the deep-green to deep-green conversation about carbon budgets, and we have to produce carbon budgets because they’re set by the Climate Change Act – something which was introduced in 2008 with cross-party support – so we have a statutory obligation to set budgets and then to meet them.
But there was this enormous, burgeoning opportunity that was out there for the UK and it’s rooted in the fact that this trend towards low-carbon economic growth is now what’s called a global megatrend – which sounds a bit pokey but actually it’s up there with the digitisation, migration. It is a fundamental shift in the way policy makers and business people do their work. And this has slightly been my response to those, because of course you will hear – what is it? – the climate deniers talk as if we’re a religion and it’s absurd. Because well there are facts, and you can either choose to believe the facts or not, and it strikes me as entertaining when people believe Steven Hawking when he talks about black holes – which is something I can’t even conceive of – and yet when he talks about climate change we think as if he’s been in a bottle – it’s just astonishing. But I’m fed up with having that debate, it is an irrelevant debate. Thirteen and a half trillion dollars of investment says that that is a false conversation, because that is the sum of money that has been committed publicly and privately just in the clean energy sector globally, to meet the Paris goals. So there is a wall of investment money that is coming in. There is an enormous and unstoppable shift to this form of economic growth, so this is not a conversation about it is warmer outside or what are the oceans doing, are we right in extrapolating from the UK’s 3% land area to the globe – it is a conversation about how we participate in an unstoppable economic shift, as important I think as the industrial revolution, and make sure that we basically get our fair share of it. And that was the fundamental premise of the Clean Growth Strategy – that we have led in this space, thanks to legislation, and thanks to an enormous amount of public and private work. And offshore wind pricing – you know when we first put that structure together, we were buying wind at £157 per kilowatt hour – it was an extraordinarily, extraordinarily high number. We’re now buying that at £57 in the latest auction per kilowatt hour – that is cheaper than new fossil fuel plants.
I opened Britain’s first subsidy free solar farm just a few weeks ago, so all of these bets that we placed together – these public and private investments we made together are starting to pay off, and that isn’t an accident, that is because we set an ambition, we had a very good policy framework, and then we challenged industry to do what it does best, which is to compete and innovate. So taking that leadership position which we have developed, and looking at the global opportunity, the question is then: “how do we actually capture that? So how do we continue to decarbonise our economy?” – and by the way energy is a hugely important part of that but actually the deepest pools of emissions now are in the industrial sector – business emits about 25% of our current emissions, both through its industrial processes, some of which are impossible to decarbonise unless we invest in technologies like carbon capture and storage, and also through the fact that business energy efficiency is just quite poor. It’s hard to persuade an SME in rented accommodation that they should be working with their landlord to improve the energy efficiency of their premises – and we have policies for that. But we need to do the same on transport, and we need to do the same in our homes, we need to do the same in terms of land use and forestation, we need to effectively march forward on all parts of our economy.
People kept saying to me: “what’s the magic bullet?”. And the answer is I’m sorry folks but there is no magic bullet, there is no one technology that we could pump all of our investment in that would deliver the outcome we want. And in a way that’s quite exciting, I think, because there are so many opportunities for investors, for individuals, for groups like Bright Blue, to help shape that agenda.
And actually, there are three tests we are using now in government when we look at investments in this space. The first is: “what is the decarbonisation potential? How much will this particular technology contribute towards our goals?” – and by the way we have very stringent goals, and again we are well ahead of the EU in terms of our ambition. There are two countries in the world who last year delivered enough progress to be on track for a two degree hold on the temperature, and that is China, and the UK. So don’t let anyone tell you that we are not doing enough – we are miles ahead of the pack in terms of our own decarbonisation programmes. So: “what does this technology do in terms of reducing our emissions?”
Secondly: “what’s the cost trajectory?” Because as you will know too often this whole debate has foundered on the shoals of two things: the march of onshore wind turbines, and the cost of energy. Now it is true that our businesses are paying a higher cost of electricity – not gas – than some other places, in the EU. And that’s why the Dieter Helm review, which was an independent review, which has come out which talks about some of the structural changes we will need to do is really important. But it’s also the case that household bills have gone down over the last four years. And what I couldn’t understand is when we had the facts and I put them in the document, household bills have dropped on average by £14 per annum since 2012. Why? Because although policy costs, the investment cost, if you like, has added something to the input cost of energy, people’s consumption of energy has dropped – because we have more efficient households, we have LED lighting, the eco programme which we effectively used has succeeded in reducing the carbon footprint of millions and millions of homes. So it is working. So again, you will see when we announced the Clean Growth Strategy that it didn’t end up as a story about the costs of green growth, and this is going to be ‘x-million’ pounds going on our energy bill. In fact quite – and I think this is probably going to be the high point in politics for me, Ben [Caldecott], there’s only one way to go after this – so the launch of the Clean Growth Strategy was welcomed obviously by the green groups, we were obviously challenged to do more which is fine, we got a good write up in the Guardian, the Times, etc., and then the Daily Express had a positive headline – do you know why? Because we lead the EU in cutting carbon emissions. So it just goes to show that for one tiny, fleeting moment in my political career I managed to please everybody all at the same time – and it will never, ever be repeated. But it does just go to show that in this narrative there is so much to welcome.
Energy security – we’ve moved away from a highly concentrated energy system, one where we were reliant on lots of imported energy, we will be in a far, far more diverse and secure place if we continue to make the investments in our energy network. But the cost of this – so the first test is carbon reduction potential, the second test is cost – “can we see a cost-effective trajectory to bring this new form of power generation or technology online?” – and if we can’t, can we challenge industry as we did with offshore wind to deliver it so we have certainty as to what those costs will look like. And of course the great win from developing lower cost technologies is that as the developing world looks to very rapidly increase its decarbonisation it’s a bit like what we saw when developing countries jumped the landline telephone installation stage – they went straight from no connectivity straight to mobile – developing countries are jumping straight over fossil fuels and looking to renewable energy sources in particular. And if we can produce low-cost, exportable, skills, products, technologies – we can help in that market.
And then the third piece of our triple test is: “what is the technological potential of this particular investment?” Because the UK’s low-carbon economy right now employs about 440,000 people – it’s bigger than aerospace, and we don’t talk about that a lot. And it is spread right across the UK. So if you want to see the power of this new form of working, go to Hull and see the regeneration effect of offshore wind – look at the Siemens wind turbine factory that’s opened, that’s employed 1,000 people. These are high-value jobs, right across the UK. And what we want to do is capture this big, global pivot to low-carbon economic growth and bring it back to UK prosperity. So the third test is: “is there something in what we’re being asked to fund or develop – publicly and privately – that gives us a competitive advantage to help us win in this global race?” And that’s why, if you look at some technologies, and I’m happy to take questions – and you know, carbon capture and storage always comes up and I’ve put 100 million quid back into that technology – but you know what we were being asked to fund a few years ago was not value-added, it was high-cost, there was no clear trajectory to a low-cost potential, there was very little in there that we could export from, and now – oddly – I understand the sort of not great market signals and the failure of that competition, we now have the Oil and Gas Climate Initiative – a group of the world’s ten largest oil and gas companies who are committing $1 billion to that technology and actively looking to invest in the UK. So in a way we have ended up in a much better place with that technology.
So that is the triple test which we have set. And we’ve also set ourselves with 50 summary policies – a nice round number in here – that we will now be bringing forward to deliver what we need to deliver by 2032 in terms of our carbon reduction emissions, and then beyond that to 2050.
But I’m fascinated by the fact that the narrative of doing this in a way that provides maximum protection to the environment that we have inherited, does so in a way that works with the market, doesn’t leave it all up to market forces – because in fact government in this space, setting an ambition and setting policy drivers is a hugely important way of stimulating market changes, but also recognising the power of innovation and R&D – and I’ll just finish with a couple of points on that.
So we as a result of this will be committing £2.6 billion of our money – taxpayers money, not government money – to investment in R&D and innovation in this space. And you can see where that money is going to go. We’re are looking to innovate in the energy sector, we need to work out how to get homes who are currently off the gas grid into a more sustainable place because everyone’s relying on fossil fuels, we need to invest substantially in energy efficiency in the industrial sector, and it is the biggest sort of R&D bet, I think, that we have ever taken as a Government – in fact the R&D spend that is coming out on is the biggest since the 1970s because we think we have the most brilliant academics, researchers, developers of early-stage technology in the world and we want to make sure we stimulate that and provide a route to market.
So it is an incredibly exciting time, we’ve got this amazing framework that we can work with in order to drive this. And I guess my final thought is how do we make this last over political cycles? Because to make a tiny political point, just for a moment – and I try very hard not to politicise this debate – but it was the case that in the 13 years of the last Labour Government, there were two energy white papers, three energy departments, 15 ministers, and not an awful lot of policy progress. So 95% of the solar panel installations that have happened in the UK has happened since 2010. So despite all the challenges we have hugely ramped up our investment in this area, and I’m just incredibly proud to be the minister who gets to launch the new strategy.
But we can’t do it alone, and this comes back to my kind of rallying cry. So one of the perhaps slightly more gimmicky announcements I was proud to make – it was all my idea – was that we are going to have a ‘Green Great Britain Week’ every year, a little bit like they do in New York with Climate Week. Where we bring together the fantastic policy work that’s being done out there in institutions like Bright Blue – we work with the NGOs who are a very powerful lobbying force – we work with the education system, we celebrate what Britain has done, we promote the fact that this is an enormous source of high-value, prosperous jobs in the future, and we recommit to our own ambitions by publishing what is the emissions intensity ratio – the measure of every pound of economic growth we deliver, how much have we decarbonised for that pound of growth? And it’s actually become incredibly exciting because everybody wants to work on this and wear the badges and think about how we’re going to do this because I think it is in that way of reconfirming our ambition, setting the envelope for what we want to do going forward, and working together to deliver this, that we will succeed. But it’s a very powerful challenge, and an incredibly exciting challenge, and to finish with the words of Al Gore: “yes we can.” It’s that moment, so thank you very much for your interest and I’m looking forward to working with you.
Claire Perry MP is the Minister of State for Climate Change and Industry