Ed Davey – 2014 Speech to Scottish Renewables Conference

eddavey

Below is the text of the speech made by Ed Davey, the Secretary of State for Energy and Climate Change, to the Scottish Renewables Conference on 18th March 2014.

Introduction

It’s great to be back here at the Scottish Renewables Conference.

It feels like I’ve never really been away.

Since we last met my Ministerial team and I have been getting around Scotland.

Visiting new energy projects.

Seeing the incredible progress being made in Scottish renewables.

Generating electricity for the grid, powering people’s homes.

I had the great pleasure of opening the Natural Power Wind Control Centre in Dumfries and turning on the Burnhead Hydro scheme.

Greg Barker has been here helping you pursue the goal of opening up marine energy in all its forms.

And just last week Michael Fallon was flown over Whitelee so he could appreciate the sheer scale of what you are achieving.

Scotland is fast becoming a world energy hub – not just in oil & gas, but in renewables too.

Being here with you is business as usual for me.

And for Scottish Renewables, business as usual means investment and progress.

And I want to celebrate that today.

But I know that some of you are nervous about the regulatory change that is coming with the move from the Renewable Obligation to Contracts for Difference.

So I want to talk about the stability the new regime will bring.

And the Scottish people are also facing a historic choice on independence in September.

This has the potential to fundamentally change the integrated energy system our United Kingdom has enjoyed for so long.

So I want to make the positive case in energy for Scotland to remain part of our family of nations.

But let me start with the progress being made.

Progress

Last year when I spoke here, the latest figures showed Scottish renewables were providing enough electricity to meet roughly 35% of Scotland’s consumption.

That has now increased to 40%.

A third of all renewable generation in the UK is now in Scotland.

As a whole the United Kingdom is making phenomenal progress.

The latest figures show that between the third quarter of 2012 and the third quarter of 2013, renewable electricity generation is up 20% on the previous 12 months.

Together we are now around half way to our ambition of meeting 30% of the UK’s electricity needs from renewables by 2020.

And my prediction is, that with the framework we are putting in place, we’ll do even better than 30%.

Bloomberg figures show average annual investment in renewables has doubled since 2010 compared to the previous 5 years.

And last year almost £8bn was invested in renewables – a record high.

This record is in stark contrast with the rest of Europe, where renewables investment halved between 2012 and 2013.

I’ve been able to boast with my European colleagues about how the UK has become Europe’s renewable investment hotspot.

Many on the continent are casting envious glances our way.

And the pipeline is looking very healthy.

My Department’s planning database shows that Scottish renewables projects set to generate 5GW have been consented, worth around £4bn, supporting over 4,000 jobs.

These include the Dorenell Wind Farm in Moray which is estimated will generate at least £93m in direct benefits for the Scottish economy.

And the Speyside Biomass Combined Heat and Power Plant at the MaCallan Distillery, which would represent an inward investment of £60 million to the local area.

A further 9.7 GW of Scottish renewables projects are currently in the planning system worth over £10bn, supporting almost 8,000 jobs.

These include the Inch Cape Offshore Wind Farm set to support up to 1,600 Scottish jobs during construction.

And the Kype Muir Wind Farm that would see contracts worth up to £20 million placed with local businesses.

This whole positive picture is down to your hard work – our hard work together.

So the challenge is to maintain this momentum as the regulatory picture moves from the Renewables Obligation to Contracts for Difference.

So let me turn to the stability and certainty we are bringing under the new regime.

Energy Act 2013

When I was with you here in Edinburgh last year, the Energy Bill was just starting its passage through Parliament.

Now it is law.

It passed through the Westminster Parliament with the active support of the Labour opposition.

And all six SNP MPs voted in favour at its crucial third reading.

This sends out a strong message.

There is a consensus on the continued deployment of renewables across the UK.

This legal, financial and political framework is designed to last.

Not just for the next few years, but it reaches out ten, twenty, thirty years into the future.

Certainty, stability, predictability.

By creating, the world’s first low carbon electricity market, we are going green at the lowest cost.

Demonstrating that carbon reduction and economic growth can go hand in hand.

We estimate that the new framework has the potential to support investments up to 2020 of at least £40 billion in renewable electricity generation projects alone.

I know that the CfD auction process is of particular interest to you.

Following formal and informal consultations over the last 6 months, we have developed a CfD allocation approach based on confidential sealed-bids.

Auction design is now being developed.

We intend to publish further detail in the Spring and the allocation framework will be published in advance of the first round.

So, our design will prevent so called bed-blocking and ensure confidentiality – and as we have done throughout EMR design, we will listen to you

Public support for renewables remains high with only 1 in 20 voicing opposition.

But to maintain public support we must continue to show that this vision of a competitive low-carbon market will keeps bills as low as possible as we decarbonise.

We need to provide certainty, stability and fair returns for investors, generators and suppliers.

But we also need to provide affordability and value for money for consumers.

Ultimately, you know as well as I do, that renewables must reach grid parity.

In a world where carbon is properly priced.

Within a reformed EU ETS, Europe’s carbon market, subject of this month’s European Council.

Costs are already reducing.

By three-quarters in raw solar PV costs over recent years.

Support rates needed for onshore wind dropped 10% last year.

And the offshore wind industry has set out a clear pathway for cost reduction.

But to see further cost reductions we continue to need a real commitment to innovation.

The affordability of existing technologies needs to improve and new technologies need to become commercially deployable in the future.

That is why I am pleased to announce today a £2.7m grant award to 2-B Energy to take forward their two-bladed turbine design that has the potential to reduce offshore wind costs by up to 35%.

I will do everything I can to help you with the process of cost reduction.

Because I recognise the huge and complex issues you face.

And we continue to work closely with the Scottish Government and others to explore where we can make a difference.

For instance, we have recognised the particular challenges of harnessing renewable resources on the Scottish Islands.

That is why we announced a higher strike price for the islands.

And I will do everything I can to continue to drive investment into renewables.

To help Scotland’s renewable industry, along with industry in other parts of the UK, to realise its potential.

To maintain energy security as we transition to a low-carbon economy.

And to help the household across the whole of the UK by using competition to keep prices as low as possible.

And that brings me to my final point today.

Scotland in the United Kingdom

In September, people in Scotland will take one of the most important decisions in our shared history.

Whether to stay within the United Kingdom family.

Or whether to divorce and go it alone as an independent state.

I don’t have a vote in this.

But it is right, that as a UK Government Minister, I continue to set out the case for our United Kingdom.

I have no doubt, that with the talents of its people, and its natural resources, Scotland could make a go of it, alone.

But the United Kingdom is greater than the sum of its parts.

When it comes to energy, the positive case for Scotland in the United Kingdom is simple.

The size of the United Kingdom protects Scottish consumers from the full costs of Scottish power generation.

In the United Kingdom, Scotland’s households pay less than they would in Scotland alone.

Why?

Because, the UK’s integrated energy market is ten times larger than that of Scotland’s alone.

Scotland has a tenth of the households in the UK as a whole.

But over a quarter of all UK support for renewable generation goes to Scotland.

These costs and subsidies are spread out over all 27 million households, not just Scotland’s 2.5 million.

If Scotland were to choose to go it alone, maintaining this level of support would take up a greater proportion of national finances.

Meaning either higher taxes, higher energy bills or cuts in other areas.

Welfare, housing, education, health, defence – maybe losing out.

As a United Kingdom, we act as a family.

Those who need more, get more, supported by the whole.

For instance, in recognition of the lack of transmission infrastructure particularly in remote parts, almost 30% of the investment earmarked for upgrades to the British transmission grid over the next 7 years is to be spent in Scotland – over £6bn.

This is business as usual in the United Kingdom.

It’s the way we do things.

It’s natural.

We don’t tot it all up on a per capita basis.

Instead everyone across the UK pays their fair share.

And the money goes where the money is needed.

Where it will be used best on behalf of all the citizens of the UK.

So the positive case for Scotland’s energy future in the UK is the protection of the integrated market.

Sharing support, sharing benefits and sharing costs.

Scotland alone

But this positive case also leads to the negative.

We are an integrated, border-blind, market.

What happens if there is a border?

Look, I have no doubt that we would continue to trade energy with an independent Scotland.

But net electricity imports from Scotland make up only about one twentieth of demand in England and Wales.

Around 4.5%. A very small proportion.

With a border in place, the integrated market will not be sustained in the same form.

We would have to strike a new deal.

I have experience in negotiating cross-border energy deals.

And believe you me, it is incredibly complex and difficult.

And throughout the whole process I keep foremost in my mind the interests of the UK taxpayer and UK consumer.

And where the UK benefits in terms of jobs and economic and industrial growth.

Negotiating post-independence energy contracts would be no different.

I would put the interests of the UK first – a UK then without Scotland.

The Scottish Government asserted in today’s Scotsman that “England and Wales will continue to need and pay” for Scottish renewables regardless of the cost and there would be no taxation issues at all.

But let me be frank.

There can be no guarantees about how much or at what price the UK will trade energy with an independent Scotland.

Because there are no guarantees about how much electricity from an independent Scotland will actually cost.

Scotland alone would need to find the £6bn required to upgrade Scotland’s transmission grid.

Scotland alone would need to subsidise its remoter parts.

Scotland alone would need to pay for the Scottish Government’s ambition to meet 100% of Scotland’s domestic electricity consumption from renewable sources by 2020.

All of these costs would fall to the Scottish consumer or Scottish taxpayer without being shared across the whole of the current UK base.

It will be much harder for a nation having to spread these costs of across the small Scottish base to keep green energy prices competitive.

And it is at this point that our trade would begin.

When looking to import electricity, the UK would consider rationally which sources provide the cheapest and most reliable options for our people.

Scotland will go onto a list of all the places in the open market the UK can buy power from – wind from Ireland, geo-thermal from Iceland, Hydro from Norway.

And don’t underestimate the renewable potential yet to be tapped in England, Wales and Northern Ireland, including offshore wind and tidal.

The Scottish Government can assert that UK consumer would continue to subsidise the costs of Scottish renewables and buy Scottish electricity to meet renewables targets no matter what the cost.

But this goes against all commercial logic.

At some point they are going to have to face up to the fact.

Independence means independence – not a continuation of business as usual.

Conclusion

You know, I was up in Peterhead last month to celebrate the funding for the next stage of the Carbon Capture and Storage project there.

If we can develop CCS as a viable commercial proposition, our energy future, the world’s energy future and the future of our climate, becomes that little bit more secure.

These things should not be trivialised.

But Alex Salmond’s response was to accuse me of trying to ‘bribe’ the Scottish people ahead of the referendum.

But I don’t see everything through the lens of independence.

I see success and I celebrate it.

Whether it is in Scotland, England, Wales or Northern Ireland.

That is why I’m here today to celebrate your success.

Scottish renewables, just like renewables in other parts of the United Kingdom, are an integral part of our vision for a low-carbon future.

The wide cross-party agreement we have reached through the 2013 Energy Act puts in place the legal and fiscal framework that supports this vision for the decades ahead.

I am confident, that as we work through the process of implementation, we can maintain the momentum.

Investment, consent, construction and generation.

Scotland – a world-leading renewables energy hub.

The United Kingdom – the best place to do business.

Our citizens – reaping the benefits of the home-grown green energy revolution that you are driving forward.

Edward Davey – 2014 Speech at Ecobuild Conference

eddavey

Below is the text of the speech made by Edward Davey to the Ecobuild Conference in London on 5th March 2014.

It’s great to be back here at Ecobuild helping you celebrate your 10 year anniversary.

This exhibition is now the world’s largest sustainability show for the built environment.

As Paul King wrote in the Conference supplement:

“Ecobuild has become the Crystal Palace of its day, the Great Exhibition where new products can be found and sold, and fortunes can be made in the name of green building.”

One of my very first engagements when I became as Secretary of State two years ago was to launch DECC’s Energy Efficiency Deployment Office.

I said then that one of the purposes of EEDO was to “change the way we think about energy……to make energy efficiency real and relevant to people’s everyday lives”.

And that remains the challenge – a challenge for government, for industry and for all those who support what we are going for.

So today I want to talk about how Government proposes to improve two of our key policies to meet that challenge.

In particular the Energy Company Obligation – ECO – with the new consultation we are publishing today.

And I want to set out how we’re improving the Green Deal, in the light of what many of you have told us – what we’ve being doing already and a sneak preview of some announcements we’ll be making shortly.

The challenge

But before I do, I want to emphasise just how important it is that we constantly strive to improve what we do, together.

For our shared ambition is to build one of the least wasteful, most energy efficient, most climate friendly societies in the developed world.

And to drive home that ambition we will all need to work together to help your customers – our citizens – the families and households of Britain – to bring about a radical change in the way they approach powering and heating their homes.

Taking control of their consumption.

Becoming smart savers.

Cutting out waste where they can, bringing down their bills so they can stay warm for less – and bringing down their polluting carbon emissions.

People have seen this winter the kind of wild weather the scientists warn us will become more frequent in a warming world.

So many recognise the need to be more energy efficient – to cut their bills, to act on climate change – or both.

But they are still not always convinced that there is anything they personally can do.

Together, that’s our challenge.

That is why initiatives such as Sir Ian Cheshire’s ‘Big Energy Idea’ which he’ll be talking about tomorrow are encouraging.

Because it will be through shared endeavours – government and industry – that we will drive the change we need.

Progress

So we need to remember what’s been achieved.

Together, over the last 10 years – government working with industry – we have grown a market for energy efficiency here in Britain with over £18bn of sales, supporting over 130,000 jobs.

With energy efficiency exports at almost £2bn, Britain is a recognised world leader in technology and expertise.

Because of the work you’ve done.

Around two thirds of lofts and cavity walls are now well insulated.

Over three quarters of homes have double glazing throughout.

And this energy efficiency has been driving a fall in household energy consumption.

Households are now using around a fifth less energy than they were in 2004 – saving the average consumer around £200 a year in today’s prices.

But of course more needs to be done.

Around half of all homes don’t have energy saving condensing boilers fitted.

Around seven and a half million homes could have more roof insulation.

Around five million homes are not fully double glazed and almost 1.5 million have no double glazing at all.

Over five million homes could benefit from cavity wall insulation.

And almost eight million solid wall homes remain untreated.

A lot of potential business.

Of course, in some areas, reaching that potential is getting harder.

A lot of the easy to treat, low-cost, low hanging fruit has been plucked.

The harder to reach consumers, living in the hardest to treat houses, are often the poorest and most vulnerable in our society who need support and help to access your services.

The private rented sector, which accounts for five million homes, has never been properly targeted or incentivised for energy efficiency.

And like any emerging market, there are bumps along the way, and it can take time to ensure we have the right regulatory balance that guarantees quality and access without inhibiting growth.

So let me turn to ECO and the Green Deal.

Energy efficiency policy framework

Last year, when I spoke here at Ecobuild, we had just launched the Green Deal and the Energy Company Obligation which replaced the CERT and CESP schemes.

And since the launch, just twelve months ago, over 450,000 households have benefited from the new regime – 450,000.

And our ambition for that new policy framework – our target – remains the same as at that launch.

To have at least one million homes upgraded under ECO and the Green Deal by the end of the next financial year.

That’s not to say, things have worked out quite as planned or gone smoothly.

And today I want to be frank about the lessons learnt.

But we should acknowledge what has been achieved – just as we acknowledge that the name of the game must be to improve.

I know the frustration is that we don’t always get it right first time.

And that the certainty and stability we all want isn’t helped when we have to make changes.

Yet the prize remains large.

The prize remains creating a stable long term market – for decades.

So changes at this stage perhaps shouldn’t be too surprising, given that ambition.

I’m just determined to make sure that you, the green building industry, have a say in how we move forward.

So let me start with improving ECO.

ECO

ECO’s effectiveness for driving home energy efficiency is not in question.

It is our foremost tool for helping the poorest and most vulnerable in society to get those benefits.

As with previous schemes, it incentivises carbon reductions and remains an obligation on the large energy suppliers.

And even following the boom year of 2012 – when Cert and CESP came to an end with a scramble to meet targets by the deadline – 2013 with ECO has been a great success.

Hundreds of thousands of the poorest and more vulnerable have been warmer this winter – in the main part, at no cost to them.

But of course ECO does have a cost.

And it’s because the impact of this government policy falls on consumers through their energy bills, that it is entirely reasonable that we reviewed it to ensure that it delivers in the most cost effective manner possible.

So today I am publishing our consultation on the future of the Energy Company Obligation.

We are proposing a series of changes designed to reduce costs for suppliers and thereby reduce the impact on bills for millions of consumers.

This consultation is a key opportunity to make sure we take into account your needs and the experience of ECO this last year.

It is a real chance to shape its course in the future.

But before, during and after this review of ECO, I’ve been clear: the obligations under ECO that meet the needs of the fuel poor cannot be compromised.

And they have not been cut back.

We continue to cleave to the basic idea that the nature of our housing stock means that expensive but necessary work can require subsidies.

These principles will continue to underpin ECO.

But we recognise that near term targets create long-term uncertainty and can result in surges of activity followed by lulls as the market adjusts.

So it is our intention through this consultation to deliver longer-term certainty that is required for proper business planning.

As we announced in December, we are extending the reach of the current ECO through to 2017, with new targets from 2015-17.

The two fuel poverty elements of ECO have been fully protected before the old 2015 cut off, and we propose to fully extend them, for an additional two years.

And to avoid any repeat of boom and bust, we propose that suppliers will be able to carry forward a proportion of their delivery against 2015 targets to count towards 2017 obligations.

Lofts and cavities will now be eligible as so many in the industry pressed for and, for the first time, we will put a target in place for Solid Wall Insulation – a minimum target, not a maximum.

Of course the danger of consultations is that they themselves can create a hiatus.

So as we carry forward this ECO consultation I am keen to ensure that work now does not suffer, while the new legislation is put in place later in the year.

So Ofgem will continue to administer ECO – and measures installed after 1st April will be included as allowable primary measures under the new regime.

So I urge you to get stuck into the detail of the consultation and work with DECC and OFGEM to ensure that we are providing the stability and certainty required.

Driving the energy efficiency market

Of course our vision of an energy efficiency market is much wider than the obligations under ECO.

While ECO focusses in the main on the poorest, the great innovation this government is bringing about is to develop a whole new energy efficiency business model.

A model where the basic proposition to is to help all households buy less energy rather than selling energy to them.

That is the underlying proposition of the Green Deal.

It’s different from anything that has gone before; a world first.

And of course central to the Green Deal design is the Green Deal assessment.

More than 145,000 Green Deal assessments have been undertaken in little over a year.

And our surveys show that of those who’ve had a green deal assessment, not only are the vast majority satisfied with that assessment, but over 80% have already acted on it, or are seriously considering having the work done to improve their home’s energy efficiency.

So I am encouraged that so many people are using the Green Deal assessment to seek information and to take action to invest in making their homes warmer.

We are looking at ways to improve the Green Deal assessment, of course, and we want your thoughts, but the good news is that we have a lot of assessments to go on.

But when it comes to converting Green Deal assessments into finance plans, the story so far has been, let’s face it, disappointing.

And we need to tackle that.

But the fact that most people currently having a Green Deal assessment are not then going on to choose Green Deal finance plans shouldn’t actually worry us.

How people pay for energy efficiency improvements is not after all the main issue.

The aim of the Green Deal isn’t to sell credit plans, but to make our homes warmer, cheaper and greener.

First and foremost, the Green Deal is a way of helping people understand how they can save energy and reduce their bills.

It is about the availability of good information on home improvements and access to trusted companies to do the work.

And that is what we need to focus on because the outcome is far more important that the input.

Nonetheless, we need more outcomes.

We need the Green Deal to help deliver more activity.

More investment.

More energy efficiency.

So we are determined to take the necessary steps to overcome the barriers that people are saying they face when it comes to accessing Green Deal measures and savings.

It’s clear from the feedback that the information, administration and finance has been too difficult, lengthy and complicated for people to access easily.

The assessment process needs to be improved.

And the old incentives weren’t taken up.

So what do we need?

First, a single route through for consumers – to get the energy efficiency advice and upgrades they want, whether it is ends up being through ECO, Green Deal or self-financed – easy, simple, hassle free.

Second, a healthy market place of companies that can make the improvements, sell the benefits to customers and be trusted to work to the required standard.

And third, attractive incentives and access to a finance package that makes sense for the individual.

Where are we on delivering these?

From quite early on, we’ve been looking for ways to streamline the Green Deal.

It started off too clunky and too complex.

So, for example, the simple on-line Home Energy Tool is now available – to help people check quickly what types of improvements would benefit them and what support they can get.

And where to go for more advice.

The Energy Saving Advice Service can match consumers together with local Green Deal providers and help them through the journey from assessment to finance to installation.

We are stripping down the red tape required to get a Green Deal finance plan, knocking 10 days of the process, so people can now – as of last month – sign up to a plan on the same day they get a quote for the work.

Amendments to the Consumer Credit Act have now come into effect which will allow the same Green Deal finance plan to be offered to all customers irrespective of what tenure they have.

Vital for the privately rented sector.

Let me be completely candid on this.

The day I found out that the 2011 Energy Act had not made it crystal clear where the liability for the green deal loan was, in the case of a landlord and tenant, was my most frustrating Green Deal day last year.

I’ve always regarded the Green Deal – with the Green Deal finance plan – as tailor-made for the private rented sector. But a mistake was made.

And we’ve corrected it.

Now, as of last month, Green Deal Providers can access the as yet untapped demand in the private rented sector.

Giving landlords the opportunity to improve their properties for the mutual benefit of themselves and their tenants.

And there is more work in train.

You have told us that many customers wanting to use Green Deal finance to fund improvements can’t borrow enough to cover the full cost of the measures they want to install – and meet the ‘Golden Rule’.

So we are considering whether changes may be possible so the Golden Rule may cover more costs while maintaining important consumer protections.

But making sure the Green Deal journey is smoother will only take us part of the way.

We have to make sure that we get the message out in the first place and encourage people to start the process to begin with.

In December, we announced that we have increased fourfold the capital funding available under the Green Deal Communities scheme.

And we received 64 Green Deal Communities bids from Local Authorities hoping to accesses the extended fund of £80m.

As Greg Barker announced yesterday, the first six projects have been approved.

These projects are in Cambridgeshire, Ashfield, Suffolk, Peterborough, Haringey & Bracknell Forest, and together represent a total £19.5m to deliver over 5,500 Green Deal Plans to over 7,000 households.

Further projects are being assessed and we will announce the next tranche of successful projects shortly.

We also set out in December a £450 million package over three years to provide new energy efficiency incentives, including for home-buyers and landlords.

The new schemes are being designed to be simple to access, and work flexibly with or without Green Deal finance.

Again, we’re learning from the shortcomings of the original cashback scheme.

Again we’re taking advice from the industry.

We are considering whether to open the new scheme to installers and if we do would give you notice before the scheme goes live, to give you time to prepare.

We are working to ensure the new scheme is up and running before the current one closes to allow a smooth transition and avoid a hiatus in the market.

In the meantime, applications for the current cash back incentives have been extended to the end of June and we have uplifted the value of several measures, with solid wall insulations increased to £4,000 as a clear signal of our intent.

Conclusion

Today I have focussed on the Green Deal and ECO, as I know that these are of direct interest to many of you.

But they are by no means the be all and end all.

The domestic Renewable Heat Initiative has received state aid clearance and is now subject to the approval of Parliament.

So, we are on is on track to launch in the Spring.

And I’m delighted to announce that ministerial responsibility for energy efficiency and products has been transferred from DEFRA to my department.

DECC’s Energy Efficiency Deployment Office is now taking this work forward – driving innovation and helping to bring new, energy efficient appliances to the market.

Working with manufacturers and retailers will be part of this.

I was pleased to be able to launch with John Lewis, an innovative retail trial to see whether giving people lifetime electricity running costs on white goods results in higher sales for energy efficient models.

This full trial is running now and will complete in June.

This is all part of helping people to be smart savers.

Just like the roll out of smart meters.

By 2020, we want every home and small business in Britain to be in control of their energy use through smart electricity and gas meters, focussing minds on what is being used and how to save energy and money.

We are also pressing ahead with help for businesses and organisations to cut their energy use and save money.

The £20 million Electricity Demand Reduction pilot is now open for registration of interest through my Department.

Final pilot rules will be published in June 2014, with applications to be submitted by October 2014.

Contracts to support EDR installations will be issued to successful bidders by January 2015.

So there is action being taken across the piece

But the vision for energy efficiency is clear.

For Britain’s householders – a single, simple way through to a warm home and a lower bill.

For Britain’s businesses – cutting energy costs to increase productivity and competitiveness.

For Britain’s green energy efficiency industry – a partnership with government that grows the markets and sells the benefits.

And for the country as a whole, playing our part in the global drive to limit climate change by cutting our emissions.

Thank you for your help and your leadership in those vital green ambitions.

Ed Davey – 2014 Speech at the Green Growth Summit II

eddavey

Below is the text of the speech made by Ed Davey, the Secretary of State for Energy and Climate Change, on 3rd March 2014.

Friends and colleagues, it’s a pleasure to be here today for this second Green Growth Summit.

Let me start by saying thank you to all those who have helped bring us together today and to establish the Green Growth Platform: To the EU Corporate Leaders Group for organising this Summit and Green Growth Platform.

To the businesses, trade associations, academics and international agencies who have put their time and effort into the two Advisory Councils set up following our first Summit last year.

And we look forward to hearing your insights into how Europe’s decarbonisation can work for the climate and the economy, including energy intensive industries.

Particular thanks goes to the OECD whose Deputy Director, Helen Mountford, we look forward to hearing from about their work on green growth and the links with our own. And to the IEA whose Executive Director, Maria van der Hoeven, we are delighted to have here to address the crucial questions on energy prices and competitiveness.

Finally, I want to thank my friends in the Ministerial Green Growth Group for their enduring commitment to working together to explore, promote and pursue an ambitious and growth-enhancing EU low carbon agenda.

In particular, I am delighted to be able to announce that the Green Growth Group, including UK, France, Germany, Italy and Spain, have today agreed to a joint statement calling for an agreement at the March European Council to the key elements of a 2030 energy and climate package including, a binding domestic EU greenhouse gas target for 2030 of at least 40% and a binding EU level renewables target of at least 27%, that will not be translated into binding national targets.

This is a very important step forward, and a timely one.

SETTING THE SCENE – ECONOMIC & STRATEGIC CHALLENGES

Later this month, Europe’s national leaders will gather here in Brussels to seek to agree the EU’s 2030 energy and climate policy framework. The 2020 Framework has served us well.

But when it comes to investment decisions on energy projects that will last into the middle of the century and beyond, 2020 is fast disappearing in the rear view mirror.

The EU Emissions Trading System needs radical surgery to achieve all that it was put in place to do.

And next year, in Paris, world leaders will meet to agree a global and comprehensive climate change agreement.

But as we agree a 2030 framework, we must do so with our eyes open to the challenges ahead.

First, Europe is still feeling the fallout of the most serious financial and economic crisis our continent has experienced since World War Two.

After so much hard work to restore economic stability, securing the recovery remains a priority.

So we have to make sure that the 2030 framework delivers our ambitious climate and energy goals in the most competitive and cost-effective way.

Second, in recent years, European and North American energy prices have substantially diverged.

European gas prices are around three times higher than in the US, while industrial electricity prices remain roughly twice as high.

The IEA predicts that while this energy price gap should narrow, it is likely to remain significant for some time.

For most businesses, energy represents a small fraction of their production costs; 3% for UK and German manufacturers on average.

And European industry has many other areas of comparative international advantage, not least in energy efficiency.

But for certain energy intensives operating in a highly competitive market, this price divergence represents a new structural competitiveness challenge.

Against this economic backdrop, some argue that Europe cannot afford climate ambition, or that we should wait and see what others’ low carbon ambitions are first. I could not disagree more.

As the latest IEA analysis sets out, the price discrepancy between Europe and the US is primarily driven by the US shale gas boom on the one hand, and Europe’s expensive fossil fuel import dependency on the other.

So Europe could choose to abandon its entire low carbon agenda.

But it would barely scratch the surface of the problems facing certain energy intensive industries.

In fact, the Commission’s Impact Assessment found that a 40% domestic 2030 emissions target would only lower EU GDP by 0.15%.

And a brand new study my Department commissioned from an independent French consultancy, copies of which are here today, support these findings. This is all in the context of projected EU GDP growth by 2030 of 25%.

So the European problem for competitiveness, for Energy Intensive Industries, is not climate action.

It is the US shale gas revolution – and we must respond to.

Third, Europe is facing an unprecedented energy investment challenge.

Europe needs trillions of Euros of investment over the foreseeable future to replace a fleet of ageing power stations, and to strengthen our energy infrastructure.

This is about cold hard energy security, providing power for our businesses and homes, or put simply, just keeping the lights on.

And finally, Europe’s indigenous fossil fuel resources are in decline and import dependency is rapidly growing.

The IEA predicts that by 2035 we will need to import 90% of our oil needs and over 80% for gas.

Our fossil fuel import bill consumes more of Europe’s GDP than any other developed or major emerging economy.

And it is a major cause of Europe’s global trade deficit.

With demand continuing to spiral in developing countries, fossil fuel import prices are likely to remain high and subject to supply shocks and price volatility.

So our energy security is best served by minimising our exposure to the volatile global fossil fuel markets, enhancing our energy efficiency and maximising home-grown low carbon energy, as well as cleaner indigenous reserves, such as natural gas, to help ease the low carbon transition.

HOW SHOULD EUROPE RESPOND?

Europe’s response to these overlapping challenges needs to be smart and strategic.

For my part, I would like to begin by outlining three key things things that I believe should be part of a smart and strategic 2030 package.

And I very much look forward to hearing today from the Green Growth Advisory Councils and from you on how to solve some of these challenges, and to stealing the best ideas. First and foremost, Europe must give the commerical sector the long-term signals they need now to invest in our low carbon and energy infrastructure.

This means agreeing an ambitious 2030 domestic greenhouse gas target of at least 40% in the first half of this year.

Without early clarity over Europe’s 2030 climate ambitions, we risk delays to investments in essential energy projects, higher costs of investment capital and expensive carbon lock-in.

And since the best competitiveness hedge is securing a global climate deal, Europe should commit to consider in early 2015 whether to raise its emissions target in the light of pledges from others and our 2 degrees climate objective.

Second, we need to ensure that the 2030 package is cost-effective and cost-efficient.

A cost-effective package means stepping up the integration and interconnection of European energy markets so countries can buy clean, competitive, low carbon electricity from wherever it is cheapest.

So the 2030 package must be a vehicle for accelerating market integration and interconnection as a priority.

Ensuring we have gas and electricity networks modern enough and integrated enough to prevent European energy supplies being put at risk.

It also means urgently strengthening the ETS in order to drive down emissions and stimulate low carbon investments cost-effectively.

The current draft ETS legislation, is a welcome basis for discussion.

But we need to be bolder and move much faster to deliver the diversified, indiginous and lower carbon energy mix that we need – and at least cost.

And IEA analysis shows that even a CO2 price of €20 per tonne would only represent a few percentage points on average industrial electricity prices – a minor impact compared to the price shock of shale.

And third, as part of a wider industrial strategy for Europe, we must develop a energy and climate package for those energy intensives industries genuinely at risk of carbon leakage.

This means providing support through the ETS and state aid framework to help them to compete during the low carbon transition. This support will need to be focused on those sectors at significant risk to ensure they get the level of protection they need.

But in parallel, we must develop the incentives, financing and regulatory frameworks that deliver credible, cost-efficient decarbonisation pathways for these energy intensive sectors over the medium-term.

Europe‘s paper and pulp industry, for instance, have done pioneering work to identify the breakthrough technologies that will deliver dramatic cuts in industrial energy usage by completely re-inventing their processes.

Europe has to get behind these sorts of game changing innovations, learn from them and apply them across other industries

CONCLUSION

Colleagues, through an early, smart, cost-efficient and ambitious 2030 package, Europe can harness the links between competitiveness, security and climate change, and meet Europe’s objectives in all three.

I very much look forward to working with you over the coming months under the Green Growth Platform, so we can develop and deliver an ambitious 2030 package that is good for the climate and the economy.

Thank you.

Ed Davey – 2013 Speech on Opening Up Energy Markets

eddavey

Below is the text of the speech made by Ed Davey, the Energy Secretary, at the Energy UK Conference in London on 12th November 2013.

I want to start today by saying how crucial your work is to the country.

You produce and supply the energy that keeps our society running.

That heats our homes, lights our streets and powers our working lives.

Every single day, working together, you supply the country with one billion kilowatt hours of electricity.

Enough power to make 50 billion cups of tea every day. Or cook over 750 million meals.

But it is not only the power you produce that people need.

It’s the 103 billion pound contribution to the economy you make every year.

The taxes you pay.

The 660,000 jobs the industry supports.

The new, modern, climate-friendly energy infrastructure you are building to make sure Britain is energy secure.

So a Britain of blackouts remains a memory of our past, not part of our future.

And now the economy is growing again, I expect this contribution to grow too – more jobs, more tax revenue, more investment in essential infrastructure.

And today I want to talk about this energy security challenge we face.

To ensure we have secure and affordable supplies of energy while we reduce the carbon emissions that cause climate change.

SERVE THE PUBLIC

But I have also come today to deliver a tough message.

Trust between those who supply energy and those who use it is breaking down.

You’ve admitted as much to me.

For it is so difficult for people to work out what exactly they are paying for, that they fear the big energy companies are taking them for a ride when bills go up.

Fair or not, they look at the big suppliers and they see a reflection of the greed that consumed the banks.

So this is a ‘fred the shred’ moment for the industry.

You deliver an essential public service, so your industry must serve the public – and the public must have trust in what you do.

The Government and Ofgem have been acting to open up the market, to increase competition, and put consumers in control of where they get their energy, and how they use it.

I want the energy companies to be part of that effort as well.

And that means opening up.

Opening up the wholesale markets, opening up the retail markets and opening up your books.

Because Government and society will not accept a closed shop in energy.

And so I want to talk about the changes we are putting in place to make sure the market work for consumers – keeping prices and bills as low as possible as we make sure energy supplies are secure.

But let me start first with that energy security challenge.

Because just as we need to work together to restore trust, so we need to work together to keep the lights on.

ENERGY SECURITY CHALLENGE

You are all well aware of the scale of the task we face.

Energy is the largest infrastructure programme across government.

We face a decade or more of structural transition as 20% of our old or polluting power stations go off line.

Replacing that capacity and moving increasingly towards low-carbon generation, as our climate-change commitments require, will be a herculean task requiring £110bn of capital investment between now and 2020.

Everything we do has to ensure that we drive investment into the system – not scare it off or freeze it out.

But that is also why energy is one of the biggest opportunities this country has to boost economic growth, speed up the recovery and create new high quality jobs in every nation and region of the United Kingdom.

This includes upstream extraction as well as infrastructure and networks.

We are providing the right conditions to make production in the North Sea commercially attractive with a system of incentives and tax reliefs worth billions of pounds.

Capital investment this year is expected to hit a record high of £13 billion with 167 new licences granted.

The indications coming out of Sir Ian Wood’s Review, which will report fully next year, suggest there is still more we can do with the potential to boost future returns by at least £200 billion.

Onshore, we are at an early stage with shale exploration – but it could also to add to indigenous energy supplies with significant benefits to the economy and energy security.

So we have put incentives in place to ensure that the necessary investigations take place to establish viability in the context of safe and environmentally friendly extraction.

But by far the biggest energy security challenge is to make sure that we create one of the most competitive and attractive electricity investment markets in the world that drives the transition to a cleaner, low-carbon energy system.

ENERGY BILL

And that is exactly what the Energy Bill going through Parliament is for.

This is putting in place the most robust and comprehensive legal, financial and political framework for energy policy this country has ever had.

And – despite all the noise in the current debate over consumer energy bills – the Government’s Energy Bill is supported across the political parties.

Significant political consensus, worth reminding people of.

And that consensus, on the fundamentals, was confirmed once again by the Opposition front bench only last week.

So we expect the Bill to become law by the end of the year.

And the detailed proposals for implementing Electricity Market Reform we published last month will provide further certainty to industry and investors.

This builds on the progress over the summer with the publication of draft strike prices for renewable electricity under Contracts for Difference, a draft of the contract itself, and detailed proposals for the Capacity Market.

The fruits of bringing this greater predictability and certainty to investment are already showing.

Latest estimates suggest that at least £35 billion has been invested in new electricity infrastructure since 2010.

And much more is in the pipeline.

Renewable electricity capacity has increased by almost 40% since 2012.

Renewables are now supplying a record 15% share of electricity generation.

Halfway to the objective of generating around 30% of our electricity from renewable sources by 2020.

In the past 12 months alone, we have provided consent for seven major energy infrastructure applications worth about £20 billion, with the capacity to generate electricity for more than 6 million homes.

That, of course, includes last month’s announcement that we have reached key commercial terms with EDF for the first new nuclear power station in a generation at Hinkley Point C.

So we are providing a framework for investors and the energy sector that gives long-term certainty with predictable returns, lowering risk and the cost of capital.

This is the market stability the Government is creating for the energy industry, to ensure energy security.

RISING BILLS

So, yes – the market has to work to meet our energy security needs and our historic infrastructure challenge.

Yes – we have to use the market to drive the decarbonisation that is imperative to meet climate change obligations to future generations.

So we do need our energy companies to be profitable.

So they can invest in our energy infrastructure, secure the energy supplies of the future, develop more energy efficient technologies, and create jobs.

But it is imperative that the markets, both wholesale and retail, deliver for the end-user.

Because ultimately markets that fail to meet the test of affordability for customers are markets that are broken.

Centrica’s Chief Executive, Sam Laidlaw, talked last week of the energy sector being in the ‘eye of the storm’.

Sam and I don’t always agree, but on this he is right.

When people see energy bills rising way above inflation year on year, you can understand the anger and frustration this causes.

People fear shareholder interests are being put in front of the needs of families and the fuel poor.

I am clear that the industry needs a reasonable rate of return.

Because without profit we won’t get investment.

And without investment, we risk a return to blackout Britain.

But those profits cannot come at the expense of the elderly, the vulnerable, and the poorest in our society.

Customers are not just cash cows to be squeezed in the pursuit of a higher return for shareholders.

And frankly, the latest round of bill rises have not been fully and openly justified.

And the public are right to challenge us, both Government and industry, to look at everything we are doing to see if we can bear down on rise.

So let me start with what the Government is doing before looking at what we expect you, the industry to achieve.

REDUCING BILLS

We do the country no favours if we resort to knee-jerk, quick fixes.

Some on the right wants us to turn our back on our social and environmental responsibilities by axing programs to help the fuel poor and boost green energy.

The left is in danger of reverting to type by bashing business, and proposing to fix prices.

But neither of these approaches actually solves the problem in the long-term.

Cutting energy bills by scrapping outright social and green levies punishes the fuel poor and punishes the future generations who will confront the full force of climate change.

If we were to pull back on our ambitions for tackling fuel poverty and energy efficiency, we would actually be hurting people.

And as I told the RenewableUK Conference last week, the level of support for investment incentives for renewables will remain as planned and as published because these are essential for investor confidence in the renewables sector and our commitments to a low-carbon economy.

Of course, as the Prime Minister has said, these subsidies and obligations shouldn’t exist one second longer than necessary – and that is why we keep them under continuous review.

And there is a valid debate about the method through which these policies are paid for – through bills, through taxation, or other means.

So it is right the Government looks at how we can reduce the impact of policies on bills and we expect to make announcements in the Autumn Statement in December.

But I am also clear that the role of Government is not to fix prices.

This will have a huge detrimental impact on the investment we need to deliver secure energy supplies.

And an investment squeeze would mean a huge blackhole in Britain’s energy security – risking blackouts and higher prices in the long run.

Price fixing would crush competition rather than encourage it.

Putting small suppliers out of business as they struggle to manage unpredictable rises in wholesale prices.

And, in the way it has been proposed by Labour for 20 months while they work out what to do next, it will have no permanent effect.

It’s a sticking plaster with no sticking power – it’s a con.

And, in my view, one of the most irresponsible proposals from a leader of the opposition made in modern times.

The best way to keep bills as low as possible for the long term is to continue to pursue our twin track strategy.

First energy efficiency – to help people use less energy and therefore pay less – through initiatives like the green Deal, ECO and energy demand reduction.

We are creating the first energy efficiency market in the world – so it will take time.

There will be no backing down on energy efficiency – because this is the way to bring bills down permanently.

The second is through robust and rigorous competition in the markets to bear down on costs and prices – keeping them as low as possible.

And that is what I want to concentrate on now.

Competition works.

We’ve seen small suppliers gain substantial business on the back of this year’s high price rises.

Customers should switch to get better deals from companies who don’t deliver on price or on good customer service.

And I will do everything I can to enable that choice.

And make that choice more available to the most vulnerable in our society too – through collective switching and working with trusted third parties like the Citizens Advice Bureau, Age UK and National Energy Action.

For competition and switching will only work well when there is a relationship of trust between suppliers and consumers.

And only when consumers have real choice and can control who they buy from.

So let me deal first with the issue of trust before turning to choice and control.

OPENNESS

The Government’s commitment to look how our policies impact on bills must be matched by a commitment in industry to open up your books and set out exactly how you are bearing down on your own costs to make bills as low as possible.

As Sam Laidlaw said, “the starting point is about transparency, and the energy industry does not have a good story to tell here.”

There is nowhere near enough scrutiny of how supplier operating costs and profits are made up and why these costs are justified.

The industry must be much more transparent and Ofgem will have our full support to introduce whatever regulations are necessary to deliver that greater transparency.

Ofgem already require the big energy suppliers to produce annual statements showing the costs and profits of their generation and supply activities.

This makes the market clearer for consumers so they can see the margins energy suppliers make on the different parts of their business.

But the overall transparency of financial flows within companies remain opaque.

Ofgem will deliver by spring next year, a full report on the transparency of the financial accounts of the energy companies and ways that that could be improved, building on the work already completed by accountancy firm BDO.

So I urge you to engage fully with the current Ofgem consultation.

This should not be a reactive process.

You need to come forward with ideas about how you can open up too.

And that includes issues such as how direct debits and bill credits are managed.

That is why I’m pleased, after meeting with Greg Barker last week, that Energy UK has agreed to develop and take forward a best practice model with its members.

Because the more you demonstrate what you are doing to keep bills down, the quicker trust will be rebuilt.

But trust is only one part of the equation.

Today’s highly regulated market must be improved to boost the competition that we know delivers for consumers.

To deliver a real ability for people to control where they get their energy from and how they pay for it.

RETAIL MARKET REFORM

First they have to be able to easily compare prices and to switch to a provider and tariff that gives them the best deal.

Ofgem’s Retail Market Reforms will do away with the complex web of hundreds of tariffs and confusing information on bills.

By December Ofgem’s cap on the number of tariffs suppliers can offer will be in place and by the end of March consumers will have clearer bills showing the cheapest tariff suppliers offer.

But we can go still further to make sure that retail competition operates effectively by working together to unpick the laborious switching system which deters people from acting in their best interests.

That is why I have challenged the suppliers to deliver faster switching.

I met yesterday with representatives from many of the suppliers and I’m encouraged by the commitment to make this happen.

But people also need a choice of who to switch to and that is why I am determined to help dilute the dominance of the big six over the retail and wholesale markets.

Competition works best when established companies are challenged by innovators, forcing them to adapt their practices to make sure they continue to deliver for their customer base.

That is why the contraction of the number of suppliers under the last Government from 14 majors in 2000 to just 6 in 2010 was so damaging.

Freeze out new entrants and you freeze out new business models and new ideas that can deliver better, faster and cheaper for customers.

So our reforms are opening up the retail market.

In 2010 there was no independent domestic supplier with a customer base greater than 50,000.

Now we have three independents with more than 100,000 customers, and a further eight companies have entered the market since May 2010.

I am determined that this trend continues.

With 98% of domestic customers still with the big six, there is a lot of room for greater competition and diversity.

To do that we also need to make sure that the market is accessible to independent generators on a fair basis in the wholesale market.

Our reforms in the wholesale market may have received almost no attention but I regard them as critical in our fight for consumers.

WHOLESALE MARKET REFORM

Thanks to improvements achieved already in the last year or so – led by Ofgem – the big barrier for generators is clearly no longer the day-ahead market but the forward markets.

Here the UK’s performance is poor.

This is where there is now great scope to drive competition and drive down prices.

Ofgem have now set in train an ambitious package of reform.

The proposed Market Maker reforms will provide independent generators and suppliers greater access to the power generated by the Big Six and other large power producers, enabling them to purchase and deliver cheaper energy to consumers.

This transparency in the way electricity is traded will give independent generators a foothold in the UK energy market and encourage new players to invest.

I am prepared to use the powers we are taking in the Energy Bill to improve energy market liquidity should Ofgem’s proposals be delayed or frustrated.

So I would urge companies to work with Ofgem to implement these proposals as swiftly as possible.

And how can we make sure that the raft of reforms from retail to wholesale are having the desired effect?

Well that is the purpose of the new annual competition review.

The first of the new competition assessments will be delivered by spring next year.

The assessment will be undertaken by Ofgem, working closely with the Office of Fair Trading and the Competition and Markets Authority when it comes into being.

Now the exact metrics for the review will be a matter for the regulators.

But I have made it clear that they should look in depth and across the energy sector at profits and prices, barriers to entry and consumer engagement.

The Government has equipped the regulators with strong powers to deal with unjustified barriers to competition.

If abuses are found they must be addressed.

I speak as the former Minister for Competition, who made and drove the decision to establish the Competition and Markets Authority and reform Britain’s competition law.

So I can be clear with you.

The CMA has teeth.

And the annual competition assessment is an innovation I expect they will cut their teeth on.

So trust is about playing by the rules.

And rules have to be enforced.

Companies that play outside the rules will be penalised and fined.

With our Energy Bill, Ofgem has powers to require energy companies to make compensation payments directly to consumers who have lost out, but we can and should go further.

That is we intend to consult on the introduction of criminal sanctions for anyone found manipulating energy markets and harming the consumer interest.

This is the proper way for Government to intervene in the markets.

Set the right rules and enforce them properly.

That is what we are doing.

That is what will have lasting effect delivering for generators, suppliers and consumers alike, in the years ahead.

Making sure investment continues to flow, that industry can flourish and that the markets deliver for consumers.

CONCLUSION

So this is a tough message I’ve delivered today.

These are very difficult and complex issues we are working through.

There is no quick fix.

And I reject the counsel of those who say you must be either on the side of consumers or the side of business.

That is the bad old days of conflict and division.

We need to make sure we keep bills affordable.

But we also need our energy sector fit and healthy.

Delivering the power we need.

Delivering jobs and economic growth.

Building the modern climate-friendly energy infrastructure that will keep this country running far into the future.

And with the stability and certainty the Government is providing, now is the time to grow and invest and improve.

And I know that you are rising to this challenge.

So let’s together meet the challenge of affordability too.

Making sure that well regulated and competitive markets deliver for the hard-working citizens of this country.

Edward Davey – 2013 Speech to the Scottish Renewables Conference

eddavey

Below is the text of the speech made by the Secretary of State for Energy and Climate Change, Ed Davey, at the Scottish Renewables Conference held in Edinburgh on 18th March 2013.

Introduction

It’s great to be here with you in Edinburgh.

Edinburgh is one of the great European cities.

Home to great artists, great thinkers, great inventors, great pioneers.

Capital city of a nation blessed by the talents of its people, and rich in natural resources.

And it is this combination of natural resources – the wind, the waves, the geology – coupled with its great human resources – the talents of the people, the work ethic, and determination to succeed…..

……it is these things that make Scotland one of the energy hubs of the world and a powerhouse of the new renewable energy industry.

People in Scotland have embraced renewable technology.

This chimes with my Department’s recent survey that showed overwhelming support for renewables, across the UK.

As you will see from the poll published later at today’s conference, the majority of Scots are more favourable towards renewables than other sources of energy.

Scottish renewables now account for 40% of the installed capacity of the whole of the UK – supporting thousands of jobs, green jobs that provide prosperity, and help cut dangerous emissions.

This really is truly a Scottish success story – made possible by the drive and determination of many of you here in this room.

Encouraged by successive Scottish Governments that have recognised the value of green growth.

And enabled by a United Kingdom Government committed to the vision of a low carbon future.

Committed to creating a market that incentivises clean energy.

And committed to going out and getting the capital investment required to build the infrastructure that we need to meet our shared ambition.

And what is that ambition?

A green, sustainable and prosperous future for the whole of the British Isles – and for the Europe we call home.

Playing a leading role internationally in tackling climate change.

So today I want to talk about how this drive for green growth will benefit people in Scotland – bringing green jobs and green investment.

I want to chart this Scottish success story in the context of the shape of the market reforms we are working through in Westminster and what they will mean for the future of renewables across the whole of the UK.

But I want to start by talking about the energy challenge we face together.

The challenge

I am the Secretary of State for Energy and Climate Change.

Not either/or.

I am charged with ensuring that we power our United Kingdom and protect the planet at the same time.

I need to meet both objectives when making decisions.

And this means recognising some realities – realities of the transition to our low carbon future.

Let me give you three.

Energy security, the continuing role of hydro-carbons, and the climate change threat.

First, collectively we face a huge infrastructure challenge, to keep the lights on.

With around a fifth of the UKs power stations due to close this decade, including some 2.5GW based here in Scotland, ensuring we have enough reliable capacity to meet demand now and in the future is my priority number one.

We need around £110bn of capital investment this decade alone to deal with that.

That is what I am concentrating on in Westminster – and I will come back to this theme later.

The second reality is that fossil fuels will remain part of the energy mix for some years to come – gas replacing coal, petrol and diesel fuelled transport, for example ahead of the development with low and zero carbon emission vehicles and their roll out to the mass market.

So, the resources in the North Sea have been and remain a boon to Scotland and the UK as a whole.

And it’s good to see investment in the North Sea rising.

It is also right that we investigate the potential that shale gas represents.

For we will need to continue maximising the recovery of indigenous hydrocarbon resources – on land and at sea.

Because these domestic resources enhance our energy security and they can be a driver of much needed growth – and they provide a valuable contribution to the balance of payments.

But let me be clear – these resources are unlikely to provide us with cheap energy bills as some would have us believe.

Even shale gas is not the silver bullet people think.

With increasing global demand for gas, the UK’s shale gas resources are highly unlikely to move global prices in any meaningful way.

Climate Change

And, of course, there is a third reality.

Climate Change.

Climate Change is a real and present danger.

The scientific evidence is overwhelming.

It is happening now and it will only get much worse if we don’t act.

And as our understanding of the changing climate grows, so does our understanding of what those risks might mean for our people.

An Earth which is hotter, more disaster-prone and more dangerous in the years to come means a more brutal environment for our citizens.

Just as it is this generation’s responsibility to pass on a healthy economy to the next.

So it is this generation’s responsibility to pass on a healthy environment to the next.

Therefore we can’t carry on using unabated fossil fuels at the rate we are now, decade after decade to come.

We have to reduce carbon emissions.

And with the Climate Change Act, this is not only a moral obligation, it is a legal one too.

So this is the energy and climate change challenge we face, together, in the UK.

Keeping the lights on, getting the investment we need into the system to provide the energy security we need.

While at the same time accelerating the transition to a low-carbon energy generation.

Increasing efficiency, reducing waste.

To achieve this we need to recognise one last reality.

I am not the Secretary of State for renewables – or for oil and gas or for nuclear – or for CCS or any other technology for that matter.

I am the Secretary of State for all of the above.

I need to make sure we are encouraging development in all these areas – making sure we have a wide mix of energy sources in order to ensure a secure and affordable energy supply.

But within that mix I am also clear, the cleaner the fuel the better, the greener the growth the better.

I will continue to look at the big picture to see how all sources of energy generation fit together in a market as we transition to the low-carbon future.

But that transition must happen – and that makes the generation of renewable energy an indispensible part of our strategy.

And it makes the renewables industry a top priority for investment.

So let me turn to the renewables industry and the success story it represents here in Scotland.

Green growth with Scottish renewables

And what a success story it is.

You all know the statistics.

Some 11,000 jobs supported by the renewable energy industry in Scotland.

Over 35% of electricity used here generated by renewables.

A massive source of inward investment.

Over the last 2 years alone Scotland has seen announcements of over £2.3bn of investment in renewables with the potential to support over 4,500 extra jobs.

Scotland already leads the UK in terms of installed capacity and there are billions of pounds of further investment in the pipeline.

Across the UK as a whole, the Renewable Energy Association estimate that by 2020, some 400,000 jobs could be supported by the renewables industry.

This is green growth.

These are green jobs.

Areva’s plans for a new offshore wind manufacturing plant in Scotland – 750 new green jobs.

Gamesa siting its new UK wind turbine manufacturing plant at the Port of Leith – 800 new green jobs.

Samsung Heavy Industries proposing to base its first European offshore wind project in Fife – 500 new green jobs.

The new Aikengall 2 windfarm – 100 new green jobs.

All these projects – based on green investment, creating green jobs, providing huge benefits to communities in Scotland.

And it’s not just the big companies.

It’s the small ones too.

From overseas and home grown.

Green growth reaching down through the supply chain, creating jobs, encouraging innovation.

Take some of the members of Scottish Renewables.

Natural Power – just 7 employees at the beginning of the new century – now with over 200.

Sgurr Energy – founded in Glasgow in 2002, now a global company.

Not just hiring in Scotland, but with offices in China, Brazil, India, the US.

Gaia Wind – the fastest growing private firm in Scotland.

When I was in Aberdeen earlier this month I visited ROVOP – a new hi-tech start up only a year old building remotely operated diving vehicles to work on offshore wind farms.

A healthy order book, growing rapidly, exporting too – generating 75% of its revenue internationally.

This is the future.

Because the world is not standing still to watch.

Here in Europe – strong renewables sectors in Ireland, Denmark, the Netherlands, Sweden, Germany.

In America, President Obama has issued a call to arms – seeing green technology as the path to “new jobs and new industries” that will maintain “economic vitality”.

In China, Australia, Japan, Brazil – targets to increase renewables.

This is a global boom market of £3.3 trillion, growing at 3.7% a year, with investment in renewables outpacing that in fossil fuels.

The International Energy Agency foresees some 6.4 trillion dollars of investment in renewables over the next two decades.

So this is a global race.

And in some areas – such as offshore wind – the UK has a head start.

But if we really want to thrive in this new environment of green growth, if we want to continue creating green jobs here in Scotland and in the rest of the UK, we will need to accelerate our own domestic drive to clean up our energy generation system and transition to a low-carbon economy.

So let me turn to what we are doing to create the framework for investment in renewables and green growth.

Electricity Market Reform

Of course, to meet the emissions reductions targets set out in the Climate Change Act we will need action in many sectors – transport, agriculture, waste management – and well as energy.

But energy is the largest producer of emissions.

Much can be done through energy efficiency.

And the £1.3bn Green Deal to help people improve their homes, save money on their bills, and cut their carbon footprint all at the same time, will be a driver of green growth.

But the centre-piece of the drive for green growth is the plan for electricity market reform now passing through the Westminster Parliament.

Our long-term vision is for a competitive market where low-carbon technologies, including renewables, participate on a level playing field.

Where people get value for money because the market is responsive to competition – not just to volatile international fossil fuel prices.

The current electricity market can’t deliver that.

First, because it is skewed to fossil fuel capacity.

And second because the current ways in which we bring on low carbon don’t deliver best value for consumers.

So it has to be reformed – but in a gradual way, that’s investment friendly, because we need investment now, while we are reforming.

So we will provide certainty in transition, and encourage investment in renewables and other forms of low-carbon generation, setting a new Carbon Price Floor and guaranteeing contract prices for low-carbon generators.

And because I recognise that more certainty is required right now for shovel-ready projects, I set out last week further detail on the Final Investment Decision Enabling Programme for renewables.

This will mean that developers of renewable electricity projects will be able to apply for support, and enable investors to make final investment decisions this year ahead of changes to the electricity market next year.

This should help construction on a number of projects to start sooner rather than later.

Looking out to 2020, we have trebled support under the Levy Control Framework to £7.6 billion – sending a strong clear signal that there is plenty of funding for low-carbon investment.

This will help increase the amount of electricity coming from renewables from 11% today to around 30% by 2020, as well as supporting new nuclear power and carbon capture and storage.

Here in Scotland, the Scottish Government has a target for renewables to generate the equivalent of 100% of gross annual electricity consumption by 2020.

I fully support this ambition, but achieving it will be a daunting task.

The Climate Change Committee estimates that to meet this target installed capacity will need to treble.

The best way that I, as Secretary of State at the UK level, can help achieve this is to make sure that electricity market reform is successful in incentivising investment in renewables.

And that is what I am doing.

I will do everything I can to get capital into the pipeline.

In my Department, and across Government, working closely with devolved administration, including here in Scotland, my fellow ministers and I are beginning an aggressive campaign to attract global financial investors.

And this is a powerful pitch.

Contracts for Difference will give investors a stable and predictable income – not just for a couple of years, but for over a decade.

As the Prime Minister has said: “What other industry or business anywhere in the world has got that sort of certainty?”

The United Kingdom offers a uniquely attractive stable, transparent and supportive environment for investment in low-carbon generation.

Stronger together

And this brings me to my final point today.

The future of Scottish renewables is more secure with Scotland as part of the United Kingdom.

Look – as an Englishman, I feel a little uncomfortable about coming to Scotland and talking about the approaching referendum on independence.

But as Scotland’s decision will affect all of us in the UK, and as a Liberal Democrat who has long championed devolution, even when it was unfashionable to do so, I feel I have the right to speak up.

And as the UK Secretary of State for Energy and Climate Change – representing the interests of all parts of the UK – I feel I have a duty to do so.

I have spoken about this before and at length, and no doubt I will do so again before too long.

So today I want to restrict myself to one simple point on this.

And that is, I guess, about self-interest – Scottish self-interest.

As part of the Great Britain energy market, Scotland and its energy industry, as net exporters of energy, have unhindered access to a market of over 23 million households and the integrated energy networks that deliver to them.

And Scottish renewables benefit from the ability to spread investment costs across the whole of the UK consumer base.

I have no doubt that if people in Scotland opt to leave the UK, an independent Scottish Government would be committed to giving the Scottish energy industry the support that it needs.

But commitment and ability to deliver are two different things.

My point is this.

An independent Scotland will be just that – independent.

Treated by the UK as just one of a number of countries it could buy renewables from.

We are pursuing a number of interconnection projects with our European neighbours, including Norway and Ireland.

For an independent Scotland, this would potentially represent serious competition.

If the UK were to look beyond its borders for renewable energy, we would need to consider which sources provide the cheapest and most reliable options for our people.

Now that could be from Scotland, but it could also be from Ireland, from Norway or elsewhere.

I am not absolutely saying that Scotland will not be able to compete.

But it will be much harder for a nation potentially having to spread the costs of investment in renewables across just two and a half million households to keep prices competitive.

I am sure that an independent Scottish Government would champion its national industries, but the economic reality is that Scottish energy industry would lose the benefit of the UK’s international clout when promoting Scottish products and industries – instead it would be in direct competition to the UK.

These are the uncertainties that independence will bring.

We shouldn’t just take for granted critical features like this when deciding our future together.

It is an easy matter to assert that the Single Energy Market would continue as it is –but independence is independence.

Divergence isn’t just possible – it is likely.

Devolution is working for Scottish renewables.

As part of the UK, Scottish renewables are thriving – with two governments working and collaborating to realise its potential, constitutionally required to do so..

Allowing tailored support for projects at a local level by the Scottish Government and Scottish Enterprise.

And, as part of the family of the United Kingdom, retaining unimpeded access to the consumer and tax base to underpin the economics.

Together we have the best of both worlds.

I believe wholeheartedly that Scotland is stronger as part of the United Kingdom, and the UK is stronger with Scotland in it.

And the future for Scottish renewables more secure in the UK that outside it.

Conclusion

So let me conclude ladies and gentlemen with this.

In the UK as a whole, we are embarking on the most ambitious reform of our energy system in generations.

Working together we can attract the investment, build the infrastructure and develop the technology we need to move towards the secure, affordable low carbon future that we have collectively committed to.

And with this drive comes growth and jobs.

Green growth and green jobs.

Scotland has been showing the way.

You have been showing the way.

So, lets, together, continue to Lead the new green renewable energy revolution.

Powering the United Kingdom, and protecting our planet.

Edward Davey – 2013 Speech at the ExCel Centre

eddavey

Below is the text of the speech made by the Secretary of State for Energy and Climate Change, Ed Davey, at the ExCel Centre in London on 5th March 2013.

First, let me thank EcoBuild for this opportunity to discuss the progress of our Energy Efficiency Strategy.

I want to use my time to set out briefly why it’s so important that we get our approach to energy efficiency right.

And to talk specifically about the Green Deal and the Energy Company Obligation.

I’m delighted that industry leaders from the UK Green Building Council are meeting tomorrow to discuss sustainability in the built environment.

Industries views are extremely important and I want you to make your voice heard loud and clear.

Joint endeavour

But my key message today is this:

We, the Government, are setting out to create a market in energy efficiency that will, over time, create jobs and provide opportunities for businesses to thrive in every part of the construction industry.

Energy efficiency can be a huge boost to your firms.

But it’s not going to happen overnight.

It’s going to be a long-term transformation.

And as the market takes off – so will these opportunities gradually take off.

Not just in the UK – but there is an export market in energy efficiency too.

I want you to be ready to take advantage.

Because this is a joint endeavour.

We have worked very well together, those of you who have been involved in designing the Green Deal, Government and industry, to get this far.

And we need to stick together to make sure we build momentum.

Here today, in this hall, and throughout the exhibition, are the people who have the answers to many of the difficult issues we are working through.

To succeed we will need to leverage your expertise, your reach with customers, your advertising capacity, your experience of what works and what doesn’t.

Together, we need to get this right:

To help people struggling with rising energy costs;

To help get the economy moving again;

And to be part of the climate change solution.

Let me take each of these three key objectives in turn – starting with climate change.

Climate change

Heating and powering our building stock is responsible for almost 40% of our greenhouse gas emissions.

Those emissions must come down if we are to help tackle climate change.

Be in no doubt – climate change is a real and present danger, it is already happening now and it will only get worse if we don’t act.

Energy Efficiency and demand reduction are only a part of the response, but they’re a very important part.

If we get this right, as my Department’s Carbon plan sets out, we could reduce carbon emissions from buildings by between a quarter and two-fifths by the middle of the next decade.

This will go a long way to making sure Britain is part of the climate change solution, and not part of the problem.

Energy bills

The second reason we have to get this right is to help people struggling with the rising costs of energy bills.

Domestic gas prices increased by an average of just under 8% in the last months of 2012 – on the back of sustained rises over the last 5 years.

And with the economic situation as it is, we have to help people who are struggling to keep up.

The Government can’t control wholesale prices in a global market.

When gas demand is booming to fuel emerging economies like India and China, replacing the nuclear power Japan turned off.

When even the shale gas revolution won’t get global gas prices lower.

The best way to help the fuel poor in Britain and to help those facing higher energy bills be they people or businesses, is to reduce the amount of energy they need to use.

If we get this right, people will have warmer homes for less – with lower bills than otherwise.

Green growth

The third reason we need to get this right is because there is a huge positive business opportunity out there.

An opportunity for green growth.

Creating green jobs, creating new green businesses, growing the green market, growing green prosperity.

The energy efficiency sector already accounts for around 136,000 jobs.

And the sector is likely to expand by around 5% a year.

With the Green Deal and the Energy Company Obligation we have the tools to open up the energy efficiency market.

The cumulative value of finance for the Green Deal is projected to be over a billion pounds by 2015.

By then, we expect to see ECO and the Green Deal together result in over one million separate pieces of home improvement work.

A lot of the work will be labour intensive which means new jobs – over 30,000 in the insulation sector alone.

And just look at the size of the market.

Almost eight million homes potentially needing solid wall insulation.

Five and a half million that could have cavity wall insulation.

Over six million could get more loft insulation.

And this is just the tip of the iceberg.

There are over 40 different types of home improvements that can be made under the Green Deal.

You may be interested in the prospect of Green Deals globally.

I am consistently asked how the Green Deal is developing by my counterparts in other Governments, not just in Europe but around the world.

If, in the UK, we grow the Green Deal and grow this market properly and sustainably this is, I believe, a business opportunity not just in the UK – but energy efficiency has potential to be a good export market for British business as well.

The energy efficiency market place

So what is the Government’s doing to get this market going?

As part of the kick start to last month’s launch, we awarded £22m to support energy efficiency projects in over 150 English local authorities and cities.

We launched the use it or lose it Green Deal Cash Back scheme to encourage early take up.

And we launched a £3m Green Deal communications campaign which will run until April this year to help get advertising off the ground and raise awareness.

How is it all going?

Well, we are going to report formally on the Green Deal through Official Government Statistics.

The plan is to issue monthly and quarterly reports, starting this Spring.

These will enable people to see how the supply chain is developing and see the progress on take up, for instance through the number of assessments that have been undertaken.

Over time we will be able to add in more information and show how Green Deal is contributing towards its primary objectives – reducing in carbon emissions and saving on energy bills.

Because these will be Official Statistics I’m afraid there are legal restrictions about what I can say before formal publication, but there are a number of positive signals I can tell you about today.

In terms of the trade, there are already 40 approved Green Deal providers.

Big companies and networks approved to oversee things.

75 Assessor organisations are registered.

And over 600 installer organisations too.

And we know from these bodies, talking to these people, there is a good pipeline of work.

So even in these early days, these are good signs of growth and market momentum.

Conclusion

But to finish let me come back to what I said at the beginning.

This is a long-term transformation we are talking about.

In some cases the life of a Green Deal could extend up to 25 years.

But the benefits – to people, to businesses and in terms of emission reductions – they can be felt immediately.

This is a joint endeavour, working together.

We need you to be part of the Green Deal megaphone.

Help us help you get this market going.

Help us get you working on people’s homes;

Replacing their boilers.

Insulating their walls.

Double-glazing their windows.

And as a result, lowering their bills and lowering carbon emissions.

I know that for you this needs to make business sense.

And that is why we are creating this market place – for green growth, green jobs and green profits I talked about.

I know that working together, we can, we will, succeed.

It will be a fabulous achievement.

Helping people reduce their bills, helping to grow the economy and saving the planet at same time.

I hope you’ll agree that this sounds like a good deal.

I hope you’re in.

Edward Davey – 2013 Speech at the Royal Society

eddavey

Below is the text of a speech made by the Secretary of State for Energy, Ed Davey, on 12th February 2013 at the Royal Society.

Let me start by congratulating all those involved in the AVOID programme on their hard work over the last four years:

Highlighting the challenge we face in tackling climate change;

Identifying the potential impacts.

This has been a unique multi-disciplinary research programme.

Including the Met Office, the Walker Institute, the Tyndall Centre and the Grantham Institute among others.

And it has been an impressive demonstration of successful collaboration between academia and Government.

And it has had concrete outcomes.

For example, materially supporting the UK’s international engagement and informing our negotiating position at Copenhagen and beyond;

Contributing to the UN’s Environmental Programme with robust, credible and timely research;

And supporting the setting of our carbon budgets.

Listen to the experts

It is fair to say that trust in politicians is not something the public has in abundance.

That is why, when it comes to climate change, it is so important that all the rigours of the scientific method are applied.

That it is the science that drives policy.

And that we hear loud and clear from the experts.

When the scientists tell us that the evidence proves that smoking is addictive and can cause a whole host of deadly medical conditions from emphysema to heart disease, we believe them.

We try to give up, we hope our children never start.

When scientists tell us to that prolonged exposure to the sun’s ultra-violet rays can lead to cancer, we believe them, because their views are based on strong evidence.

We take precautions, we avoid sun burn, we cover up, use sun cream.

So if we have this trust in scientific evidence, why would we make an exception when it comes to the science of climate change?

When it comes to assessing the health of our planet’s eco-system – we should listen to the scientists – and we should believe them.

The message of the science

We heard earlier from the Chief Scientist Sir John Beddington, and from other distinguished guests about the overwhelming scientific evidence for climate change.

Overwhelming evidence, yes.

But of course there are uncertainties.

You are scientists.

You know that good science is all rightly cautious.

Not jumping to conclusions based on weak evidence, but identifying uncertainties and from them learning more about how systems work and change.

So, I understand that, what we don’t know is at least as important as what we do.

Good science is questioning, sceptical, analytical – testing theories and understanding risks.

Two hundred years of good science – teasing out uncertainties, considering risk – has laid the foundation of what we now understand.

It screams out from decade upon decade of research.

The basic physics of climate change is irrefutable.

Greenhouse gases warm the atmosphere and cause changes to the climate.

Human activity is significantly contributing to the warming of our planet.

Sir John talked about some of the impacts that are already being felt.

While we would not want to attribute every extreme weather event to climate change – the pattern is building and the costs are rising – the human costs and the financial costs.

The costs of the 2012 floods here in the UK could easily top £1bn.

And last month the US Congress passed a $50bn bill for relief for those affected by Superstorm Sandy.

As President Obama said last month:

“Some may still deny the overwhelming judgment of science, but none can avoid the devastating impact of raging fires and crippling drought and more powerful storms.”

And Sir John also talked about how our hope must be to limit climate change – preventing us passing a potentially catastrophic tipping point – a great threat to life.

Because the stark fact is this – climate change is happening.

We can’t reverse it, but we can limit it.

AVOID highlights the importance of keeping temperature increases below 2C

To do so global emissions need to be reduced urgently and sustained deep cuts are required long term.

This points to the importance of a comprehensive global deal in 2015.

It may be as I mentioned earlier that the art of politics is not greatly revered.

But we will need every piece of political artistry we can bring to bear to make sure that we translate this scientific understanding into concrete and effective action to keep climate change within manageable levels.

Action based on the science, the risks and the impacts.

Action to deliver a low carbon way of life.

Rewiring the global economy, becoming more resource efficient while continuing to deliver the economic growth that improves people’s lives.

So let me turn to the actions we are taking, first, here in the UK, and the actions we are taking with our European partners on the world stage.

Getting ahead in the green global race

Over the last decade in the United Kingdom, there has grown and solidified, a political consensus for domestic action to curb our emissions, and for seeking a legally binding international treaty to provide for the same at a global level.

What we have done here in Britain has been quite an immense achievement.

It has not been easy and it has been a long journey in which all political parties have, at times, shown courage and leadership.

We can all be proud of the Climate Change Act of 2008 – the first comprehensive economy wide climate legislation of its kind.

Committing the UK to achieve at least an 80% cut in carbon emissions by 2050.

With 5 year carbon budgets to help us stay on track.

And robust accountability with independent auditing through the Committee on Climate Change.

The latest estimates for the UK’s greenhouse gas emissions in 2011 show a 7% fall compared to 2010.

Yearly figures can fluctuate depending on a number of factors from the state of the economy to the state of the weather.

But the overall trajectory is in the right direction, recording emissions reductions of more than 25% since 1990 – the base year measure for the Kyoto Treaty.

The real prize, the real prize, is to design in long-term emissions reduction through systemic change.

Designing out carbon.

And that is where this Coalition Government has been building on the framework created by the last Labour Administration.

Putting muscle and flesh on the bones of the Climate Change Act.

Turning theory into practice.

Taking forward the practical polices that will create a low carbon economy.

Maximising energy efficiency by overhauling the housing stock through the Green Deal.

Setting up the Green Investment Bank to leverage private sector investment into low carbon.

And now before Parliament a new Energy Bill – an ambitious long-term plan for a major reform of our electricity market to help ensure we deliver on our emissions reductions commitments, and attract the right investment for low carbon infrastructure – creating jobs and growth in the process.

Too often, we are told that those who go low-carbon first will sacrifice their competitiveness.

But as the Prime Minister set out last week, reaffirming our shared commitment to being the greenest government ever:

“We are in a global race and the countries that succeed in that race, the economies that will prosper, are those that are the greenest and the most energy efficient.”

The real danger we face is being outpaced by other countries who are investing in clean, low-carbon economies.

This is a boom market of £3.3 trillion, growing at 3.7% a year, with investment in renewables outpacing that in fossil fuels.

For our businesses this means opportunities, for our governments tax revenues, for our people jobs, for our societies insulation from the volatility of fossil fuel prices.

So this drive for low-carbon energy is a real engine of growth for hard-pressed economies around the world.

We are not alone

The UK is not alone – we are not somehow risking our competitive edge because others aren’t doing their bit.

Over the next year, I will be part of a concerted push by like-minded countries at EU level to commit to a 30% reduction target in 2020 and to agree a further strong emissions reductions target for 2030.

And looking wider than Europe, I recently attended the GLOBE International legislators summit.

The GLOBE study catalogues the action already being taken in over 30 countries.

South Korea creating the legislative framework for emissions reduction targets, cap-and-trade, carbon tax, carbon labelling, carbon disclosure, and the expansion of new and renewable energy.

Australia’s Clean Energy Act, and now linking its emissions trading system to the EU’s.

China adopting targets to decrease both the energy intensity and the carbon intensity of its economy by 2015.

And I am encouraged by President Obama’s inauguration address in which he challenged America to claim the promise brought by low carbon technology – new jobs, new industries, economic vitality.

So those who advocate the view that ‘no one else is doing anything, so why should we’ have not opened their eyes to the real world.

2015

Of course incremental, nation specific action is very welcome, but we need to sustain and increase the emissions reductions on a global scale over the long-term.

AVOID has shown that to achieve a 50% chance of limiting warming to 2°C, global emissions need to peak in the next few years and be followed by rapid long-term reductions.

Some look at the negotiations for a legally binding successor to the Kyoto Treaty and despair.

I am given hope: The Doha conference in December 2012 has re-affirmed the international commitment to reaching a 2015 agreement.

I am given hope, by the actions taking place all around the world in developed and developing economies, that we can agree a global, binding treaty, because it will be the next obvious, natural step to consolidate the actions we’re already taking.

And I am given hope by our human ingenuity – to find a way through problems and develop solutions.

And this brings me back to the politics and the science.

We now have three critical years leading to the end of 2015 to get the international politics aligned.

To bring into agreement those representing the huge mega economies of Europe, America, China, Russia, India, Brazil, Japan – those representing developed countries and developing countries, those representing the most threatened by climate change, and those who believe, quite wrongly, they are cushioned from the impact.

Politicians have to make balanced choices.

Meeting their responsibility to look after the interests of those they directly represent, while trying to work for the greater good.

The result is rarely clean and neat.

But it is much easier to come to a reasonable and altruistic position if the technological challenge is in hand and the results are beginning to show.

So my message is this.

We can’t leave this to the politicians to save the planet.

This has to be a whole of society effort, and no contribution will be more crucial than that of the scientific community.

Conceiving solutions, engineering new efficiencies, bringing new energy sources to the market.

We share a positive vision of a green, clean energy and transport – and a better, healthier way of life.

And the progress of science will help us get there.

Conclusion

Thanks to programmes like AVOID the science, the risks, the impacts and the way ahead have never been clearer.

You know, when I am confronted by some of the most dogmatic and blinkered people who deny that climate change is happening, I am reminded of the sentiment of the famous USA Today cartoon.

“If we really are wrong about climate change, we will have created a better world for nothing”.

In reality, those who deny climate change and demand a halt to emissions reduction and mitigation work, want us to take a huge gamble with the future of every human being on the planet, every future human being, our children and grand children, and every other living species.

We will not take that risk.

Thank you.

Edward Davey – 2012 Speech at CBI Breakfast

eddavey

Below is the text of the speech made by Ed Davey, the then Secretary of State for Energy, on 18th October 2012.

Introduction

I want to thank our hosts for bringing everyone together this morning.

The CBI has been on a journey, much like Government policy, as both have grappled with how to decarbonise the economy and tackle climate change while ensuring the UK remains competitive and energy affordable.

The CBI is a strong and powerful advocate for the green economy and I very much welcomed the report, The Colour of Growth, which drew attention to the vital role energy can play in terms of investment, jobs, and growth.

The case for EMR

Today I want to focus on the reforms that I know CBI members understand are critical if we are to attract the massive investment we need in our energy infrastructure and secure a supply chain for low carbon technologies in the UK. Neil has outlined how important regulatory certainty is to investors and we believe our energy reforms can achieve that certainty.

The challenge is well known. Demand for electricity is set to double, as economic growth returns and then as we use more electric cars and heating. But a fifth of our power plants are closing because they are too old or too polluting.

So with supply reducing and demand increasing over the next decade and beyond, we need massive investment: investment at double the current rate, a total of around £110bn between now and 2020. That’s a huge investment in new, low-carbon electricity generation and grid infrastructure – representing around half the UK’s infrastructure investment, the equivalent of seven Crossrails.

It will make sure we keep our homes heated, our industries and consumer electronics powered and our lights on. It will diversify our energy mix – with gas, renewables, CCS and nuclear all playing their part – and thereby protect our energy security and insulate business and domestic consumers from fossil fuel price spikes. It will help us meet our legal obligations on climate change, including our emissions and renewables targets.

And it present a big opportunity for jobs in every nation and region of the UK, and a boost to the supply chain, giving British business opportunities both at home and in export markets.

This opportunity for growth and jobs comes now, when we need it, not a decade down the line. The CBI’s report said that the UK’s green business grew in real terms by 2.3% in 2010-11, beating even the global green business growth rate to take a share of over £120 billion in the global market of £3.3 trillion.

The Government is looking to support this through sector-specific strategies, which will ensure there is sufficient supply chain capacity to support growth sectors including nuclear, renewables, oil and gas.

I want Britain to be the best place in the world to invest in new, clean energy infrastructure. But Britain’s electricity market, as it stands, cannot deliver investment on the scale we need. That’s why we’re reforming it, and why we’re introducing the Energy Bill within weeks.

We’ve had pre-legislative scrutiny, we’ve listened to industry and others, and today I intend to announce a little more detail in some key areas.

And today I can also confirm we will be publishing the Energy Bill, as we always planned, next month, for second reading before Christmas. So given that imminent publication, I wanted to use today to make my case for electricity market reform.

Contracts for Difference

For the ultimate goal, let me reassure you, has nothing to do with Government intervention. Quite the contrary. Eventually I want to see low-carbon power sources competing on cost alone. But we can’t just flick a switch and make that happen instantly. So our energy reforms will come in four phases.

Let’s start by admitting that the current arrangements – phase zero, you might say – are actually quite dirigiste. We have the Renewables Obligation; we negotiate bilaterally on potential new nuclear power stations; we have the competition led by my Departtment for commercial-scale carbon capture and storage.

There’s a good case for that statist approach now, but our reforms are explicitly intended to move to a market-based, price-discovery model.

So in phase one, we’ll introduce a mechanism that will offer reliable contracts, delivered in a way that is trusted by investors. That mechanism is the Feed-in Tariff with Contracts for Difference. Prices will be set administratively, aiming to bring all technology groups down in cost and begin levelling the playing field.

Here’s how it works. We set a fair price for low-carbon electricity. The generator sells its electricity in the market, and is paid a variable premium to top up if necessary. And if the market price is higher than the strike price, the generator pays back the difference.

The key thing here is certainty. Contracts for Difference can help smooth out market volatility, not only minimising costs to the consumer, but also making investment and financing decisions easier. And because energy still needs to be sold in the market, there are still powerful incentives to encourage operational efficiency.

Global fund managers have told me that the uncertainty of the current arrangements has put them off investing. And they prefer the long term contracts we are proposing – because they would give them the predictable revenue streams they need to invest in big projects, and with lower costs of capital. In a contract.

Of course, we don’t want a hiatus in investment pending our reforms taking full effect in 2014. So I’ve undertaken to explore what form of comfort might be given to keep investments on track for project developers looking to make progress over the next 15 months or so.

We are talking to EDF about what this can do to help bring forward new nuclear at Hinkley, but let me stress that this offer is intended to benefit all low-carbon technologies.

My department has been approached by some half dozen renewables developers, in wind and biomass, to understand how the availability of early comfort could help them.

So I can announce that I will seek powers in the Energy Bill to give the market certainty on these arrangements and demonstrate our commitment to supporting new investment.

In phase two, as different technologies mature and become more widely deployed, we’ll see the first technology-specific auctions where prices will be set competitively by the market and (for example) onshore wind generators will start to compete with other onshore wind generators, as early as 2017.

Then in phase three, when most current technologies have matured, we’ll move to technology-neutral auctions. So in the 2020s, low-carbon technologies should start to compete with each other in a true low-carbon electricity market.

Finally, when all technologies are mature enough, and if the carbon price is high enough and sustainable enough, all generators could compete without any intervention.

The move from price setting to price discovery will be complete, with low-carbon electricity sources competing on cost to provide clean, affordable, secure energy for UK consumers.

And through this 4 staged reform, we will ensure that demand-side response, and additional storage and interconnection, can all play an increasingly important role in Britain’s reformed electricity markets, helping to manage supply.

So the reforms in the Energy Bill are about building a framework for a new, competitive electricity market – bringing down the cost of capital, unlocking a huge amount of investment, and all the time moving our energy mix towards the diverse, low-carbon mix we need for our energy security and to meet our climate goals.

So as we prepare to introduce the Bill to Parliament next month, we’re already taking practical steps now to make the electricity market reforms a reality.

Just this month National Grid published its Call for Evidence , which is the first step in establishing the first strike prices for Contracts for Difference.

Decarbonisation target

At the same time, I believe a strong case has been made by many investors in energy infrastructure for a decarbonisation target range for the power sector. Such a range would help make clear our continued commitment to our climate goals. Believe me when I say that no one would be happier to see the politics taken out of energy policy. What could make life easier for the Energy and Climate Change Secretary than political consensus? So

I hear your message Neil and I can say with confidence that the coalition is united behind these energy market reforms.

Security of supply

As well as stimulating low-carbon investment, I am determined to ensure the long-term security of our electricity supplies.

Our market has, to date, delivered us a high level of electricity security. But the picture is changing, and we cannot be complacent.

Over the coming decade, a large proportion of our existing capacity is set to close, and more low-carbon plant will enter the system.

That means that other types of capacity will run less often, and can be less sure of revenues. That increased uncertainty could threaten the investment in non-intermittent capacity that we need, and run the risk of shortfalls – for example, during cold, windless periods.

So we need to be ready to act to secure our electricity supplies for the long-term. This was underlined by Ofgem’s recent assessment of future capacity margins, which clearly set out the potential for capacity margins to decline from their current high levels.

Many of the actions that we are taking – securing investment in low-carbon generation, reducing demand through the Green Deal, enabling consumers to manage their energy use actively through smart meters – will help to reduce the risks. But these actions may not be sufficient to ensure security of supply in the long-term.

That’s why we are intending to legislate for for a Capacity Market – which will ensure that we have the right long-term incentives to provide us with the reliable capacity that we need.

The Capacity Market would work by guaranteeing a steady payment for providing reliable capacity, giving developers of new power stations the certainty they need to invest. And it would work for households and businesses by securing their electricity supplies and insulating them against the steep price spikes that can occur in very tight markets.

Many investors in gas plant have made clear to me that they see the capacity market as important. . Gas is crucial to the UK’s security of supply, and will continue to play a major role in our electricity mix over the coming decades, alongside use of carbon capture and storage technology and of course with significantly increasing renewables and nuclear.

But the Capacity Market is not just about traditional generation – we are designing it so that other approaches such as demand side response and storage capacity can also participate.

So we will, later this year, set out more of the detail of the scheme – giving investors the certainty they need to take decisions.

Liquidity

To secure the best value from our reforms we also need a diverse and competitive wholesale market.

The liquidity of our wholesale power market is low relative to some other major European power markets and to international commodity markets. The issue is particularly pronounced in the forward markets, which are important for independents.

We all know that liquidity helps competition and entry in any market, and allows participants to manage their risks. Independent electricity generators and suppliers are no exception. It is also crucial to the efficient functioning of the Contracts for Difference.

That’s why I support Ofgem’s objectives as it takes forward potential reforms. I am keen to see swift and appropriate action from the regulator.

The industry itself has also taken steps to improve transparency and day-ahead liquidity. I welcome those efforts too, and would encourage industry to move further and faster, especially with respect to liquidity in the forward markets.

And, while supporting the efforts of the regulator and industry, I do believe Government needs to stand ready to step in and act if those efforts are not promoting competition to the benefit of consumers.

So I want you to feel confident that Government is ready to act if necessary. So as we complete the fine details of the electricity market reform, we will make sure they promote competition at every stage. And we are looking closely at backstop powers in the Energy Bill to promote market liquidity and improve competition for long-term contracts, particularly with independent renewable generators.

CfD Payment Model & Allocation

The Energy Bill will set out our choice of payment model for Contracts for Difference and, alongside the Bill, the allocation process for Contracts for Difference. Developers and investors in the renewables sector in particular have told us that they want a single strong counterparty to these contracts, and earlier certainty of their contract allocation and strike price, and I want to assure you that we are listening.

Of course, Contracts for Difference will provide much earlier certainty than is available currently, with developers entering into legally binding contracts, with set levels of support, potentially years ahead of when pricing certainty is achieved under the Renewables Obligation.

But in response to feedback on our initial proposals, I am attracted to the idea of giving developers much earlier certainty on allocation of contracts than we previously proposed. In particular, a process that would allow developers to enter into a Contract for Difference as soon as relevant planning approvals and grid connections are agreed, so long as the developer ALSO commits to progress their project at a reasonable pace.

This could better match the needs of developers, whilst also giving Government appropriate comfort that the available budget will be used effectively and protecting energy consumers.

We have listened to the concerns industry raised about the CfD payment model – in particular the need for a robust counterparty to the contracts. I have taken the concerns on board. I know this is a key issue for developers and others in the sector, and central to unlocking the investment we need.

We have been looking at these concerns over the summer and have been assessing the benefits and workability of creating a single counterparty, probably a company owned by Government, which could give the certainty you need to come forward and invest.

My Department has this very week finalised our plan and when we announce it next month I believe we will show that Government has worked constructively with the industry to address your concerns.

Growth and Infrastructure Bill

I’d like to turn to two measures closely related to our energy strategy and reforms which we propose to introduce through the Growth and Infrastructure Bill, which the Chancellor is introducing in Parliament today.

You may know that Ofgem planned to launch in April 2013 a Network Innovation Competition in the gas industry, which would have seen industry invest £160m over an eight-year period in innovation and greater efficiencies in the grid.

But Ofgem found itself unable to move forward because of a legal ambiguity in the Gas Act 1986 which threatened the planned funding mechanism. Ofgem has therefore proposed to delay the Competition until this issue can be resolved or another funding mechanism can be found.

I know that the gas network companies and Ofgem are disappointed by this, and I think they are right.

So I can announce that we will remove this regulatory barrier altogether in the Growth and Infrastructure Bill so that the Competition can go ahead at the earliest opportunity.

The second measure relates to Section 36 of the Electricity Act 1989. Planning decisions on major energy infrastructure projects were examined under this section of the Electricity Act, before the Planning Act came into force.

There remain around 9 projects still awaiting a decision from Ministers under Section 36, and around 30 projects that have consent but have not made a final decision to build.

Unlike Planning Act consents, section 36 consents are inflexible. Once given, a developer must build its new plant to the specification permitted by the consent.

For example, currently if a biomass developer with Section 36 consent wanted to change the type of fuel it burns type, or a wind farm developer with consent wanted to add a couple more turbines, they would have to submit a completely new application to the Planning Inspectorate under the Planning Act – a process which could take over a year.

I see that as unnecessary red tape, and we will use the Growth and Infrastructure Bill to cut it.The changes we will make will mean that developers wishing to apply for changes to to their projects Section 36 consents will in most cases need to undertake only a 3 month consultation on those changes. This could unlock investment decisions across a range of technologies, bringing thousands of new jobs and billions of pounds of investment to the UK economy.

The recent good news that the Carrington gas power plant near Manchester has confirmed financing and will now go ahead might have come significantly earlier if this reform had already been in place.

Demand-side reforms

A key issue raised in Parliament, during scrutiny of the draft Energy Bill, was that the Government should be driving permanent reductions in electricity demand. I agree that this is a crucial issue and we will be shortly setting out our ideas alongside our energy efficiency strategy.

That’s in addition to the measures we’re already taking on energy efficiency, including of course our flagship Green Deal programme, which will enable homes and businesses to pay for energy efficiency improvements through savings on their fuel bills.

The Green Deal will save money, save carbon – and make a real contribution to economic growth: supporting new jobs and businesses, and unlocking unprecedented choice for consumers. It’s a programme that will to run not for years but for decades, and should establish a vibrant new market in energy efficiency, one that could attract over £10bn of new energy efficiency investment in the residential and business sectors over the next decade.

Conclusion: CBI’s six tests, and consumer benefits

Reform is always controversial.

You may have heard or read criticism of various types: that our reforms are too complex, possibly deliberately so to conceal some secret subsidy for new nuclear; that we’re abandoning our climate goals in favour of a new dash for gas; or that we’re replacing a market-based approach with an illiberal, statist one.

Those critics are all a long way wide of the mark. I prefer the six tests – six entirely sensible tests in my view – which the CBI has said it will use to evaluate electricity market reform.

I hope that it’s clear from what I’ve set out today that our plans will indeed:

– one, remain market-oriented – indeed, in the longer term, we are blazing a trail to pure competition;

– two, remain technology-neutral – a diverse generation mix remains at the heart of our strategy;

– three, safeguard existing investments – indeed, we are committed to the principle of no retrospective changes and I’m acting to help existing investments out of the pipeline and into delivery;

– four, be politically durable – the very heart of Contracts for Difference is that they are long-term, stable contracts that provide certainty to industry;

– five, minimise the cost on energy users – and I’ll come back to this;

– and six, enable sufficient investment in low-carbon power generation and supporting technologies: that’s the driving force behind the reforms.

The fifth test – the need to minimise the cost on energy users – is a test through which I put all policy in my department.

Our reforms will stabilise consumer prices. With the increased diversity in the energy mix they herald and the long-term contracts for suppliers, we will shift decisively away from the current situation where volatile global gas prices determine the market electricity price.

So our reforms are good news for consumers, including for business consumers. They are long overdue.

Ed Davey – 1997 Maiden Speech in the House of Commons

eddavey

Below is the text of the maiden speech made by Ed Davey in the House of Commons on 6th June 1997.

It is a pleasure to follow the hon. Member for Hendon (Mr. Dismore), although a daunting prospect because he gave us such an entertaining and interesting speech. I congratulate him on making such an erudite maiden speech.

I would also like to offer the hon. Gentleman my sympathy and condolence for having the hon. Member for Hartlepool (Mr. Mandelson) in his constituency. This obviously brings a new meaning to the big brother state. I hope that the health service in the hon. Gentleman’s constituency improves, because having the hon. Member for Hartlepool looking over his shoulder all the time might not be good for his health.

From listening to Labour Members and to my hon. Friend the Member for Southwark, North and Bermondsey (Mr. Hughes), it is clear that a great consensus is emerging on the new government for London. That consensus spreads to the wider community—the business community, as the Minister said, in the boroughs, and in the population of London as a whole. The need to remove the quango state that was introduced by the previous Government, and the need for a strategic authority that is democratically accountable to the people and will take a strategic perspective on issues such as employment, transport and the environment—issues that affect the daily lives of our constituents—is crucial.

There is a genuine debate, however, about the suitability and appropriateness of having a directly elected mayor. My hon. Friend the Member for Southwark, North and Bermondsey described our position clearly. I am concerned that we will have some very odd hybrid if we have an elected authority and a directly elected mayor. The mandates will clash. It will be a recipe for confusion, and the only way around that—perhaps a separation of powers model—is a recipe for gridlock.

I see no merit in a directly elected mayor. Indeed, I endorse the remarks of the hon. Member for Brent, East (Mr. Livingstone). Why are we not going for the tried and tested model of party competition for the new strategic authority? That seems sensible. I would support a strategic authority that was elected in a proportionally representative system. I urge the Minister not to be affected by “manifestitis” and to be open to the idea of having a multi-question referendum.

I am very grateful for having this early opportunity to make my maiden speech. I am the first ever Member of Parliament for the new constituency of Kingston and Surbiton. It was formed from the old Surbiton seat and from the southern part of the old Kingston upon Thames seat and covers a number of communities, from Malden Rushett, Chessington and Hook in the south, through to Tolworth, Berrylands, New Malden, Norbiton and Worcester Park. It covers three quarters of the royal borough of Kingston, which through its long and distinguished history has previously returned only Conservative Members of Parliament to the House, so I am especially pleased that the royal borough is now represented on the Liberal Democrat Benches, by me and my hon. Friend the Member for Richmond Park (Dr. Tonge). It is a great responsibility, but I look forward to meeting the challenge.

My predecessor in the Surbiton seat, Richard Tracey, was first elected in 1983. He has a long history of public service and, on behalf of my constituents, I thank him for all his work over the years for the people who live in the Surbiton area. I trust that his experience in the media as a former BBC presenter will suit him well as he embarks on a new career.

My predecessor in the Kingston upon Thames seat was perhaps better known in the House. I recommend that hon. Members who want to inquire about how he is getting on go to my hon. Friend the Member for Harrogate and Knaresborough (Mr. Willis), from whom I understand that Mr. Lamont is doing very well. He is remembered affectionately by many of his constituents, whom he helped.

In a former life, I was an avid reader of his speeches as I used to assist my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) in his many battles with the former Chancellor, but it is not Mr. Lamont’s speeches as Chancellor that I reflected on in making my maiden speech and wanting to pay tribute to him. I looked back at his very good maiden speech, which I recommend to other hon. Members. I should like to quote one or two phrases from it because they reflect interestingly on recent debates.

For example, Mr. Lamont said early on in his speech: I have to admit that for some years I have been strongly pro-European. Hansard does not record whether he said that sotto voce, but he went on: I hope that everyone will agree that by making an uncompromisingly European speech I am being as non-controversial as it is possible to be. If only that were still the case. I recommend the speech because it talks about the advantages of European governance. He said: At least in the Community there is nothing secret about the way in which the Commission’s thinking is developing. It is a shame only that, when he took office, he did not reflect on those views and still kept, unfortunately, the Budget purdah. I hope that this Government will be a little more open.

My favourite part of the speech is when the former Chancellor discussed the foreign exchange markets. He referred to currency volatility in the early 1970s and stated: One wonders how much of last year’s currency upheaval could have been avoided had there been a joint European strategy”.—[Official Report, 13 July 1972; Vol. 840, c. 1887–92.] How times have changed since 1972.

I do not, however, want to dwell on the past. My constituents’ main concern is education—our future. Kingston schools are extremely popular, and teachers, parents, governors, councillors and council officials work very hard to deliver high-quality education in our area, but in recent years their efforts have been thwarted by cuts imposed by central Government, which have led to huge overcrowding and some of the largest class sizes in the country.

Efforts to absorb those cuts from central Government have proved impossible within the current draconian system of local government finance, so, unfortunately, some of the cuts have been experienced in schools. To meet previous cuts, the authority had to run down its reserves, which are now at the minimum prudential level, yet in the past three years the grant has been cut by £15.1 million.

The authority has worked hard to make efficiency savings to try to meet that challenge and has achieved savings of nearly £4 million, but last year’s cut was just one too many and schools felt it badly. In looking to next year, my concern is that the Chancellor of the Exchequer will somehow be able to escape from the trap on public spending in which he has put himself. I am filled with dread when I hear him reiterate the Labour party’s manifesto commitment to keep the previous Government’s public spending controls for the next two years. When one talks to professionals, one realises that the claim that money from the abolition of the assisted places scheme will fill that gap insults their intelligence. More money is needed.

Cuts have been made not only in schools but in further and higher education. In Kingston college, last year’s settlement means that 20 teachers—10 per cent. of the staff, in one college, in one year—may face redundancy.

I hope that there is a plan to escape that trap somehow. Liberal Democrats will make no apology for returning to this issue time and again, because it is at the heart of the education debate. Until we have more resources for schools and colleges, sanity will not return to the education system.

If the Government put education at the top of their agenda, as they said they would, we shall be helpful, and make suggestions. In that spirit, as they prepare for the future, I would like to offer them an idea for their welfare-to-work proposals. In my constituency we have Hillcroft college, which presents a unique example of the type of programme that the Government should have in mind.

Hillcroft is the only adult education institution in the country geared solely to the needs of women. Over many years it has helped women who missed out on their first chance of education; women who as single parents are trying to find a path back into the workplace; and women who had previously been dependent on the social security system.

In a recent visit to the college, I was most impressed by the way in which the college supports individual women’s needs, as some try to repair some of the self-confidence that was shattered by some of the previous Government’s policies. I recommend that Ministers come to my constituency, visit Hillcroft and use it as an example in their deliberations on the Government’s welfare-to-work proposals.

In Kingston and Surbiton there is a wealth of examples of policy initiatives that the Government could usefully study—some to follow and some to forget. Kingston university has expanded tremendously over the past few years, and I hope that the proposals in the Dearing report will enable that process to continue.

Unfortunately, many problems have been caused by police cuts in Kingston. In the past two years we have lost more than 40 officers.

The need for a strategic transport policy is one of the subjects of the debate today. In Kingston we certainly have not had such a policy. Moreover, South West Trains has made appalling cuts in services, and the recent infamous cuts have caused many problems for my constituents.

The accident and emergency department in Kingston hospital experiences queues every day of the week. Unfortunately, until there is more capital funding to build a new accident and emergency department there, those problems will continue.

One Kingston policy is highly germane to the debate, and I recommend it to the Government. For the past three years the borough council has pursued the policy of devolution of power to neighbourhoods. The neighbourhood system has been a huge success. In the past, central committee meetings were held at the guildhall, and a few political aficionados used to attend and listen to the debates. There was little participation, and the general public did not know what was going on.

Now, seven neighbourhood committees have been set up round Kingston, which is the smallest borough in London. Many people come to the meetings and participate, and democracy has flourished in our borough. The efficacy of policy decisions, too, has improved because of the public participation.

The success of the neighbourhood system, that revolution in decentralising power within a borough, has become so famous that many people have come to Kingston to study it. After the first two years of its implementation, the previous Government’s district auditor produced a glowing value for money report on it.

The report said: Communications between officers and with citizens appear to have improved as a result of the neighbourhood structure”, and there is real value in local diversity … for many service areas, there is clear justification for delegation to achieve a local focus”. The extra marginal cost was found to be minimal, and the auditor also noted that the royal borough of Kingston operated on staff numbers that were among the lowest for outer London borough councils.

The district auditor was not alone in praising the value of the neighbourhood system. In a recent document entitled “Innovative models of local authority working”, the local government management board said: Kingston has achieved much and is a good example of clear devolution plans being carefully implemented in a very limited timescale. Its experience is well worth considering and drawing upon.

We have heard today about the powers of the strategic authority and how it will be elected, but I hope that any Green or White Paper will refer also to the inter-relationship between the strategic authority and the borough councils—and between councils themselves, and within councils—so the debate is not just about the strategic authority; it is about all aspects of the future governance of London.

I would like an assurance from the Minister that any future Green or White Paper will allow scope to discuss models of how power can be decentralised within, and to, boroughs. Taking power from the centre to empower communities and citizens was what the neighbourhood system in Kingston was all about. If that is the goal of the Government’s proposals for the governance of London, they will be a great success and improve the lives of the people of London. After all, it was the Prime Minister who, in the John Smith memorial lecture on 7 February 1996, said: I want to enable local communities to decide more things for themselves through local councils. I agree, and I hope that the Government’s proposals for the future governance of London follow that statement.

Philip Dunne – 2014 Speech on Military Equipment

Below is the text of the speech made by Philip Dunne, the Defence Minister, in Farnborough on 4th February 2014.

Introduction

Ladies and Gentlemen.

It’s a great privilege to have been asked by General Gary (Coward) to give the keynote presentation here at the armoured vehicles conference.

This year’s conference is particularly important because 2014 is the year in which NATO allies complete their withdrawal from combat operations in Afghanistan.

I’ve seen it for myself.

In early January I visited Afghanistan and was pleased to meet the Chief of Staff of the Afghan National Army, General Karimi, and many of his senior colleagues in the Ministry of Defence.

His praise for the British military contribution to the improved security of his country and the sacrifices which have been made by UK and other coalition forces was most welcome.

I am particularly honoured today, to have the opportunity to welcome General Karimi to this conference and to host your visit Sir.

I would also like to pay my tribute to the growing strength and capability of the Afghan National Army and Security Forces, and the leading role the forces under your command, General, are taking and the sacrifices you are making in providing security to your own people.

I have seen it; it is happening on a daily basis; and you are to be congratulated on building an increasingly effective defence force over a short period.

While I was in your country I spent time with our forces, including the Defence Support Group readying vehicles for their return to the UK.

And this afternoon I’m going down to Marchwood on the south coast to witness the end result of their work this month, one hundred and twenty eight vehicles returning from operations.

The largest single consignment to date.

New challenges, agile investment

The withdrawal from active theatre after over a decade of continuous operations is welcome for our armed forces.

But as one vista closes a new horizon opens up NATO allies returning from Afghanistan are having to scan that horizon and reset their armoured vehicle requirements.

For a new era of contingent operations.

Military operations in the future are likely to face threats from both ‘traditional’ enemies, using sophisticated armoured vehicles themselves as well as asymmetric threats from insurgents or from warring rival factions.

We don’t know today where those future flash points might be.

We cannot assume we will be operating in another Basra or another Helmand against an insurgent threat.

That’s why we’re investing in the UK now for the future.

We’re investing in a range of capable vehicles that our army will need for that new world.

We’re investing in our research effort.

And we’re investing in our Reserves where we’re looking for an equally broad range of capabilities.

But there’s another factor.

If it is a new operational horizon it will also be one conditioned by the financial constraints that are a legacy of the economic crisis.

An environment in which many nations are facing an economic squeeze including in France as we’ve just heard where defence budgets are having to take their share of that squeeze and expensive military procurement programmes are having to justify their worth in these straightened times for the public finances.

So it’s doubly important that we make the best investment decisions that we can we must remain agile so that we can meet the needs of today as well as the long term.

Agility represented by bringing UORs into core

That’s why I was pleased at the end of last year to announce that almost every surviving protected mobility vehicle purchased with UOR funding would be transferred into our core programme.

Around 400 Mastiffs, 125 Wolfhounds and 160 Ridgbacks are returning from theatre with 400 Jackals, 70 Coyotes, 325 Huskies and 60 Warthogs.

A practical example of leveraging battle proven technology for the long term.

And you may care to tune in to ‘Top Gear’ in the near future to see one of these vehicles on the road, I challenged James May to take a Foxhound up to its top speed.

Those vehicles were part of a four year £300 million regeneration and support work package.

What’s involved?

Well, we’re doing things like bringing the vehicles up to the standards required for UK roads.

And converting them into the different roles necessary for the needs of the army going forward a topic which will be explored more fully tomorrow by General Sir Peter Wall our Chief of the General Staff.

Deliveries will begin this year to allow UK based units to start training on these vehicles.

Colonel John Ogden, Commander of our Armour Centre, will be speaking about that also tomorrow

Those deliveries will be good for the army.

And they’ll be good for British industry too.

But these converted vehicles are not just for today or next year.

They will provide the adaptability and flexibility that the British army will need until the next generation of armoured utility vehicles are introduced.

This is an example of agile investment writ large.

Backing an agile research base

Of course those UORs that played such a key role in keeping our troops one step ahead of the enemy were not just pulled off a shelf at will.

They relied on an innovative and agile research and on that best in class partnership between UK’s Defence Science and Technology Laboratory (DSTL) and industry.

I’m immensely proud of what that partnership delivered for us in Afghanistan.

For instance Morgan Advanced Materials Composites and Defence Systems from Coventry who developed techniques to enhance Mastiff’s survivability.

The development of the high survivability Foxhound vehicle by General Dynamics Force Protection Europe and Ricardo, in the Team Ocelot consortium.

And Amsafe from Bridport who developed innovative protection technologies against rocket propelled grenades, a system that is even now being installed on a number of vehicles in theatre and I understand, is exciting interest from several other nations.

I take my hat off to the ingenuity and commitment of those from Industry who worked the long hours with colleagues in the defence laboratories to deliver these and many other vital enhancements.

But UORs, critical though they were, are not the end of the story.

We’re investing research effort now for the longer term.

For example developing a generic armour mounting system which is all about creating a common interface between a vehicle and its armour.

Similar to the situation in weapons where our standard GPMG fits on all our vehicles. In this way we avoid having a different weapon type for each vehicle and can benefit for instance from commonality in ammunition.

And so, similarly, our aim is to develop armour that has wide applicability across a range of platforms.

It’s about making fitting, repairing and upgrading so much easier.

It’s about agile investment.

And it’s something I’m particularly proud of and it is an area where we are keen for allies to become involved in taking it to the next level.

My colleague Professor Bryn James will be saying more about that later today.

An affordable core programme

But this research effort is useful only in the context of a vibrant and affordable armoured vehicle programme.

That’s what we’ve got.

Thanks to the difficult decisions this government took in the [SDSR] in 2010 the army mounted equipment programme now stands at some £7.7 billion clearly spelt out for the next ten years.

And we expect to issue the next iteration of the EP very shortly.

So the incorporation of the Afghan UORs is certainly not the end of our investment in armoured vehicles capability!

Far from it.

Our 2010 SDSR confirmed the funding for a number of key armoured vehicle development and upgrade programmes which will support Army 2020.

These programmes, taken together, are known as the ‘Mounted close combat capability change programme’.

Investing now for the needs of tomorrow.

These vehicles will need to be modern, integrated and interdependent both to overcome adversaries as well as keeping up with the capability developments of our allies.

A demanding requirement.

But these are exciting times to be in the armoured vehicle business.

Look for instance at the Scout SV programme for a new ground armoured reconnaissance capability.

Under prime contactor General Dynamics UK this programme has passed several of its key milestones including the preliminary design review and live blast trials. These achievements have confirmed that the design meets the army’s needs, especially the high levels of protection needed for future combat operations.

The first production vehicles are expected to appear in a 2017 timeframe ready to start army user trials.

And we are anticipating an in service date of 2020.

Look also at the Warrior capability sustainment programme.

Good progress has been made here as well and prime contractor Lockhead Martin UK is expecting to undertake reliability trials in 2016/17.

These upgraded vehicles will be the cornerstone of the Armoured Infantry Brigade of the future.

Look too at our utility vehicle project which we intend will start to replace our current, battle hardened protected mobility vehicles, those Mastiffs, Wolfhounds and all the rest, during the early part of the next decade.

UK open for business

Before I leave the equipment programme, Brigadier General Beaudouin from the French would not forgive me if I failed to mention the 40mm case telescoped ammunition programme and the VBCI which the Prime Minister announced last week the UK would be testing to see whether it is a capability which meets the British army’s requirements.

Working with our French allies has lead to an efficient and cost effective solution for a common cannon for our Scout and Warrior programmes that I’ve just mentioned.

It will give both our nations a class leading capability that will allow this class of platform to maintain its battle winning firepower for many years to come.

I am particularly pleased with this project, as the Ministerial lead on the procurement aspects of our growing Anglo/French cooperation which formed a central part of the summit meeting between our Prime Minister and the President of France last Friday.

A good example of the UK and its close partners benefiting from cutting edge technology and value for money.

And a fine example of Great Britain being a great international partner and a great place to invest.

Conclusion

So in conclusion ladies and gentlemen.

The UK’s armoured vehicle programme is in good shape.

It’s a programme that balances the needs of today with those of tomorrow.

And it’s a good time for industry to roll up its sleeves and invest.

For an army increasingly based on contingency.

And from the end of this year an army no longer on long standing operations.

But it’s equally important to realise that those solutions must be cost effective.

That’s my challenge to you.

I know it’s possible.

Just look at the superb response to UORs delivered by industry to recent theatres of operation.

So do use the next couple of days to network, to make new contacts and be part of the next phase of the armoured vehicle story.

Thank you.