Tag: Ed Davey

Below is the text of the speech made by Ed Davey, the then Secretary of State for Energy and Climate Change, on 27 January 2015.

I’d like to start by expressing my gratitude to Connie for the work she did at the European Commission.

She was fundamental to putting the 2030 Energy Framework in place.

Connie knows just what a challenge it was to bring 28 member states to unanimous agreement on the Framework.

How much more difficult, then, will it be to bring 195 countries to agreement in Paris.

So I want to talk today about two things.

What are the prospects for achieving that deal?

And second – what can we do between now and then to make it happen.

And by ‘we’ I mean, all of you too.

Because success will require a great coalition of the willing from across all parts of global society.

And that includes you in the business community. You the Corporate Leaders Group.

Who, through initiatives like the Green Growth Platform to show what can be done, have already done so much to demonstrate that climate change action is not just economically useful, it is an economic requirement.

So let me turn to the prospects for a deal in Paris.

The prospects for a deal in Paris

You know at one point in Lima, when I was frustrated and the clock was ticking, I was looking around my European counterparts and I realised that I was the longest serving Energy Secretary among them.

Indeed, at over three years, I am the longest serving UK Secretary of State for Energy in over a quarter of a century. Which shows how quick the turnovers have been in the past.

And that got me thinking about how much individuals and personalities matter in these kinds of diplomatic negotiations.

Are they just about the faceless forces of history and the lucky confluence national interests?

Or are just they as much about the coming together of the right people, in the right place, at the right time.

Well, we can certainly claim necessity.

The science on climate change is clear. We’ve got to do a deal.

And the more we see the impacts of the warming world around us, the more we understand the future risks.

We are already some way off where we need to be by 2020, of the most cost effective pathway for keeping climate change to below the 2 degree rise the scientists judge is needed to avoid the most catastrophic effects.

And if we do not reach agreement in Paris the vector of action needed becomes increasingly steep with each passing year;

And the economic cost increasingly expensive.

So are these forces of enlightened self-interest strong enough in themselves to make a deal inevitable?

With regret my answer is no.

Whether we are thinking today about the 70th year since Auschwitz was liberated or the commemoration of the start of the Great War last year which claimed the lives of at least 16 million souls;

We should reflect that the historical record shows many examples of national leaders pursuing narrow interests, playing to domestic galleries, and ignoring wider imperatives and horrific costs.

The stakes are very high.

And that is why I do believe personality matters. It will matter who is sitting round the table in Paris in December.

Who will be willing to take risks? To embrace enlightened self-interest? To move beyond the narrow confines of their domestic politics? To take that leap?

Preparation and personalities

People ask me. Will Paris be another Copenhagen at which we agree to disagree?

And my firm answer is no.

For two reasons: Preparation and Personality

First, preparation.

At Copenhagen the writing was on the wall when pledges only came forward in the last few days before the Conference, with no time for any sensible debate or compromise to happen.

It seems to me that since then, momentum has really shifted.

Over the last few years we have seen national climate change legislation proliferating, carbon pricing mechanisms spreading and new policies and regulations being introduced.

Almost 500 climate laws have been passed in 66 of the world’s largest emitting countries.

Carbon markets have now been put in place in over 36 countries. Not always working as well as they might.

But the world has changed since Copenhagen.

Many of the mechanisms and concepts that implementing a global climate deal will need already exist.

But for me what is most encouraging is what is happening with the so called ‘big four’ – the EU, China, the US and India – who together are responsible for half of global emissions.

And this is where personality has mattered.

In India, the election of Prime Minister Modi has changed the mood, raising the prospect that he can duplicate the effective low carbon policies he implemented in Gujarat across the whole of India – and bring a constructive India to the negotiating table in the lead up to Paris.

In China, President Xi Jinping has been pursuing since he took over his vision of an ecological civilization that embeds climate action in its national planning process.

China is already the world’s largest non-fossil fuel energy producer.

It is one of the world’s leaders on sub-national carbon markets.

And they are preparing to launch a national scheme from 2016 which will be bigger than the EU’s ETS.

In the United States, President Obama is increasingly seeing climate change action as part of his legacy.

And although there remain political obstacles to overcome, but the commitment of the White House to achieve agreement in Paris has never been so strong, of course supported by Secretary Kerry.

Historically the EU has been one of the world’s leading advocates of climate change action.

And with the new 2030 agreement, that remains the case.

The Green Growth Group I set up to build consensus around a low-carbon, pro-growth policy position, now boasts 13 member states representing 75% of Europe’s population, 85% of Europe’s GDP and 60% of the votes in the Council of Ministers.

And we are extremely lucky to be able to draw on the support, expertise and insights of the Prince of Wales’ Corporate Leaders’ Group.

Indeed, the CLG is the backbone underpinning the Green Growth Platform, bringing together nearly 50 business from multiple sectors and from across the EU.

Let me take this opportunity to thank all of you and Sandrine and her team, for all the hard work they have put in over the last 2 years into making the Green Growth Platform viable.

So what does all this mean for Paris in December?

It means we are more prepared than ever before.

And the right people are in the right place at the right time, we hope.

There were some signs of this Lima.

Discussions were difficult, and it looked like a deal was being cooked up in Beijing and Washington, but I genuinely believe things are looking good and not one country wanted to leave Lima without an outcome that took us the next step towards the deal.

So, I judge the prospects of a comprehensive climate change deal to be the best since we first began this journey many decades ago.

But now is definitely not the time to rest

The negotiations are going to get tougher, and tensions are inevitable.

So let me turn to what needs to be done between now and December to increase the chances of success.

Making Paris a success

The timetable is tight.

By April, we expect many countries to have shared their proposed targets for the new deal – Intended Nationally Determined Contributions or INDCs in the jargon.

We’ll see what people come forward with.

By May we will have a draft text of the Paris Treaty.

In September leaders will gather in New York at the UN for high-level discussions on the post-2015 development agenda, and that will look into climate-proofed development.

And then in December, the Paris Conference.

But this will be like the proverbial duck on the water – serenely moving forward but paddling furiously underneath.

We will have to use every international opportunity to maintain ambition and keep up the momentum.

Whether it be the Major Economies Forum meetings in April and July.

The G7 meetings in June.

Or any other international gathering that allows us to raise the issue and exert pressure.

But let me focus in on those INDCs expected by April.

At Lima we agreed that INDCs would be mitigation focussed and represent a progression in ambition for what is currently on offer.

Let me deal with the EU first.

We need to get the EU’s INDC in place by the deadline.

And we should set the INDC gold standard acting as a template and benchmark against which we can judge others.

Second, it has always been the position of the UK that the EU needs to be ready to commit to increasing its GHG offer beyond 40% in the context of a global deal.

The two words ‘at least’ in the October deal were important, challenging though it might be.

So we need to set out the credible options on how we could deliver this, in order to help drive further ambition and momentum through to Paris.

But we have been the first to put some of our cards on the table. And it will be impossible to raise the EU’s level of ambition without seeing ambition from others.

Finally, we shouldn’t wait for a global deal before getting on with implementing the 2030 package in Europe.

That means, in particular, repairing the EU Emissions Trading System through a strengthened Market Stability Reserve.

It also means pushing the Commission to bring forward robust ETS and Effort Sharing legislation to implement the EU’s 40% GHG target for 2030, without delay.

But looking wider at the INDC process, the Lima decision did not set out any formal way of assessing the fairness and ambition of individual INDCs.

And it is highly likely that the aggregate of INDCs will not reflect what is needed globally.

And that is where you and others come in.

The UK can of course do its own analysis, but as a Party in the process we will need to be careful about accusations of pursuing our own interests or playing politics when it comes to pointing fingers.

So we are expecting and indeed encouraging civil society to carry out assessments on INDCs – to make judgements about who is and who is not pulling their weight.

I hope we can build on the green growth message.

But we need your help internationally in other ways too.

We need to work together to unlock breakthrough low carbon technologies particularly for heavy industry;

We need to work together on the financial instruments and integrated energy markets that can smooth the transition to a low-carbon economy;

And we need your help to take the message on green growth that you have helped deliver so effectively within Europe during the 2030 campaign, to a new international audience – explaining what the 2030 agreement means and what can be gained from a low-carbon economy.

We are looking at an intensive year of climate diplomacy and we look to you, the progressive business community, to help us in this effort.

Including the planned establishment of a new Pacific Alliance Green Growth Platform, which will bring together governments, business and experts in that region to collectively explore and pursue a new climate growth model.

One of the most encouraging things in Lima was the Pacific Alliance being built.

This is a great opportunity to export some of what we have developed together in Europe.

Conclusion

So in conclusion ladies and gentlemen.

Will the deal in Paris be perfect? No.

Will we need to ensure that the Treaty includes a mechanism to ratchet up ambition overtime? Yes.

But I am ever more confident that we will emerge from Paris with a comprehensive agreement that all Parties will sign.

And this achievement on its own is not to be underestimated or undervalued.

But we have to drive ambition forward.

We want an agreement that does the job.

Like many who have been looking forward to this moment for decades, I am clear, we must still keep our sights on the prize – meeting that 2 degree target.

The good news I think is that that ambition is shared across the main parties in the UK.

I don’t think you will see backsliding in May, there is consensus.

But whoever does this role next will need help from you our business community, our scientists and engineers, our academics and faith leaders, and our committed, vocal community of environmental NGOs.

But between now and Paris we will need all the efforts of all of you to push us over the line.

Below is the text of the speech made by Ed Davey, the then Secretary of State for Energy and Climate Change, at the Royal Society in London on 9 September 2013.

Introduction

It’s an honour to be here at the Royal Society today.

For over 350 years, the Society has served the common good.

Your Charter, updated and approved by the Queen just last year, tasks the Royal Society to ensure that the light of science and learning “shines conspicuously”.

Not just amongst our own people – but the “length of the whole world”;

To be a “patron of every kind of truth”.

It is because of your rich history, your reputation for independence, your dedication to the scientific method, that people turn to the Royal Society for understanding when confronted with new and complex challenges.

That is why last year, the Government’s former Chief Scientific Adviser, Sir John Beddington, asked the Royal Society and the Royal Academy of Engineering, to review the scientific and engineering evidence on the advances being made in shale gas extraction.

Specifically the technology of hydraulic fracturing – popularly known as fracking.

And he asked you to make recommendations to ensure exploration in the UK could proceed safely and extraction be managed effectively;

Recommendations based on the scientific evidence to ensure that the way forward is informed by fact and not by myth.

On behalf of the Government, I accepted the recommendations of your report in full.

And today I want to talk about the progress we’re making in implementing them.

But I also want to take this opportunity to address other concerns that have been raised.

And to set shale gas in the context of Britain’s overall energy strategy.

The debate on shale gas

There has been quite a debate on the future of shale gas this summer.

And if you took at face value some of the claims made about fracking, such has been the exaggeration and misunderstanding, you would be forgiven for thinking that it represents a great evil;

One of the gravest threats that has ever existed to the environment, to the health of our children and to the future of the planet.

On the other side of the coin, you could have been led to believe that shale gas is the sole answer to all our energy problems;

That we can turn our backs on developing renewables and nuclear, safe in the knowledge that shale gas will meet all our energy needs.

Both of these positions are just plain wrong.

I understand the concerns people have that shale gas extraction could be taken forward irresponsibly and without proper protections.

And I stand shoulder to shoulder with those who want to tackle climate change;

Just as I stand shoulder to shoulder with those who want to keep our homes warm and our businesses powered at a price people can afford.

But our society is ill served when we allow myths to proliferate or when we allow debates to be hijacked by zealots or vested interests.

So, today, I want to make the calm, rational, objective case for shale gas exploration in the UK in the light of the three equal and overarching objectives I have as Secretary of State for Energy and Climate Change.

First, powering the country – keeping the lights on – planning properly to meet our future energy needs.

Second, protecting the planet – cutting carbon emissions and preserving our environment – being responsible guardians of our children’s inheritance.

And third – making sure the whole of society benefits from the exploitation of energy resources – revenues, growth and jobs – and, of course, affordable bills.

My message to you today is this:

UK shale gas can be developed sensibly and safely, protecting the local environment, with the right regulation.

And we can meet our wider climate change targets at the same time, with the right policies in place.

Gas, as the cleanest fossil fuel, is part of the answer to climate change, as a bridge in our transition to a green future, especially in our move away from coal.

Gas will buy us the time we need over the coming decades to get enough low carbon technology up and running so we can power the country and keep cutting emissions.

We have to face it: North Sea gas production is falling and we are become increasingly reliant on gas imports.

So UK shale gas could increase our energy security by cutting those imports.

Home-grown gas, just like home-grown renewables and new nuclear, also provides jobs for our people and tax revenues for our society.

Taking all this together shale gas could have significant benefits.

But – let me be equally clear – shale gas is no quick fix and no silver bullet.

First, we must make sure that the rigorous regulation we are putting in place is followed to the letter, to protect the local environment.

Second, we must pursue vigorously the development and deployment of mitigation and abatement technologies like carbon capture and storage, to protect the planet.

And, third, frankly, we are at the very early stages of onshore shale gas exploration in the UK.

We may have been fracking in Britain’s offshore waters for years.

The US may have been fracking onshore for years.

But in Britain, fracking for onshore gas in shale, at any significant scale, is something new.

Nobody can say, for sure, how much onshore UK shale gas resource exists.

Or how much of it can be commercially extracted.

So let’s be cautious about hyperbole on shale.

For it would likely be the 2020s before we might feel any benefits in full.

So we can’t bank on shale gas to solve all our energy challenges, today or this decade.

And in the next decade, shale, by itself, will not come close to solving even our basic energy resource security challenge.

But the promising news is that UK shale gas could be a key and valuable resource as part of a more diverse energy mix – especially as the production of North Sea gas declines in the future.

And it will do so alongside conventional gas, wind, wave, biomass, nuclear, carbon capture and storage – and all the other low carbon technologies that must contribute.

We won’t know any of this for sure until proper exploration takes place.

So it’s in the national interest to move on from the arguments of zealots and vested interests, and start a debate about how best to proceed safely with shale gas exploration, where we maximise the real positive benefits and minimise the inevitable negative impacts.

And today I want to start that debate beginning with that first objective I set out, powering the country.

And to do that, I have to tell the story of gas in Britain.

We need gas

Over the last 45 years, the extraction of both oil and gas from the North Sea has contributed around £300 billion in production taxes to the Treasury, with hundreds of thousands of jobs across the country.

Today, our society annually consumes around 70 billion cubic metres of gas.

Roughly a quarter of that is used to produce electricity.

And nearly all of the rest is used for cooking our food and heating our buildings.

And gas has advantages for those tasks: it is flexible and readily available.

Gas is much better for the environment than coal when generating electricity, with half the carbon footprint.

As our comprehensive 40 year Carbon Plan sets out – a plan that meets our ambitious climate change objectives – gas will continue to play a role right through to 2050.

And over the next two decades or more, gas in the power sector will support our ability to reduce carbon emissions while we develop low carbon alternatives for electricity.

For by 2030, none of Britain’s electricity must come from unabated coal – a dramatic shift.

Instead, it must come from some mixture of renewable generation, nuclear and gas.

In proportions decided in the world’s first low carbon electricity market this Coalition Government is establishing.

But with gas-fuelled electricity predicted to have a significant market share.

And if carbon capture and storage technology can be successfully deployed, gas will continue to play a major role in power generation into the 2030s and beyond.

So Britain will continue to need gas.

For power.

For heating.

And for cooking.

But North Sea gas reserves are diminishing.

We expect net North Sea gas production to fall from a peak of 108 billion cubic metres at the turn of the century to perhaps 19 billion cubic metres by 2030.

We will miss that gas – and the tax revenues it brings.

And the jobs – given the levels of employment supported today by offshore gas production.

And less North Sea gas means greater reliance on imports.

In 2003, we were a net exporter of gas.

But by 2025 we expect to be importing close to 70% of the gas we consume.

How we get gas matters.

Energy security

There is a big debate at the moment about Britain’s energy security.

And like the shale gas debate it is characterised by myth and misinformation.

Over the next 6 months, I intend to make a series of speeches that I hope will counter that – and reassure people that the problems the Coalition inherited on all aspects of energy security are being fully addressed.

But for today, it’s important to realise that energy security has several aspects – from having sufficient electricity generation capacity to having the networks for delivering gas, electricity and transport fuel reliably across the country.

The role of gas in the UK’s energy security story is in the energy resource piece.

Can Britain be sure of our raw fuel supplies?

And the good news is, our energy resource security is actually very robust.

There have been no major interruptions to gas supplies in recent history.

Partly, of course, because we have our own direct supplies currently – from the North Sea.

But also because we have reliable conventional piped gas supplies from our friends in Norway and the Netherlands.

And because the Liquefied Natural Gas (LNG) we import from Qatar and other suppliers has been dependable.

Indeed, our capacity to import gas has increased five-fold in the past decade.

So the UK has one of the largest and most liquid gas markets in Europe – giving us confidence about the short and medium term security of gas supply.

But we cannot afford to be complacent.

Global energy demand is already twice as high as it was 30 years ago.

And the International Energy Agency estimates that it is set to grow by a third again by 2035.

If we see rapid increases in global gas demand to which supply cannot react quickly. Or if we see disruptions in supply to which demand cannot react quickly, we will see price spikes and wider market instability.

In 2005/6 for instance, the spike in UK gas prices can be partly attributed to a reduction in Russian supplies to Europe.

Fears that a conflict in the Middle East would close the straits of Hormuz can also set the markets jittering.

You only have to look at the effect of recent crises in Libya or Syria to understand how global events can impact on the markets.

So our solutions to energy resource security have to be robust and lasting – looking out to 2050 and beyond – alongside our decarbonisation timescales in fact.

For key to delivering energy security in the long-term is making sure we have a diverse energy mix, not over-reliant on any one source or fuel.

And much, much less reliant on fossil fuels and imported fuels.

That’s one of the many reasons I put such a great emphasis on renewable energy and energy efficiency investments as central to my energy strategy.

By increasing indigenous, home-grown, energy production through renewables, new nuclear and lower carbon fossil fuels, and by using energy more wisely, we are seeking to cushion the country as far as possible from volatile global fuel prices.

And onshore UK shale gas could play an important part in that strategy of planning, long term, for more home grown diversity.

By advancing shale gas production in the UK we will achieve three things:

First – we will displace a proportion of gas imports – increasing resilience and energy security.

Second – there will be a benefit in terms of jobs, tax revenues and growth mitigating some of the falling revenues from the North Sea.

Better those jobs and tax revenues are in the UK, rather than in the countries from which we import.

And third – we control the production, so we control the carbon emissions created by production.

Better those emissions are controlled within our rigorous carbon budgets system than in other countries where controls may be more lax.

So let me turn to those environmental issues.

Safe for the local environment

Your Royal Society report published last year with the Royal Academy of Engineering demonstrated, that if regulated properly and with investment in safeguards, hydraulic fracturing can take place quite safely, without hurting the local environment.

It will not contaminate water supplies.

It will not cause dangerous earth quakes.

We have a long, strong tradition of civil engineering and mineral and energy extraction.

From coal in the 18th and 19th century.

Oil and gas in the 20th.

And renewables in the 21st.

We are skilled, practised, and vastly experienced – with some of the tightest safety and environmental regulations in the world.

But onshore shale gas exploration and production could genuinely become a significant new industry for the UK.

So the same scientific rigour, methodical engineering, and stringent safeguards that have been applied elsewhere must be applied to shale.

We must make sure that the recommendations the Royal Society made in your report are in place and the regulations we have imposed are followed to the letter.

As you proposed, we have now set up the Office of Unconventional Gas and Oil to co-ordinate the cross-government work on shale gas:

Planning regulations under the Department of Communities and Local Government;

Environmental safeguarding carried out by the Environment Agency under DEFRA;

And of course the licencing and consents procedure carried out by my Department.

We have introduced the traffic light system you proposed to reduce the risk of seismic tremors.

Environmental Risk Assessment Guidance will be published this autumn.

And the Research Councils have agreed in principle to fund a joint responsible innovation study to consider further work.

These may be early days for onshore shale gas exploration – but I’m determined we have tough regulations in place, from the start.

The public rightly expect that.

And then we will still need to continue to develop our systems as the industry evolves.

The Environment Agency for example is considering the best way to ensure groundwater monitoring for when exploration takes off.

We are looking at ways to pilot methane emissions monitoring with industry.

And we are working to ensure there is a formal mechanism for operators to share information about any problems they are encountering and how they can be overcome.

My Department met with the Royal Society recently to look at progress and we will continue to seek your advice.

Meeting UK emissions targets

But there has remained a gap in our knowledge in relation to the impact of UK shale gas extraction on greenhouse gas emissions.

Today, I have published the report I commissioned in December last year from DECC’s Chief Scientist Professor David MacKay and Dr Timothy Stone into the carbon footprint of UK produced shale gas.

I want to thank them publicly for that report.

Their report concludes that with the right safeguards in place the net effect on national emission from UK shale gas production will be relatively small when compared to the use of other sources of gas.

Indeed emissions from the production and transport of UK shale gas would likely be lower than the imported Liquefied Natural Gas that it would replace.

The continued use of gas is perfectly consistent with our carbon budgets over the next couple of decades.

If shale gas production does reach significant levels we will need to make extra efforts in other areas.

Because by on-shoring production we will be on-shoring the emissions as well.

And, as this report recommends, we will still need to put in place a range of mitigation and abatement techniques.

I strongly welcome these very sensible recommendations and we will be responding positively and in detail shortly.

But the report from Professor MacKay and Dr Stone puts another piece of the puzzle in place.

It should help reassure environmentalists like myself, that we can safely pursue UK shale gas production and meet our national emissions reductions targets designed to help tackle climate change.

Global emissions

Of course, in terms of global emissions, the only way we are going to address the very real danger that rising global energy demand results in ever rising global carbon emissions is through a binding international agreement on how to tackle climate change.

This has to stand at the centre of any climate change strategy.

Climate change is the greatest long-term threat that humankind currently faces.

A threat that is proven, growing and already impacting on the way we live.

So it is right that we consider how the exploitation of new fossil fuel reserves will impact on this process.

Would the imported LNG that UK shale gas is likely to replace just create extra emissions elsewhere?

Or will it displace more damaging coal generation elsewhere?

One of the unfortunate side effects of US shale gas production has been the dumping of US coal on international markets.

But I believe that if we can encourage a global move from coal to gas, we will be doing the planet a favour.

China has overtaken the US as the world’s biggest polluter, mainly because of the massive amounts of coal they burn.

A Chinese switch from coal to gas – as is happening in the US – will make it easier to cut global emissions in the short and medium term, as the low-carbon revolution picks up pace.

If shale gas can contribute to weaning the world off more damaging coal; then we should not fear it; from an environmental point of view we should welcome it.

Let me be clear – here at home we must not and will not allow shale gas production to compromise our focus on boosting renewables, nuclear and other low carbon technologies.

UK shale gas production must not be at the expense of our wider environmental aims – indeed, if done properly, it will support them.

I am determined to make that happen.

With the market reforms enacted by the Energy Bill currently going through Parliament, we can attract the investment we require to develop technologies across the mix we need – from wind to nuclear, shale gas to carbon capture and storage.

As I have said, the future of gas in the long-term will rely on technology like carbon capture and storage.

The UK Government is committed to CCS head, heart and wallet.

We have selected the Peterhead project and the White Rose project chosen as preferred bidders under our £1bn commercialisation competition.

And the £125m research and development programme is supporting 100 different projects testing knowledge in all areas of the CCS pipeline from technology to transportation to the supply chain.

So I am excited by the prospect of Britain leading the world on carbon capture and storage, because cracking this technology and making it cost effective will open up a host of new options in tackling climate change.

That is why we need to plan properly for our future.

And that includes thinking about how we use the potential proceeds from shale gas.

When North Sea oil and gas production was at its height, tax revenues were used for current spending and not reinvested.

In contrast countries like Norway and countries in the Middle East have used oil and gas tax revenues to create sovereign wealth funds which invest for the future.

If onshore shale gas production takes off; If our country gets another major fossil fuel tax revenue boost; I want us to be a country that invests for the future.

A low carbon future.

Using shale gas revenues.

My party at its conference next Sunday will be discussing how we can best transition to a zero carbon Britain by 2050.

One policy proposal before our party conference is that a Low Carbon Transition Fund is established from some of the tax revenues from any future shale gas production.

I think that is absolutely the right thing to do.

Shale gas production can and must be used to transition to a low carbon future.

In this way the benefits of future shale gas production can be felt not just by this generation, but by future generations to.

So let me now turn to the third of my objectives as Secretary of State – making sure the whole of our society benefits from the exploitation of energy resources.

The future of UK Shale

Here in the UK we are at the very early stages of shale gas exploration.

The British Geological Survey is methodically investigating the geology.

This is beginning to give us some idea of the size of the resource.

The Bowland shale study suggests a large rock volume, potentially filled with some 37 trillion cubic metres of gas.

But the geology also makes for challenging extraction.

In some areas the shale is 10,000 feet thick.

There is just no way of knowing how much gas can be physically extracted and how it will flow.

And, crucially, there is no way of knowing how much can be extracted at a commercially viable rate.

That is why we have put in place the right incentives for exploration to take place and for a domestic industry to develop so that we can make those judgements more clearly.

But, let’s just look one possible scenario.

In May, the Institute of Directors produced a report based on available evidence.

They conclude that on a central estimate Britain’s shale gas production could potentially peak at around 32 billion cubic metres per year.

The industry could support around 70,000 jobs directly, in the supply chain, and in the wider economy.

Significant production could have a benign effect on wholesale prices.

And that production would of course provide a net benefit to the Treasury in terms of revenues.

It is plain common sense that we pursue the shale possibility if we can realise such benefits, without jeopardising our environment.

So – is onshore shale gas Britain’s new North Sea?

Well the 32 billion cubic metres a year of shale gas production estimated by the IOD would be less than a third of peak North Sea gas output.

In reality it could be much more, I hope so.

But it could also be much less.

Regardless it would still be valuable – especially if we can keep the North Sea running longer – perhaps with more offshore fracking.

Any shale gas tax revenues could offset some of the revenue reduction we are already seeing from our North Sea asset.

Shale gas could displace some gas imports.

But even with shale gas in full production, Britain is likely to remain significantly import dependent.

So there will be a very real and tangible benefit from shale gas – but let us not get carried away.

The basic fact is we just don’t know exactly what amounts of gas are under our feet and how much of that gas we can commercially and safely extract.

And this is why we can’t quantify precisely the effect that UK shale gas production will have on UK prices.

Prices

It’s far from clear that UK shale gas production could ever replicate the price effects seen in the US.

The situation is different here.

We don’t have the wide open landscapes of Texas or Dakota.

Just one of the areas producing shale gas in the United States – the so-called Marcellus Play – has a productive use of roughly 95,000 square miles.

That is the same size as the whole of the United Kingdom.

The Bowland Shale, the largest potential shale gas area in the UK, is just 500 square miles – almost 200 times smaller.

Of course this is just a two dimensional example, but it gives you a sense of scale.

And it’s not just the geology, or the population density, or the environmental regulations or the planning laws that are different.

The US has a closed gas market – massive increases in supply naturally affect prices.

We are part of the European market.

We source energy from far and wide.

And we compete against others for the supply.

And gas produced in the UK is sold into this market.

When UK gas production in the North Sea was at its highest earlier this decade, UK and continental gas prices were still closely linked and fairly similar.

North Sea Gas didn’t significantly move UK prices – so we can’t expect UK shale production alone to have any effect.

But given there are plenty of demand side upward pressures on gas prices, as we’ve seen so painfully in recent years, shale gas is well worth pursuing simply to have more supplyside downward pressures on prices.

For if Britain can lead in Europe and can show a lead on how shale can be done safely, and as part of a complete shift away from coal, shale gas production might take off not just in the UK but across Europe.

This would reduce the dependency of Europe as a whole on gas imports.

And with huge Europe-wide shale gas production boosting supply, markets might really be impressed.

Then we might see downward pressures on gas prices strong enough to offset fast rising demand.

And frankly after wholesale gas price rises of 50% in the last 5 years – the key and overriding reason behind today’s high energy bills in Britain – any downward pressure that can be exerted on prices will be welcomed by consumers and industry alike.

Conclusion

So, ladies and gentlemen,

The reality is shale gas has a role to play in meeting all the objectives I have set out – keeping the lights on, tackling climate change, and helping keep energy affordable and the economy moving.

On all these fronts – especially energy security – shale represents an exciting prospect.

Even if the potential benefits are some way off.

Even if shale gas is not the new North Sea.

It is a national opportunity.

An opportunity it would be foolish to turn away from.

An opportunity for a home-grown energy resource that boosts security.

An opportunity for investment, jobs and tax revenues.

The bottom line is we are going to need gas supplies for many decades to come as we move to the zero carbon Britain I’d like to see.

As a bridge to that future, shale gas can help the UK, and other countries, transition to the low carbon energy system that we need if we are to limit climate change.

On this crowded island, our communities matter, our environment matters.

Energy production of all types has to be safe and an accepted part of the landscape.

Exploration, development and production all need to be handled correctly.

And that is what we are doing.

Shale gas will be developed responsibly.

Britain can lead the way.

We have the skills and expertise to lead in Europe – showing others how it can be done – protecting the environment not wrecking it.

And you at the Royal Society have helped to show us the way.

Here at the Royal Society, in 1988, a seminal speech was made by a seminal British Prime Minister.

Even though action to tackle carbon emissions may involve up-front costs, she argued:

“I believe it to be money well and necessarily spent because the health of the economy and the health of our environment are totally dependent upon each other.”

By embracing the concept of green growth, Margaret Thatcher showed a lead not just to her party, not just to the country, but to the world.

This Coalition Government agrees.

And our approach to shale gas will meet these twin responsibilities – to the economy and to the environment.

Below is the text of the speech made by Ed Davey, the then Secretary of State for Climate and Energy Change, in the House of Commons, London on 23 January 2012.

Introduction

Ladies and Gentlemen, the Department of Energy and Climate Change which I represent tonight, is, of course, a relatively new Whitehall department.

But the role of Secretary of State on the energy side has long antecedents.

My predecessors in that role include, Secretaries for Mines, Secretaries for Petroleum, Secretaries for Energy, Ministers of Technology, Ministers of Fuel, and my personal favourite….the Minister for Power.

I could get used to that title….

‘A surfeit of riches’

On the 21st December 1965, the Minister for Power, the Rt Hon Frederick Lee, rose in the House to Commons, and announced that by 1967 it was estimated that fifty million cubic feet of gas would be delivered ashore every day from the North Sea.

Just months earlier, in the September that year, British Petroleum’s rig SEA GEM had made the first ever hydrocarbon discovery in the UK’s North Sea waters.

Having read the exchanges that followed in the House, I must admit to having some sympathy for the Minister of Power.

Because that was a good news story, but one MP rose to bemoan the discovery which he claimed would ‘naturally’ lead to pit closures in the coal industry.

And one Scottish MP came close to claiming the North Sea’s riches for Scotland alone.

Some things, it seems, never change.

In exasperation, the Minister of Power said retorted that he hoped the House was not afraid of a ‘surfeit of riches’.

“We are making” he said, “a most remarkable indigenous fuel available to the British people”.

And so it has proven.

With the discovery of oil as well as gas in the North Sea, over the last 45 years: 41 billion barrels of oil and gas have been produced; contributing around £300bn in production taxes to the Treasury; benefiting both Scotland and the whole of the United Kingdom; seeing a renaissance in Aberdeen; hundreds of thousands of jobs across the country; the UK’s largest industrial investor for many decades.

“A surfeit of riches” indeed and testament to the drive, determination, and in some cases, sheer bloody doggedness of those working to unlock the riches beneath the sea.

So I want to pay tribute to all those who came before us.

But today, I don’t really want to talk about the past.

I want to address the future and the realities we face.

The future of the further exploration of North Sea resources.

The reality of what that means for the industry, the country, and indeed the planet.

Realities

Let me set out a few as I see them.

Reality number one:

Oil and gas will form an integral part of UK energy mix for decades to come.

Over 70% of the UK’s primary energy demand may still be filled by oil and gas into the 2040s.

With 20 billion barrels or more still to be drawn from the UK’s North Sea fields, having an indigenous source helps prevent over-reliance to imports from more volatile parts of the world.

So the UK Oil and Gas Industry is a vitally important strategic resource now and over the next half century at least – to help fulfil our energy needs – and as a contribution to the UK’s energy security.

Reality number two:

North Sea oil and gas production is crucial to the economy of the whole of the United Kingdom.

We are not a petro-state and we cannot afford for our economy to become over-reliant on any one sector.

But the truth remains that the UK’s oil and gas resources are one of the country’s greatest assets.

The Offshore Oil and Gas Industry is the largest corporate tax payer to the exchequer paying around 20% of total corporate taxes.

Although the exact amount fluctuates, this typically represents around £8 billion a year.

And particularly during this tough time, the contribution of the North Sea industries to helping dig Britain out of fiscal difficulty is essential.

These two realities add up to one thing.

The Government must aim to maximise the economically viable recovery of resources from the North Sea – and where they exists on land too.

Because this will contribute to growth, jobs, the balance of payments, and to energy security.

So the Government has been acting:

Providing a regime that encourages investment and innovation;

Introducing, for example, new field allowances West of Shetland;

Extending the small fields allowance;

And putting in place new allowances for shallow-water gas fields.

The level of investment in new oil and gas projects sanctioned in 2011 was over ten times the amount of 2009.

18 projects with a total value of around £13bn were approved.

In 2012, 29 projects approved with capital expenditure over £11 billion.

In 2013, we are already expecting around 28 new fields to get approval.

So this is really good news – good news that both the Government, and you, the industry can be proud of, and everybody who has been involved in that.

Climate change

But there is another reality – reality number three:

Climate Change.

The draft US National Climate Assessment released this month doesn’t mince its words:

“Sea level is rising, oceans are becoming more acidic, and glaciers and arctic sea ice are melting. These changes are part of the pattern of global climate change, which is primarily driven by human activity.”

As a planet we cannot go on using unabated fossil fuels at the rate we are now and keep climate change below 2°C.

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.

I see both of these as moral responsibilities – responsibilities we owe to our children and our grand children.

So this Government, like the last, is committed to reducing harmful greenhouse gas emissions.

And part of that drive means a major shift to low-carbon energy supply.

Diversifying our energy mix.

Exploiting every energy source and every technology available to do so.

From renewables, to nuclear, to carbon capture and storage.

So I hope we can work together, particularly on the latter.

The third reality, the reality of climate change, means that this Government will support a fiscal regime that encourages investment and innovation in Offshore Oil and Gas:

That ensures a fair return for shareholders and the tax-payer;

That contributes to energy security;

That will keep the turbine turning and the lights on.

But, that fiscal regime must be compatible with our long-term aims for diversifying our energy mix, reducing our emissions, and building a low-carbon future.

And that is what the Energy Bill is all about.

The work ahead

So there is are significant challenges ahead of us.

In terms of the industry itself, there is important work being done by the PILOT work groups, looking at everything from exploration to infrastructure to technology to workforce issues.

The industry is working collaboratively to tackle these issues and I pay tribute to that.

Extracting the natural resources of the North Sea must be seen as a collective endeavour.

So I have been very impressed in the way these working groups have been operating.

Work is also being done across Government to produce an Oil and Gas Industrial Strategy which will assess where we are now and determine what overarching work needs to be done to address the pressing issues that your industry faces.

This will allow us, together, to set out a plan for the future.

This work has to be a collaboration to be successful.

Collaboration between DECC, BIS, HMT and Industry and also through talks with all the regional and sectoral trade associations, as well as the Scottish Government.

So I would like to thank all those who have contributed to this report and Oil & Gas UK for their help in that process.

It will be consulted on over the next few months and will be finally published for everyone to see at the end of March.

But it should be a living document, not just an event.

It should be reviewed and refreshed regularly to reflect the extremely complex and changing landscape we are operating in.

Conclusion

So in conclusion ladies and gentlemen, with so many projects in the pipeline, the future of the UK’s Offshore Oil And Gas industry is a very bright one.

Oil and gas will be fundamental to our energy policy for decades to come.

The health of the industry is crucial; crucial to Britain’s power needs and economic needs.

And that is why we have created a positive investment environment and continue to nurture the environment to exploit the talents and expertise of the North Sea industries.

The Department I represent has been charged with these two crucial missions, powering the country and protecting the planet.

In the long-term, we will only succeed in achieving our mission, if we demonstrate the pioneering spirit of those who spudded the first wells in the North Sea.

The investors, the risk-takers, the innovators.

This has to be a joint endeavour.

Government and industry working together to exploit the resources the earth has to offer, powering the country, providing prosperity, while protecting the planet for future generations.

So in that spirit, I want to thank the All Party Parliamentary Group and Oil & Gas UK for all your hard work over the last year.

And I want to thank all of you in the Offshore Oil and Gas Industry for the invaluable contribution you make to British society, now and in the years to come.

Below is the text of the speech made by Ed Davey, the then Secretary of State for Energy, at Chatham House in London on 11 July 2012.

Thanks very much Bernice, and thanks to Chatham House for hosting this event.

There are few think tanks that are global in both outlook and recognition. This is one of them. So I’m very pleased to be here to talk about a subject of global importance.

When I first got interested in the green agenda – as an idealistic student – climate change was just crossing over into the public consciousness.

For people concerned about the environment, climate change seemed to wrap up all of our worries – pollution, resource scarcity, sustainability – yet add another layer of complexity.

Thinking about local impacts wasn’t enough. Global climate change raised global questions – like justice and equity, diplomacy and development.

And so the path to getting international agreements on climate change has been a long one.

Agreeing responsibility for action on emissions is hard enough. And in a global economy built on fossil fuels, it can seem an impossible ask. For twenty years, the world has been working on the answer.

Today, we are closer than ever. Countries have agreed that in 2015 we will aim to sign a global deal to limit emissions and curb climate change. This commitment is the primary achievement of the Durban meeting last year, which Christiana Figueres described as the ‘most encompassing and furthest reaching conference in the history of the climate change negotiations’.

In a little over three years, we must set in train a change to the whole structure of the world economy; breaking the bond between carbon and growth. Building the systems to support low-carbon economies in the most advanced countries, and low-emissions development in poorer countries.

History

Today, I want to talk about how we can do that. I will make three points:

Firstly, that the economic case for climate action is clear – and pressing. Green growth is real, and is already making a compelling contribution to our economy.

Second, that political leadership in Europe can unlock more green growth – and drive global ambition to tackle climate change.

And third, that multilateralism works. That at the UN climate negotiations in Doha and beyond, we can plot out the path towards a safer future.

I’m under no illusions: it will not be easy. But we have the technology to live sustainably; every year, renewable energy use rises. And we have the economic incentive.

The problem is political. And it is complicated by the fact that we are living in a distracted world.

Distractions

Because although evidence of climate change grows stronger by the day, the pressures on the world economy are equally unrelenting.

The financial crisis that began in 2008 has not yet run its course. The global recovery is still fragile; what happens in the eurozone could shatter it again.

Economic problems have driven political change: in Europe alone, nine governments have fallen since the crisis struck. People are losing faith in our ability to work together to solve the big problems.

This really matters for climate change, because unless we can show that multilateralism works, we cannot get the global agreement that we so badly need.

It matters because when householders – and businesses – are concentrating on cutting costs, we have to remind them why going low-carbon is a priority now.

And it matters because with financial instability pushing up the cost of capital, investors need certainty to invest in clean energy.

So how can we focus minds on a problem that for many seems far-off – and far away?

Economics

I believe we have to start with the economic case for action on climate change. Right now, everyone is focused on stability and growth. So my first point is this: the green economy can be good for both.

I’m hardly the first person to say that – a fair few politicians got there first.

But businesses are saying it too. Take the Director General of the CBI – John Cridland. Just last week, he said, green and growth are inextricably linked.

Reducing our reliance on fossil fuels can help insulate businesses and consumers from volatile fossil fuel prices. Research shows climate change policies could halve the effect of global fossil fuel price spikes on the UK economy by 2050.

And energy efficiency is unambiguously good for growth. If the EU can hit its 2020 energy efficiency target, it could save 34 billion euros – and add 400,000 jobs. UK businesses alone could save up to £4 billion a year by using energy more efficiently.

But the real engine of sustainable growth is green business. Over a third of the UK’s economic growth in 2011/12 is likely to have come from green business, which accounts for 8% of UK GDP.

The UK’s green economy grew by £5.4 billion last year – that’s 4.7% growth, even as the rest of the economy was struggling. It created more than 25,000 jobs last year, and now employs nearly one million people.

Globally, the clean energy market is increasingly competitive and fizzing with opportunities. Not just for our companies, who are competing in a £3.3 trillion global market, growing at 3.7% per year, but for our economies, too.

The UK is 6th in the world in the low-carbon sector, with an industry worth £122 billion. I want us to secure a greater share of this vibrant and growing sector. Not because I’m a hair-shirted hippy, or bound by ideology; but because I believe in following the evidence.

Green business generated a trade surplus for the UK of £5 billion last year; if we play it right, it could halve our trade deficit before the next election.

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

This is misleading and dangerous.

The real danger is not going green, but being outpaced by our competitors.

Around the world, the countries who are most competitive are the ones who are investing the most in low-carbon.

Korea, spending 2% of GDP on green growth. Germany, whose development bank is leveraging 100 billion euros for renewable energy.

China, putting green industries at the heart of its 12th five year plan. Investing more than anyone else in renewables, developing pilot emissions trading schemes in seven provinces – including Beijing and Shanghai.

And India, which taxes coal and uses the proceeds to fund renewable energy; which has incentives for wind and solar power, and far-reaching energy efficiency plans.

Investment in low-carbon – and policies to support it – reach right across the globe.

And at last month’s summit, all the G20 countries recognised the important of putting green growth at the heart of their structural reform policies. By this time next year, there will be 33 countries with national emissions trading schemes. More than half the world’s countries have renewable energy targets.

This ambition is not just matched by businesses: it is surpassed. When it comes to pursuing sustainable growth, businesses are way ahead of governments. They are looking to Ministers in Governments across the world to give them the certainty they need to invest in a clean energy future: to provide clear and predictable policies that can unlock investment at scale.

So we cannot be drawn into some false choice between economy and environment. Instead, we must make the clear-eyed – the hard-nosed case for green growth.

Time horizons

And that means making a better argument about time horizons. For if I’ve learnt anything in the last few months about energy and climate change policy, it’s that time horizons have to be long – decades not days. Yet in a distracted world, it is easy to focus on the urgent at the expense of the important. But action on climate change is about both. We cannot let the search for short term solutions threatens our long-term goals. An economic recovery that exposes us to greater climate risk is by definition unsustainable.

Partly this is about looking to a different horizon: making sure that our efforts to build a more sustainable economy, in the UK and in Europe, lead to a financial sector, for example, that looks beyond the next quarter and invests in long-term growth.

Partly this is about doing everything we can to ensure the government takes the right decisions for the long term, too. This desire – to do what’s right for the future, not just the near-term – is one of the principles on which the coalition government was founded.

And from the Green Investment Bank to the Fourth Carbon Budget, I think we’re doing just that.

But it’s also about understanding where responsibility really lies. When people talk about climate change, there’s a tendency to talk about children and our grandchildren. About how future generations will feel the worst impacts of a changing climate.
That’s understandable: I think most people view the future differently when they have children. You can’t help but think about the kind of world you want them to grow up in. And the kind of complicated feedbacks in the global climate can take time to reveal themselves.

But there’s a risk that by locating the problem far away in the future, we forget that it is this generation who must act to solve it. It is those in power now who must find the political will – and show the political leadership – that will deliver results.

EU30

I believe Europe has a chance to show that leadership.

At a time when Europe is asking itself searching questions – when the European project itself seems to be on trial, shaken by problems in monetary union – it is worth reminding ourselves of the leading role this continent has played in the global climate fight.
Europe has already cut emissions by around 17% on 1990 levels – outstripping its Kyoto Protocol obligations. We have just agreed an energy efficiency directive which could deliver savings equivalent to a 25% cut. And for all its shortcomings, we have the largest emissions trading system in the world.

For all its problems, the EU is the world’s largest integrated economy. And when it comes to climate change, this union has served us well: Europe negotiates as a bloc at the UN, one with more authority than we could muster individually.

By working together, we have been able to achieve so much more than we could alone. A gathering of individual agents, each fighting for different national priorities, could not have secured the Kyoto Protocol, or its extension.

We should draw strength from this legacy. Rather than letting ambition slip, we should pay tribute to our past achievements by raising our sights still higher.

Europe must do more to complete the single energy market. More on interconnection. More on a continental-scale supergrid. More on energy efficiency standards. More on renewable energy deployment. More on climate finance.

And – crucially – I believe we must do more on greenhouse gas emissions. So my second point today is this: a more ambitious EU carbon target is in everyone’s interests – and I as Secretary of State am working hard to secure that.

The arguments for moving to a 30% cut in emissions by 2020 are well-rehearsed.

It is the most cost-effective way of cutting carbon. It will help us secure the investment in clean energy we need to stay competitive. It will help grow our low-carbon industries, ensuring Europe’s competitiveness. It will limit our exposure to volatile fossil fuel prices.

And – critically – it shows the world what Europe stands for.
I believe that moving to 30% is the clearest statement of ambition and leadership that we can make. It is a key coalition government commitment, and I am doing everything I can to deliver it.

My strategy is to approach this from both the top down and the bottom up. Not just trying to secure Council conclusions on the 2050 low carbon roadmap or a 30% target, but also delivering the measures that will help to move us towards 30%.

Leadership in Europe is about building coalitions and working to deliver compromise deals.

Take the Energy Efficiency Directive, which the UK played a pivotal role in securing.

It is not as ambitious as we would have liked. But it was the very best outcome we could secure, given the negative voices in the Council, and it will help us to go beyond 20%.

The UK is also leading calls for the Commission to present strong and ambitious proposals to strengthen the EU Emissions Trading Scheme.

I’m working closely with the Deputy Prime Minister, NGOs and business leaders to build a coalition for change.

And my German counterpart and I are working particularly hard to find a way to help bring Poland into that coalition.

Their support mustn’t be at any price, but looking a little further ahead, it’s better if Europe moves together. In the next few years we need to start discussing 2030 emissions targets, and longer term reform of the ETS. If Poland remain where they are it will be a struggle.

They’ve set out their concerns to us; now we need to work together find ways to address them. That’s why I am meeting the Polish Minister in London. And actually, the message for Poland is the same as for the rest of the EU: 30% is doable, it’s desirable; so let’s find a way to make it work for everyone.

Moving to 30% will be an act of climate statesmanship, one that speaks to Europe’s reason for being: collective action for the betterment of our citizens.

And – by ensuring we enter the negotiating room from a position of strength, commitment and leadership – it can help secure a better future for all the world’s citizens, too.

UNFCCC

And European leadership can help deliver on my third priority tonight – preparing properly for this year’s climate change talks in Doha at the end of the year.

For the next objective in the UN climate negotiations must be to take forward the important achievements made in Durban last year – and to prevent the attempts to block further progress we are already seeing.

Doha is unlikely to be an epoch-making event – but it needs to be a significant step in taking the Durbna platform forward. Some are calling it an ‘implementation’ meeting. It certainly is that.

But we can also agree some major steps, if we fully lay the groundwork.

It should be the meeting that produces a second commitment period of the Kyoto Protocol.

It should be the meeting that sets us on the way to the new legally binding Protocol. That makes the negotiation process clearer, showing us not just the destination – but the route to a global deal.

It should be the meeting where more countries make 2020 pledges under the Copenhagen

Accord, to keep real momentum and progress. More national policies and actions to support carbon cuts.

It should be the meeting where we make further progress on climate finance. And it could be the meeting where we see big pushes on key technologies, such as carbon capture and storage and renewables.

Given the world is simply not making fast enough progress to keep us below the 2 degree limit, we need to use every occasion like Doha to push further. Whatever the political and economic challenges countries face.

Outside

And we should work hard outside the negotiating room too.

Yes, getting the global architecture right matters. Without it, we cannot get a meaningful and cost-effective agreement, and we cannot be certain that emissions will fall. We need the multilateral, rules-based and top-down approach to deliver – with everyone making commitments. That is why a comprehensive, legally binding global deal is such a cornerstone of our climate policy.

But we need to do more to get things going on the ground. Bottom up, not just top down.

There is absolutely no doubt in my mind: negotiating summitry must not get in the way of actually doing things that close the gap between our climate goals and our actual emissions.

Action to reduce deforestation, for example. With funds pledged and ready, we need more action to save the forests and our plant’s own ecosystem’s ability to absorb carbon.

Action to encouraging more countries to make emissions pledges, and action to encourage those who have made pledges actually to deliver on them;

Action to bring powerful greenhouse gases like hydrofluorocarbons into the Montreal Protocol;

And one area I want the UK to lead even more is on taking positive steps on climate finance. Many developing countries are committing serious resources to climate change; and we are supporting them both because it is right, and because it is in our interest to do so.

We are on track to meet our Fast Start Finance pledge, with more than £1 billion spent or committed. We’re working to leverage private finance through our Capital Markets Climate Initiative. And we’ve set up the £2.9 billion International Climate Fund to help developing countries tackle climate change and reduce poverty.

We want to focus our climate finance where it will get results. So the Fund will make at least 15 million poor people more resilient to the impacts of climate change and natural disasters in Bangladesh by 2014, protect 39 million hectares of forests, and help over 2 million poor people access clean energy.

So our commitment should be clear: we will meet our fair share of the $100bn of public and private international finance per year the world has pledged to provide from 2020.

So we must not see a gap in financing after the Fast Start period ends: I want to encourage other countries to pledge funding beyond 2012.

Action on finance, forests and HFCs; these are some of the things we must now focus on if we are to come close to closing the emissions gap. And there is no reason why we should not do them in parallel with negotiations on a climate treaty.

So my final message today is this: I believe that top-down and bottom-up approaches are not mutually exclusive, but mutually reinforcing. They are different halves of one whole: action to cut emissions and protect the planet.

Conclusion

On Sunday I’m travelling to Berlin to meet 45 of my counterparts to discuss how we prepare for Doha and how we raise our ambition levels. The case I will put there is the same I have put to you here today.

Research published this week shows that recent climate change made the 2011 Texas heat wave twenty times more likely than 50 years ago. Here in the UK, extreme flooding – like we saw in 2000 – is twice as likely thanks to man-made climate change. Extreme weather events caused by climate change are not a distant worry: they are already happening.

The call to arms on climate change is growing ever louder. But it risks being lost in the noise of the world’s business as usual concerns.

But it must be heard. At my first international meeting on climate change three months ago, I was struck by an impassioned speech by a Minister from a small Pacific Island – when he argued that some countries’ right to develop were in conflict with his people’s right to survive.

That’s our challenge.

So we must reject those who argue that action on climate change and economic growth are incompatible. Those who claim that the EU is ineffective. Those who pretend that multilateralism cannot deliver.

And I’m determined that my Department and our Coalition Government is front and centre in those arguments. Thank you.

Below is the text of the speech made by Ed Davey, the then Secretary of State for Energy, on 23 July 2012.

Thanks very much – it’s absolutely fantastic to be here at the Eden Project, whose low-carbon credentials are impeccable.

The world’s first eco car show. Plans for an 80% cut in emissions by 2020. And a new deep geothermal energy system, drawing heat from Cornish stone to warm the biomes and feed into the grid.

These are all real achievements. But what I find most impressive is the work Tim and the team here have done to bring environmental issues into the national consciousness.

The Eden Project is the one of the most recognisable green ‘brands’ in the world. Everyone knows what it stands for: sustainability, not just in environmental terms, but in a social context, too.

The scheme we are here to launch today speaks to the same agenda. Helping people save money. Helping communities benefit from energy projects. And hopefully saving carbon, too.

I’ve been a consumer advocate for many years. As an MP, and as a Minister at the Department for Business, where consumer affairs and competition was a big part of my brief. I even launched a Consumer Empowerment Strategy, to help people realise the power they have to get a better deal.

So I know the consumer landscape well. And I’m absolutely clear that getting more competition in our energy markets, and helping people take advantage of it, is vital.

That’s why one of my top priorities after taking this job was to focus on collective switching and collective purchasing.

Everyone here today knows that the way people buy energy – and who they buy it from – can make a real difference. But that message isn’t making out to the wider world.

In 2010, we saw significant energy price rises. Wholesale energy costs soared, driving up consumer bills. Yet consumer switching rates fell.

In 2010, just 15% of us switched gas suppliers, down from 19% in 2006. For electricity, it was even worse: 17% of consumers switched, down from 22%.

We need to better understand why – and what we can do to turn that around. And I believe the first thing to do is to give people better information.

We want to see fewer tariffs and much clearer pricing, so that customers can find the best deal more easily. We want people to have access to better information about their energy consumption, with smart meters to help consumers monitor and manage their energy use.

But better information isn’t enough. We also need to give people more power in the energy markets, which is where collective switching can really come into its own.

We’ve seen a few partnerships starting up, with Which? and the campaigning group 38 degrees coming together for the Big Switch, successfully carrying out a reverse auction that was won by Co-operative Energy.

At a time when householders everywhere are looking to cut their bills wherever they can, such schemes have grabbed media attention.

And I’ve been clear from the start that this is about more than commercial opportunities.

It’s about more than helping those who are already clued up. I want to see new providers – not just the usual suspects, not just the private sector, but charities and the public sector too – coming up with schemes that can reach the most vulnerable consumers. I want the benefits of collective switching to be open to all communities.

That’s why Cornwall Together is such a fantastic initiative.

Not just because this is the first time a county has joined together to help people save. Not just because it’s coming from a new angle, by working with big employers in Cornwall, across sectors. Not just because it encourages people to think about more sustainable energy options.

But also because this is the first collective switching scheme I’ve heard of that will actively target the hard-to-reach the households who most need help. And 1 pound out of every 10 generated will go into a fund for Cornish communities.

This scheme really is the first of its kind. And I sincerely hope it’s the first of many.

I want to congratulate everyone who has put the work in to get this far. Thanks to your efforts, Cornish households could save up to 20% on their energy bills. For the most vulnerable, who spend a greater proportion of their income on energy, that can make a huge difference.

Everyone here today knows that fuel poverty is a difficult and pernicious problem. Cold homes harm the health of those least able to cope. Children. The elderly. People with disabilities or long-term illnesses.

For those who are already struggling to get by, worrying about keeping warm adds another layer of stress.

Being able to heat your home adequately and affordably ought not to be a luxury, but a basic right.

High energy prices, low household incomes, and energy inefficient homes are the main drivers of fuel poverty. And like other types of inequality in our society, there are few simple solutions.

We’re doing what we can to help. We’re working with energy suppliers. We provide direct support to households who are vulnerable and in fuel poverty. And – in the long term – we’re trying to limit our exposure to volatile global energy markets.

But we have to be realistic: income and prices are the two parts of this equation that we have the least control over. For government, it makes sense to really focus our efforts on energy efficiency.

That’s why the Green Deal and the Energy Company Obligation are so important.

I want every household in Britain to benefit from energy savings; it’s good for consumers, good for the climate, and good for growth.

But it’s the poorest and most vulnerable who need the most help, and that’s what the Affordable Warmth and Carbon Saving Communities parts of the ECO are designed to provide.

Every year, they will help around 230,000 households to install energy efficiency measures worth £540 million.

I believe that’s going to make a real difference. But it’s not enough. Because when it comes to fuel poverty, we face a problem which – on the current measure – affect 4 million households.

That’s why I’m so passionate about encouraging collective purchasing and switching. Particularly when it’s done by genuine partnerships, who are working to help whole communities.

Just like Cornwall Together.

Once again, I want to congratulate everyone involved in this groundbreaking project; and wish you all the very best in the months and years to come. Thank you.

Below is the text of the speech made by Ed Davey, the then Secretary of State for Energy, on 6 August 2012.

Introduction

Thanks very much. This has long been one of the great business cities. For fifteen centuries, it has welcomed traders and merchants from around the world.

In fact, its Old English name directly translates as ‘London trading town’. And that’s as appropriate today as it was a thousand years ago.

We are part of Europe, but have strong ties to much of the world. Our working day bridges the Asian and American markets. English is the lingua franca of business; most international contracts are based on English law.

So London remains a fantastic place to do business, including energy business – which is of course what today’s session is all about.

I’m sure the panel will generate some sparkling discussion. But before the day gets underway, I thought I’d take this chance to fill in some of the detail about the UK’s energy policy – and the opportunities it provides for investors.

Opportunities

Over the next decade, the UK energy sector is going to change radically: as more and more low-carbon energy comes online, and existing infrastructure is upgraded.

We’re going to see significant changes in the way we make, save and use electricity. Our ambition, as you’ve just heard, is to rebalance our economy, and put green growth at the heart of our policy.

These changes aren’t unique to Britain. At the G20 in June, all members recognised the importance of putting green growth at the heart of their structural reform policies.

But the UK’s investment need is particularly strong. Thanks to a combination of legally binding climate targets, ageing infrastructure, and rising demand, we need double the normal rate of investment between now and 2020.

Numbers

In less than ten years, we have to find 20 gigawatts of generating capacity – and £110 billion of investment in electricity generation.

Even if we go full-speed ahead on energy efficiency, we still expect demand for electricity to rise. We’re talking about building as much as 18GW of offshore wind by 2020, if costs come down; and 16GW of new nuclear power by 2025.

Creating a cost-competitive Carbon Capture and Storage industry in the 2020s, and seeing new gas come online to ensure we can meet demand as we decarbonise.

This is the biggest overhaul of our energy infrastructure for decades. It brings huge opportunities right across the supply chain. And it’s driven not just by need – a fifth of our power plants will close by 2020 – but also by our climate commitments.

We have legally binding renewable energy targets for 2020; carbon budgets setting the level of emissions out to 2027; and a 2050 target under the Climate Change Act.

No other country has set carbon targets in that much detail, that far ahead. So the overall position is clear: It is government policy, enacted with wide cross-party support, to move to a low-carbon economy.

This change brings real opportunities for the energy sector – and for new investors.

Investors

Existing players don’t have the capacity to invest at that kind of scale. We need new players, including institutional investors, who have the muscle to make big investments in technologies with high capital costs.

That means doing everything we can to take the risk out of investing in the UK’s energy markets. From a government perspective, that means making sure we keep political risk to a minimum.

And here I want to pick up on one thing in particular which Nick mentioned: predictability.

Our priority is to set a clear policy direction. To reassure investors and entrepreneurs alike that the UK will remain a great place to do low-carbon business.

So we will make sure our policy positions are predictable, transparent, and based on the evidence. And if you look at what we’ve done so far, I think you can see that we’re holding fast to that aim.

We’re opening up markets, providing long-term certainty for investors, and removing barriers to entry – three things that are vital to bringing forward new investment.

Markets

Take the Green Deal, the nationwide energy efficiency programme for homes and businesses.

We want to establish a vibrant new market in energy efficiency, one that could attract capital of up to £15bn for installation of energy efficiency measures in the residential sector over next decade.

Or take the reform of the electricity market, the biggest news in the UK utility sector. It’s designed to give investors the certainty they need to raise capital to build our clean energy future.

The overall aim of the reform is clear: we want to encourage competition on cost between low-carbon electricity sources -including renewables, carbon capture and storage, and new nuclear – while ensuring our long-term supplies are secure and affordable.

So we’re setting up a framework that will offer reliable contracts, delivered in ways that are trusted by investors.

To unlock low-carbon investment, we’ve chosen a feed-in tariff with contracts for difference, providing a guaranteed price.

From an investor perspective, this delivers clear & predictable revenue streams – making sure we have an active and liquid wholesale market, and giving new investors enough certainty to enter.

As a package, this reform will enable large-scale investment in low-carbon generation capacity in the UK in a cost-effective way.

The Rating Agency Standard & Poor’s now takes the affordability of the regulatory system into account when they assess projects, so the affordability of the EMR framework should provide additional comfort to the investor.

And the important thing is that it’s a staged process, designed to minimise risk.

The idea is to move gradually from administrative price setting to full market price discovery over the next decade, as different technologies mature at different rates.

To make sure existing investors aren’t left in the dark, transitional measures will ensure that investments made under the current regime – the Renewables Obligation – remain predictable.

When it comes to cost-effectiveness, we are absolutely determined to follow the evidence – even if it means taking a little bit more time to get the details absolutely right.

We’ve just announced the level of subsidies for renewable electricity for the next five years, unlocking between £20 billion and £25 billion of new investment in the next four years, and bringing down costs to consumers.

We’re also committed to cleaner fossil fuels, which is why we’re working with industry to create a new cost-competitive carbon capture and storage industry in the 2020s.

We’ve got a £1bn competition, a £125m Research and Development programme and a well developed regulatory framework to help bring this pivotal technology to commercial fruition.

As our energy mix changes, our network will also need to evolve. So we have a £500m Low Carbon Networks Fund, to encourage innovation in smarter electricity networks.

Barriers

We’re also working to break through some of the non-financial barriers holding up investment.

The new National Policy Statements on energy will make our planning system faster, more predictable, and more accountable.

To help get more renewables online, we’ve published a Renewable Energy Roadmap, which focuses on the eight key technologies which have greatest potential – identifying the non-financial barriers to deployment.

And we’re working with industry and the regulator to deliver a more liquid and competitive power market, so that all investors can manage risks and have fair routes to market.

Conclusion

I hope I’ve given you a sense of the opportunities in UK energy markets, and the two big themes which run through UK energy policy: predictability, and evidence.

As we look to build a diverse, secure energy system – one that can meet the UK’s future energy needs at the lowest environmental cost – we will need significant new investment.

Unlocking that investment, and reducing our political risk profile, means making sure our policy positions are predictable, and based on the evidence.

If we get it right, the prizes on offer are alluring. For Britain, secure supplies of affordable low-carbon energy. For businesses, the opportunity to build and operate the energy system of the future.

And for investors, the chance to be part of an historic, unprecedented replacement cycle – with opportunities stretching out for decades to come.

Thank you very much.

Below is the text of the speech made by Ed Davey, the then Secretary of State for Energy and Climate Change, at Association of Brfitish Insurers on 24 March 2015.

Introduction

Thank you for inviting me here today to your climate change conference.

You may have noticed. But we’re just a few weeks away from a general election.

For many MPs this is what Sir Alex Ferguson referred to as ‘squeaky bum time’.

So maybe it’s appropriate I’m at the Association of British Insurers.

Businesses can of course take out insurance against the possibility that a change in political conditions will result in a loss.

But I’ve not yet seen a premium to insure an MP against losing their seat.

Maybe you’ve missed a gap in the market for political life insurance.

Though the premia would be high in this General Election – because it’s easily the most difficult to predict in living memory.

Interestingly though your industry is getting ready for insuring the risks of climate change.

As you look ahead at the big long-term issues for global insurance, climate change is increasingly one of the biggest risks you’re considering. And I’ve been impressed by the leadership your sector has and is showing.

So in my speech today I want to look ahead – to one of the immediate challenges the new Government will face – the Climate Change Conference in Paris in December.

But first I want to begin by reflecting on what has been achieved in this Parliament here in the UK to meet this climate change challenge.

Consensus on climate change

In 2010, the Coalition inherited ‘a number of difficulties’ from the last administration.

The economic crisis being the most pressing.

But credit where credit is due, on climate change, the 2008 Climate Change Act passed by the previous Government positioned the UK as one of the leading nations for pressing for action.

And this position is supported by a wide political consensus.

Labour, the Conservatives and the Liberal Democrats all voted in favour of the 2008 Act.

It’s a consensus based on hard scientific evidence.

We are on course, at present, for a world far hotter than the 2 degrees or less rise that scientists tell us should avoid the most catastrophic outcomes.

Outcomes that will damage our prosperity, our security and our health.

Only yesterday, public health experts warned that climate change could see tropical diseases such as malaria establish themselves in Britain in a few short decades.

With climate change, our children and their children will face a harsher and more brutal world.

That is why the Climate Change Act remains a key feature of the UK’s energy policies today – rightly – because it ensures that, alongside energy security and price, low carbon energy is a core objective.

So in 2010, the Coalition did have the benefit of the Climate Change Act – and that’s helped people like me – both domestically and internationally – to argue for low carbon policies from a position of strength.

But there was still a major weakness in the position we inherited.

The 2008 Climate Change Act may have put in law the objective – a low-carbon economy and a decarbonised energy supply.

But no long-term, cost-effective policy framework to meet the Carbon Budgets.

We had a destination – but no credible road-map or vehicles to get there.

To make matters worse the coalition faced a legacy of under-investment in energy infrastructure – particularly in low-carbon electricity generation and networks.

No new nuclear for a generation. Renewables generating less than 7% of our electricity needs.

So radical action has been required, to maintain energy security while we decarbonise – and at the lowest possible cost.

Progress at home

The solution has been green growth. With a road map to reduce emissions, and provide much needed economic development and jobs too. And with not just one vehicle, but a garage and a cycle rack full of vehicles for low carbon growth.

First – in 2011 – our comprehensive Carbon Plan to set the strategy out to 2050. A strategy for the transition to a low-carbon economy based on the meeting the Carbon Budget System of the Climate Change Act. A practical plan.

And second, this plan came hand in hand with a trebling of the support available to 2020 for low-carbon, as part of the Levy Control Framework. Indeed, one of my proudest achievements was negotiating the Levy Control Framework with the Treasury – because we won that negotiation!

Third, in 2012, we set up the world’s first Green Investment Bank, dedicated to greening the economy, capitalised to the tune of £3.8bn, which is already transforming the way we look at long term climate friendly investment.

Fourth, we also remodelled the energy efficiency landscape, primarily with a tough new legal regulation on big energy firms – the Energy Company Obligation – to boost energy efficiency investment, especially for the most vulnerable people and the hardest to heat homes, but also with the UK’s first comprehensive “whole home” assessment system and ‘pay as you save’ mechanism – the Green Deal.

And, most important of all, Electricity Market Reform – with the 2013 Energy Act. This puts in place the world’s first low carbon electricity market, with long-term financial and legal structures to drive investment in low-carbon power generation.

And the results of this focus on green growth have been pretty spectacular.

Average annual investment in renewable power is now running at over twice the level of the last parliament, with 2014 a record year.

Since 2010, renewable electricity capacity has more than doubled: in fact it’s risen by over 165%!

Renewables now supply almost a fifth of the UK’s electricity – powering the equivalent of over 14 million homes every year.

Britain’s low-carbon economy as a whole grew at 7% last year – outstripping growth in the economy as a whole and now supporting 460,000 jobs.

And the insurance industry has played a vital part in all this – by developing risk management solutions for renewables and other low carbon projects.

Thanks to green growth, the UK now has one of the least carbon intensive economies in the developed world.

Over this parliament the UK economy has become almost 13% more carbon-efficient. With more growth not leading to more emissions.

Proving that going green and economic development can go hand in hand.

And, as Jeremy Oppenheim from the New Climate Economy Project, explained to you, the global opportunity for green growth is huge.

And through our actions we have put Britain in the leading pack.

Greenest government ever

But the billion dollar question is this:

What has all this action meant for UK greenhouse gas emissions?

No other measure matters more for the climate.

The latest stats show that between 2010 and 2013, UK carbon emission fell by 7%.

That’s good. But I think we’ll have done even better than that – once we see the full Parliament picture.

Official statistics setting out the 2014 provisional position will be published in the next few days. Rightly, I am not privy to the detail.

But if you look at those 2014 indicators already published, they are pointing in the same carbon reducing direction.

Over the last year energy consumption fell by 7%.

Coal use for power stations fell by almost a quarter.

Electricity from wind up by 11%

The carbon intensity of our economy dropped by almost 6% – even as growth began to pick up over the year.

So I can confidently predict – 2014 will have been a bumper year for cutting our emissions.

So – when people ask me – has this been the greenest Government ever? – I answer – unequivocally – yes. Based on the evidence. Based on the stats.

And better still – by our actions over the last 5 years, the next Government is set to be even greener still. Assuming of course it doesn’t totally mess things up.

For the 2013 Energy Act puts in place the ‘how’ to the Climate Change Act’s “what”.

With cross-party consensus, providing stability for investment in the low-carbon economy.

A beacon for others to follow.

As the Chief Economist at the International Energy Agency, Fatih Birol, has said:

“UK energy policies are moving in the right direction and can be an example for many countries to get inspiration from”

So the Coalition in the UK has put a lot of the policies needed to deliver on our own domestic climate targets.

But being a green Government in the UK is no good for the global climate, if we can’t take other countries with us.

And as a proud pro-European I was determined to take the UK’s leadership position and work with other leading nations in the EU – from the Nordics to the Germans – to build greater ambition across Europe.

So in February 2013, I set up the Green Growth Group – of Ministers from the EU’s Environment Council. My aim was to build consensus and drive more ambitious policy around a low-carbon, pro-growth position.

This Green Growth Group now boasts 13 member states representing 75% of Europe’s population, 85% of Europe’s GDP and 60% of the votes in the Council of Ministers.

And it’s partly down to the Green Growth Group that the EU rediscovered its leadership on climate.

Above all, with the new 2030 energy and climate change package.

Based on our British blueprint, the 2030 climate framework is ambitious – but it’s also realistic and fully achievable.

A target to reduce Europe’s domestic greenhouse gas emissions by at least 40% by 2030. At least 40%.

Backed up by a European-wide renewables target of 27%.

So combining the British wish for flexibility for member states to judge their own power mix, with a German and Danish demand for a strong long term signal for the industry. Which I thoroughly support.

It’s not a deal you could strike if you were out of Europe. Or even threatening to leave Europe.

Frankly, without nearly two years of determined EU climate diplomacy, that 2030 package would not have happened.

But it has put the EU in a strong leadership position in the run up to this December’s key Paris UN climate summit.

The second part of the international picture.

Prospects for Paris

People ask me. Will Paris be another Copenhagen – when we’re forced to agree to disagree?

My firm answer is no.

For the world has changed since Copenhagen. Momentum has definitively shifted.

Almost 500 climate laws have been passed in 66 of the world’s largest emitting countries.

Carbon markets have now been put in place in over 36 countries.

Many of the mechanisms and concepts we will need to implement a global climate deal already exist.

And all this action is having an impact.

The IEA estimate that last year, for the first time in 40 years – in the absence of a serious economic crisis – global emissions did not rise.

Of course, we actually need drastic cuts in emissions. Stopping them growing is just a first stage. But it’s a big plus.

And for the deal, the signs are increasingly positive: in the EU, in China, in the US – together responsible for over half of global emissions – action is happening.

In China, President Xi Jinping has embedded climate action directly into the national planning process.

In the United States, the commitment of the White House to achieve a global climate deal has never been so strong.

And I’m still hopeful that the new Prime Minister of India, Nahendra Modi, will lead his country to a more climate ambitious position.

How will the negotiations go?

Well, the EU’s 2030 Framework has placed Europe at the forefront.

We have been one of the first to publish our Intended Nationally Determined Contributions – or INDC in the jargon. And it’s easily the most ambitious of any large country or block.

And yet it is the UK position – fought for by me in this Coalition – that the EU should be ready to commit to go further – if there’s a comprehensive global climate deal.

That’s why I fought for an EU target of “at least” 40% reduction.

The words “at least” ensure the 40% target will be the floor of EU action – not the ceiling.

So I’m pressing for the EU to develop credible options to deliver more, for instance, through using international credits.

But it will be impossible to increase the EU’s offer – unless we see real ambition – indeed a step up in ambition – from other countries too.

We have been the first to put our cards on the table – the spotlight must rightly now shift to other countries – as EU Leaders made clear at Friday’s European Council.

Path to Paris

So there is so much still to do.

At Lima we agreed that INDCs would be progression in ambition compared to what is currently on offer.

But the Lima decision did not set out any formal way of assessing the fairness and ambition of individual INDCs.

And it is highly likely – probably certain now – that the aggregate of INDCs will not reflect what is needed globally to achieve our below 2 degree objective.

So we need to use the time available between now and Paris to mobilise global civil society to up the pressure. Carrying out objective assessments. Making judgements about who is and who is not pulling their weight.

You here at the ABI have been at the forefront of arguing for action on climate change – articulating both the risks to the UK from climate change – as well as the opportunity that low carbon growth provides.

It is great to see leading insurers teaming up with academics and green groups to press the case for such action with today’s open letter.

And it great to see institutions like the National Trust throwing their weight behind climate change action.

But we are looking at an intensive year of climate diplomacy – and we look to the progressive business community and wider civil society to help us in this effort.

Paris will not be the end of the story.

A strong, rules based agreement in Paris must include a long term signal of where the international community is headed.

And a strong mechanism for increasing climate ambition over time – as trust is built, as costs fall and as technological innovations rise.

We will need to make sure we continue to help the most vulnerable countries adapt to the effects of climate change.

The UK’s International Climate Fund, worth almost £4bn, is part of the global effort to mobilise $100bn a year by 2020 from public and private sources to help with both mitigation and adaptation in developing countries.

I can announce today that DECC plans to create a new pilot joint venture with the UK Green Investment Bank worth £200m over three years to assist in investment of the UK’s International Climate Fund .

It will focus on renewable energy and energy efficiency projects in developing countries; delivering significant emissions reductions and poverty reduction by supporting economic growth, job creation, and the development of reliable energy infrastructure.

And by working with the Green Investment Bank, we can maximise the commercial viability, impact and effectiveness of UK climate finance.

And this work has to go hand in hand with reducing incentives for high-carbon energy.

That is why, in November 2013, I announced that the UK will end support for public financing of new coal-fired power plants overseas.

And why we are working with the US to change the rules on OECD export credit support to effectively rule out unabated coal.

One of the long-term issues we also need to tackle is that of stranded assets in fossil fuels.

We know that in the absence of Carbon Capture and Storage, a great deal of the world’s current fossil fuel reserves are unburnable if we are to limit global warming to 2 degrees.

Coal reserves, in particular, are a cause of concern.

Research suggests that over 80% of global coal reserves should remain untouched.

That is why DECC is supporting the climate analysis work of the Bank of England – including the impact of climate change on the insurance sector expected later in the year.

We are providing data on emissions pathways and investments to track how investment allocations are already changing. It’s why I’m so keen on the work done by the Carbon Tracker Initiative.

It’s why we do need to look at disinvestment from coal assets.

But let me also be clear – we will still need a lot of oil and gas over the next few decades, as we decarbonise rapidly.

So the policy question is – how, during this historic energy transition from high to low carbon, do we maintain the financial system’s strength, given it’s highly exposed to fossil fuels assets?

I’m arguing for disclosure. Transparency. Reporting requirements on firms and financial institutions – to force them to set out the future income they expect from their fossil fuel assets. To give long term investors more information on which to base their decisions.

This will help smooth the transition to a low-carbon economy.

As Paul Fisher from the Bank of England, said this month:

“Even though the full impacts of climate change often may not be visible in the short-term, it is well worth insurers being alert to emerging risks, including those from policy makers”

Not that politically subtle for a central banker!

So let me conclude by looking at what the General Election could hold here in the UK.

Conclusion

I’m pleased to say that the political consensus I spoke about at the beginning remains healthy today.

The Valentine’s Day pledge by the leaders of the three main UK parties on Climate Change demonstrates this.

A pledge to stick to the Climate Change Act and its Carbon budgets system.

To continue the drive towards a low-carbon, energy efficient economy, and ending the use of unabated coal.

And to work for a legally binding deal in Paris that limits temperatures rises to below the 2 degree threshold that will avoid the worst effects of climate change.

The next Government will face an intense six months of climate diplomacy.

But how that Government acts will inevitably impact on our ability to make a difference in Paris.

And while the Valentine’s Day pledge gives us some confidence, I do see difficulties.

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So the General Election does bring uncertainty at a critical time.

But I remain an optimist.

With the world-leading platform built by successive UK Governments.

Especially the significant achievements of the last 5 years, at home and abroad.

With the wide coalition of the willing. Not just in politics, not just in the UK – but across global civil society. The business community. And here, our financial community.

I do believe the prospects for a comprehensive and binding global deal to tackle climate change are the best in a generation.

Yes, the deal won’t be perfect.

Of course, Paris will not be the last word.

You bet, we’ll need climate talks after Paris.

But we cannot let this this moment slip by.

In Paris, the world has to act. And Britain has to lead.

Below is the text of the speech made by Ed Davey, the Secretary of State for Energy and Climate Change, to the Eurelectric Convention held in London on 2nd June 2014.

Introduction

Colleagues, in five months’ time Europe’s leaders have a historic opportunity to learn recent lessons for our energy and climate change policies – and make a new start.

But I’m not sure if they’ve all fully realised it yet.

At the European Council this October, Heads of State have a realistic chance to bring together, at last, the key three strands of energy policy – carbon, security and price – to forge a coherent strategy, for the first time.

This has happened more by happenstance than design – so there is a real risk the moment will pass without anyone realising it.

So today, as well as explaining what this historic opportunity is – I want to enlist you – Europe’s electricity industry – in the task of making sure all Europe’s leaders wake up to the possibilities and grasp them.

It may be thought somewhat bold, to launch a pro-European energy and climate change campaign here in London. Just after the European elections. With the debate on the next President of the European Commission raging.

But – if I can persuade you to sign up today – the prize is huge.

So what am I talking about?

Well you should all be aware of the debates over Europe’s 2030 energy and climate change package. What our targets should be for 2030. How we can reform the EU ETS. These are vital questions – and the March European Council said they should be settled this October.

This would be a critical strategic moment by itself – if it was just the 2030 climate package we have all been working on for so long.

But it turns out it could be even more significant. And we have President Putin to thank for that. For alongside climate, energy security is also now at the top of the European energy debate.

Just last week, the Commission’s published its welcome Energy Security Plan, building on the deal agreed by myself and other G7 energy ministers in Rome last month.

This plan shows not surprisingly that there is no quick fix to tackle European energy security. We need a sustained effort, over many years.

And it makes policy sense and political sense to embed a robust energy security strategy within an ambitious and flexible EU 2030 policy framework.

For the political challenge in the past has not been getting energy security at the top of the EU agenda, it has been keeping it at the top of the EU agenda. In October, we could ensure that happens.

But of course, climate and energy security are only two of the three pillars of a modern energy policy – the third is price.

Everyone knows that energy prices are a huge issue – for consumers and European industry alike. As gas prices have risen here and fallen in the USA, the need to help people struggling with their energy bills and to do more for industrial competitiveness could not be more urgent.

Yet at the moment there is no official document, no package, no process for EU Heads of State to include energy affordability in their discussions.

Fortunately, I don’t think actually we need a paper. But we absolutely do need Europe’s leaders to see the links – to make the links between climate, security and price, as they reach their conclusions.

Let me now deal with the detail of the European energy trilemma.

To give you my account of what we should aim for in October.

And my account of how the energy inter-relationships of carbon, security and price can be dealt with, together.

For we can bring them together if we do three things:

– diversify

– drive investment in EU production and energy efficiency; and

– complete the single market

A critical first step for Europe is to diversify – and to understand the benefits of diversity.

In the UK, our whole energy and climate change policy is based on a mixed approach – to bring on all low carbon technologies. Not to pick a winner, as these technologies develop fast. But to recognise the uncertainties caused by dramatic technological change.

And so to design a market-based framework which supports diversity in a low carbon world.

So for us, Europe should not repeat the 2020 renewables target, which was binding on an individual member state, as that is too rigid, and for some countries too expensive.

Member states must be allowed to follow the Treaty – which in effect demands technology neutrality in European energy policy. An EU-wide renewables target will continue to support these vital green technologies, without threatening the low carbon diversity we need against the threat of climate change.

But we must diversify for energy security too.

Eurelectric rightly notes that while 30% of EU natural gas imports come from Russia, only 5% of European electricity is fired by Russian gas.

But we should not forget that many European homes are warmed by Russian gas.

And as the cleanest fossil fuel, gas will become more important in the future as we transition to a low carbon economy.

We will be using more gas, not less, at least in the medium-term – including using it to generate electricity.

So we will continue to need to import gas, but we need to source it from far and wide.

The UK has invested significantly in our ability to import liquid natural gas.

This, coupled with indigenous production in the North Sea and pipelines to Norway, limit our own reliance on Russian gas.

It also helps to make the UK the most energy secure nation in the EU – a point noted by the recent report by the US Chamber of Commerce.

But we are not complacent.

That is why the UK is pioneering shale gas exploration in Europe.

And we have acted to ensure that shale exploration happens safely, without harming the environment, and provides a boost to local communities who host the resources.

So shale can form part of the UK’s, and Europe’s, energy security future.

Other nations need to consider their own reliance on gas from one supplier and one source and urgently adopt strategies to mitigate this in the long-term.

The European Commission’s requirement for national gas risk assessments due to be submitted by all Member States on Wednesday (04 June) should provide a good base-line to proceed – and take collective action where necessary.

Second, we need to produce more energy ourselves – and be far more efficient in using it.

We need to accelerate the investment in secure, home-grown energy resources as we decarbonise.

This will not only assist energy security, but it will aid the recovery by pinning jobs and investment into Europe – maintaining Europe’s leading position in the global green energy market worth some £3.3 trillion and growing at the rate of 4% a year.

So putting the 2030 Energy Framework on the right footing is crucial.

The EU ETS, is often considered the cornerstone of the European climate and energy policy framework.

So any new Framework has to address the weaknesses in the ETS system tackling the large surplus of allowances that is depressing the carbon price.

We cannot repeat the experience of last year’s backloading reforms. And in the UK’s view, we have to go further than the reforms proposed by the Commission.

And having spoken to many of Europe’s energy ministers intensively in recent months, my strong view is that major reform of Europe’s carbon market is now possible.

Increasingly people are recognising that climate change policies are not the cause of Europe’s competitiveness problem: the recent report from the IEA spelt it out: Europe’s energy price problem has been caused by America’s successful exploitation of shale gas. If we addressed that imbalance more effectively with policies such as completing the single energy market, higher carbon prices would drive investment not threaten it.

But we will need more than a reformed EU ETS – to stimulate growth in home-grown low carbon capacity, the central plank of 2030 should be an EU Green House Gas target of at least 40%.

We need to make use of everything nature and science has provided us – renewables, nuclear, indigenous gas supplies – and new technologies like hydrogen and carbon capture and storage.

And an ambitious greenhouse gas target is the technology neutral approach that will do this – supporting carbon pricing.

We will need major investment too in energy efficiency – which will also be supported by this 40% domestic European target.

Building new supply is expensive so we shouldn’t miss the massive demand side opportunity.

I have spoken before about the UK’s drive to create an energy saving society.

The Green Deal, the Energy Company Obligation, Energy Demand Reduction, products policy, smart meters, business energy efficiency – creating an energy efficiency market with a new business model.

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.

By tapping the potential of energy efficiency, we estimate we can save ourselves in the UK the need to consume 196 TWh by 2020, the equivalent output of 22 new power stations.

But demand measures should be judged in the same way as supply measures.

How can we reduce emissions in the most cost-effective way possible?

And the most cost-effective mix of action on supply and demand will be different in each member state.

The EU framework needs to foster innovation and investment, not hinder it.

And European policies on more ambitious energy efficiency standards offer the best way forward, to support member state work.

The third area we have to act in to ensure energy security is to get our own house in order on the internal energy market.

This will not only deliver the lowest available prices for our consumers, but the Internal Energy Market can be the solid backbone of Europe’s energy security.

As Eurelectric have said in response to the Commissions communication on Energy Security:

“An integrated EU market combined with improved interconnection is the single most important guarantee for security of supply.”

Being able to trade energy more freely between ourselves means we can maximise the use of home-grown European energy, and reduce imports from outside the continent.

And to make that home-grown option a cost-effective reality, we must step up the integration and interconnection of European energy markets.

So what do we need to do to make this a reality?

Before I set any hares running let me be clear.

We don’t need to go back to the drawing board.

There are new challenges to the single energy market which policymakers do need to think through – from Europe’s various low carbon subsidy regimes to the need in some countries for capacity markets.

There are some who say that we cannot complete the single market until we have somehow either integrated these interventions or outlawed them.

I profoundly disagree. That is a recipe for never completing the single market.

We need to get on with what we have already committed to on the single market – whilst we work through the low carbon transition that requires these temporary interventions.

That means each Member State must fully implement the EU’s energy liberalisation legislation to put the legal and political frame in place.

We must complete the complex technical and market framework that will allow our national networks and markets to operate more effectively together.

We must facilitate investment in the physical links that make market integration possible through the Projects of Common Interest process.

And we must take the action needed to integrate low-carbon electricity into the market while maintaining system stability.

Let me take each of these in turn.

Completing the market

First, the legislation.

It is critical that Member States implement the Third Package fully and consistently.

Here in the UK we have fully implemented all the Third Package provisions, committed to market integration and opened our markets fully to competition.

So we are among the good guys!

But I recognise that with the reforms in the UK market over the last few decades, we had an easier platform to build on.

But in the spirit of solidarity, all Member States should be looking to support each other by effectively meeting all their Third Package obligations.

Second, the network and markets frameworks.

Network codes and guidelines must be agreed and implemented.

The Commission should present formal proposals to all Member State setting out how this should be achieved.

And that process should start immediately.

My Department is geared up to look at the detail and see how we can implement swiftly.

Our regulator OFGEM and the National Grid are primed to act.

So let’s get on with it.

Third, interconnection.

Member States, regulators, developers and the Commission should work together to ensure that the key Projects of Common Interest are built as quickly as possible.

The UK has supported 6 GW of interconnection projects which would represent a 150% increase in our connected capacity.

Three projects are heading for financial over the next 12 months.

Eleclink through the Channel Tunnel is due to be operational in 2016.

Nemo to Belgium in 2018.

And NSN to Norway, the world’s longest sub-sea electricity cable, by 2020.

With interconnection flourishing we need to enable cross-border participation incapacity mechanisms.

The capacity market we will shortly implement in Great Britain will be consistent with the target model.

And we will allow interconnected capacity to participate directly in the mechanism from 2015.

We must continue to work together to learn from each other experiences, developing and sharing best practice to minimise market distortions.

We should also look at ways to improve the co-ordination of National Generation Adequacy Assessments, including the contribution expected from interconnectors.

And we must ensure that national measures to promote investment in low carbon generation complement the internal market.

In the UK, we have designed a system that preserves the wholesale market price while providing support for low carbon investment.

Our Contracts for Difference are a prime example of how such market based intervention can be consistent with the internal energy market.

The Electricity Coordination Group is a good forum for working together to address such common challenges and ensure that national measures work with, and not against, the Internal Energy Market.

But the Commission needs to reinvigorate the Group and Member States need to participate actively in the discussions.

Conclusion

Ladies and Gentlemen,

The three overarching issues of energy policy – security of supply; affordability for consumers; and the requirement to decarbonise – have all come into sharp focus over the last few months.

The Ukraine crisis has sparked a reassessment of European energy security.

The recent reports by the UN IPCC leave us in no doubt about the urgency of action on climate change.

And as Europe recovers from the most dangerous economic crisis since the Second World War, competitiveness and the costs of energy are high on the agenda.

Energy is at the top of political priorities, and we should seize this moment. Today I have set out a way ahead.

The next few months will be crucial. Your voice will be critical.

And I am determined that we find the collective political will to act.

Below is the text of the speech made by Ed Davey, the Secretary of State for Energy and Climate Change, at King’s Place in London on 28th April 2014.

Introduction

It’s great to be here with you today to help mark the Climate Group’s 10th anniversary.

Over the last ten years you have demonstrated a unique ability to bring together businesses and government officials;

At all levels and from all corners of the globe;

To help unleash the economic opportunities presented by the low-carbon revolution.

And there can be no doubt about the need for bold action to tackle climate change.

The latest reports from the International Panel on Climate Change makes the situation crystal clear.

The science is unequivocal.

Without radical reductions in greenhouse gas emissions, the world is set to be potentially 4 degrees hotter than today.

And the latest reports are also clear on the consequences of that scenario.

Not just the physical consequences – lack of arable land, shortages of water, extreme weather.

But the social and economic consequences too.

Of course there are always uncertainties when it comes to economic prediction but the long-term economic impacts of climate change are likely to make the problems we have encountered over the last few years look mild in comparison.

So the debate cannot be about if carbon emissions are reduced, it has to be about how.

Because that is what all logic dictates – scientific logic and commercial logic.

The voice of business on climate change

Because this debate cannot be confined to the realm of science.

Or even the realm of politics – government regulation and international negotiations.

It must take place in the business community too.

Because you are the engine of our global society.

Without the active support of business, we cannot bring about the low-carbon revolution that we need to manage and limit the consequences of climate change.

Only by working together can we provide confidence and credibility for the market mechanisms required to reduce emissions.

Carbon-pricing, carbon-trading, encouraging low-carbon innovation.

And only by working together can we harness the social and economic benefits of going green.

Jobs for our citizens.

Profits for our businesses.

Revenues for Governments.

Growth for our economies.

Development for our societies.

The voice of business in this debate is critical.

We have a year or so leading to the end of 2015 to get the international politics aligned to make Paris a success.

Politicians will have to make balanced choices.

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

Political results are rarely clean and neat.

But it is much easier to come to a reasonable and workable position if those who create wealth, provide jobs and drive innovation are demanding bold action.

Business and climate risk

I know how difficult it is for businesses to make long term commercial decisions when there is so much uncertainty about how the international climate change policy framework will play out.

And there will always be those with a vested interest in the status quo who argue against change.

As the IPCC report itself points out, “Given loss aversion, the potential negative consequences of moving away from the current state of affairs are weighted much more heavily than the potential gains, often leading the decision maker not to take action.”

But we have to overcome this status quo bias.

Because for a business to gamble that climate change won’t happen just doesn’t make commercial sense.

No boardroom worth its salt can avoid making the long-term risk assessments climate change threats require, faced with the scientific evidence.

And that shouldn’t be some worthy annual report from the sustainability team, however helpful that might be.

Climate change needs to be mainstreamed into core business risk management processes.

How will climate change affect my business and my customers?

How do we mitigate the negative consequences?

And what options will provide my business with the greatest net benefit from a low-carbon economy?

Because as the Climate Group has consistently demonstrated, there is a huge business opportunity ready for those who grasp the green mantle.

Green growth

It isn’t just the higher productivity that can be gained by going green.

Things like lowering energy use or embracing new sustainable techniques.

There is a booming low-carbon market to take advantage of.

The global low carbon and environmental business market is worth around €4 trillion a year.

And it is expected to grow at over 4% a year for the foreseeable future.

Europe as a whole has carved out a 22% leading share of this global market.

Worth over €900 billion a year.

Supported by the far-sighted regulatory framework put in place by the EU and its member states.

We in the UK are a leading player in supporting low-carbon business.

Our ground breaking 2008 Climate Change Act, the product of a wide and welcome political consensus, commits to achieve at least an 80% cut in carbon emissions by 2050.

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

And through the 2013 Energy Act, we are putting in place one of the first low-carbon electricity markets in the world.

With a long-term political and financial framework to provide predictability and confidence for business investment.

Just last week, I announced the first eight contracts issued under the new regime.

Which will provide £12 billion of private sector investment in new renewable energy projects.

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

But Europe and the UK are far from alone in embracing the opportunity green growth has to offer.

Global clean energy investments have grown sixfold since 2004 to nearly €195bn a year.

As you will hear from the Chinese ambassador later today, China is investing over a trillion dollars in its green economy over the coming years.

When I was in China at the end of last year, at almost every meeting I went to, the concept of a new ecological civilization was being discussed.

The enthusiasm with which this is being embraced in China gives me great hope.

And after years of appearing to stand apart, the United States, under the Obama Administration, is once again helping to drive this process.

The US recently became the world’s largest investor in low carbon energy research & development.

For the planet, this is encouraging, suggesting that the world’s two largest polluters have a growing stake in a low carbon-future.

So I have growing confidence that the international community can come together to set the global framework businesses and investors need.

This isn’t just about the big players, or national governments.

As today’s event will show, action is being taken to change the facts on the ground from the bottom to the top.

Local neighbourhoods coming together.

Cities going green.

All parts of civil society working to make the low-carbon transition possible.

Conclusion

But as I said at the beginning.

Without the engine of the business community, the low-carbon revolution cannot be achieved.

So I whole-heartedly support the Climate Group’s ‘We Mean Business’ campaign.

Powerful voices speaking up for climate action.

Backing new business models.

Supporting innovation.

Embracing low-carbon solutions.

And taking them to a booming market place.

None of this is going to be easy.

The year ahead to Paris in 2015 will be challenging.

And achieving an ambitious and workable international agreement is going to take courage from all who lead.

And we will have to sustain this low-carbon transition over decades if it is to have a lasting effect.

But we can and must hold the course.

The UK Government, negotiating as part of the EU, will be a strong voice for ambitious action.

At Ban Ki Moon’s summit in September we have an early opportunity to show we mean business.

Lets take it.

Below is the text of the speech made by Ed Davey, the Secretary of State for Energy and Climate Change, in Scotland on 9th April 2014.

Introduction

I am here in Edinburgh today to make the case for the United Kingdom.

And to make the case for Scotland’s place in the United Kingdom.

And today, as the UK Government publishes its analysis of the implications in energy of Scottish independence, I want to talk specifically about Scotland’s energy future within the United Kingdom.

Before I go into detail, let me first address the wider debate on whether we are better off together or apart.

You know, as the UK Energy and Climate Change Secretary I’m regularly here in Scotland.

This is business as usual for me.

The Department of Energy and Climate Change is co-located in Aberdeen.

And as I have said here in Scotland many times before, I have no doubt that with the talents of the people, and the natural resources of the land, Scotland could make a go of it alone.

But to do this, the people of Scotland will have to give up being part of family of nations that make up the United Kingdom.

Not a holiday, not a sabbatical.

But an irrevocable, irreversible act of divorce.

That closes the book on three hundred years of shared history, shared fortunes, shared fates.

The decision that the people of Scotland will take in September is monumental.

Not just for the people here but for the people of England, Northern Ireland and Wales too.

Because if Scotland chooses to go it alone, it will have a huge and lasting impact on all of us.

Because the United Kingdom is more secure and richer with Scotland in it.

And Scotland is more secure and richer as part of that family.

Families stick together

Yes, we can split up and be small countries making our way in the world.

But such a decision would leave all of us, all of us, poorer than we are today.

Not just in an economic sense – but emotionally too.

Together we are a great country.

Greater than the sum of our parts.

People always say that you never really miss something until it is gone.

And I think that if we wake up on 19th of September to find that our United Kingdom has been sundered forever, we will regret it for the rest of our lives.

And that is why, although this is a decision being taken by the Scottish people alone, all of us in the United Kingdom have a stake in the outcome.

All of us have the right to be heard.

Not bullied into silence, or scared off, or told we have no part in this, or our views don’t matter.

Just think about what would never be the same again.

Just think about what we would have to do to unpick the ties that have bound us together.

Things that affect all of us in the United Kingdom.

Our economy – the money we use, the taxes we pay.

The debts, pensions and liabilities we have built up together for better or for worse.

Our welfare state.

One of the crowning achievements of the post-war generation.

That supports every citizen of the United Kingdom in sickness and in health.

The Armed Forces that protect us and our way of life

The historic units that trace their history back centuries.

Who have fought for us and died for us in good times and in bad.

This United Kingdom is so much more than a marriage of convenience.

Just a body of law and regulations.

It is a Union of the heart and the mind and the soul.

We are a family and we should stick together.

Better together, poorer apart.

Energy powerhouse

And in no area is that more true than in energy.

The industries and networks that generate and deliver power around this United Kingdom.

Keeping our houses warm, our lights burning, our businesses working.

As part of the United Kingdom, Scotland is fast becoming an energy powerhouse.

One of the world’s energy hubs.

And this is being achieved precisely because Scotland is part of the United Kingdom.

Supported by the integrated energy market across Scotland, Wales and England of 30 million homes and businesses.

Supported by the pull and weight of the UK economy with the scale of the financial support it can provide.

Scotland’s energy future is booming.

Oil and gas

The UK is providing substantial help to industry to maximise output and revenues from the North Sea oil and gas as the challenges of extraction are increasing.

And, in the process, supporting the 225,000 Scottish jobs that directly rely on the oil and gas industry.

We are also investing heavily in decommissioning and cleaning up those areas that are becoming depleted.

Can Scotland do this alone?

It would be far more difficult.

North Sea Oil revenues fluctuate.

Since devolution anywhere between £2bn a year and £12bn a year.

The weight of the UK economy can soak up this uncertainty as it amounts to only 1.5% of income.

But for Scotland, North Sea revenues would have been almost 14% of income.

In the UK, Scottish tax payers are shielded from over-reliance on a single uncertain strand of income.

In Scotland alone, they would be exposed.

Take decommissioning.

An independent Scotland would have to invest around £3,800 per head to match the £20bn the UK has committed to decommissioning

That is over ten times more than when the costs are spread across the UK.

Scotland’s Oil and Gas industry prospers in the UK and Scottish taxpayers are protected from volatility and uncertainty.

Better together, poorer apart.

Renewables

But it is not just the traditional oil and gas industry that makes Scotland’s energy future within the UK so bright.

It’s the new green energy industries too.

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

This is a fantastic story bringing jobs and investment to local communities.

And the pipeline is looking very healthy.

My Department’s planning database shows that Scottish renewables projects set to power a further 4.3 million homes (5GW), have been approved.

Worth around £4bn, supporting over 4,000 jobs.

And further Scottish renewables projects are currently in the planning system have the potential to serve up enough electricity to power another 8 million homes (9.7GW).

Worth over £10bn, supporting almost 8,000 jobs.

This success is being mirrored in other parts of the UK too.

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.

By working together as the United Kingdom, with our integrated systems and markets, we share the risks and costs.

And share the benefits too.

I am convinced that we can meet the ambition of the Scottish Government, one that I fervently share, for renewables sources to meet 100% of Scottish electricity consumption by 2020.

So let’s get down to the heart of why this green future, this green ambition, the interests of both Scotland’s new green energy industry and Scotland’s households are better served within our United Kingdom.

Better off together

These new industries need support to compete as technology matures and costs are reduced.

And because of the success of Scottish renewables, although Scotland accounts for some 10% of electricity sales in the UK, it receives 28% of the support paid by all UK consumers to renewable generators.

And then there are the networks.

£6bn has also been earmarked over the next seven years to upgrade and improve the electricity transmission network in Scotland to support this green boom.

Reaching out to the remotest islands.

Within the United Kingdom, Scotland’s people are protected from the full costs of this necessary transmission work and support for renewables.

All 30 million UK consumers pay an equal share.

Because we are part of an integrated market place.

If Scotland became an independent state, the current integrated energy system could not survive it is current state.

Both the independent Scottish state and the continuing UK would be focussed on serving the best interests of their citizens.

For the continuing United Kingdom, the energy relationship with and independent Scotland would become purely commercial.

The future of European energy is a single competitive market, where we trade our home grown energy and boost our collective energy security.

The UK has interconnectors that transport electricity to and from a number of countries in the rest of Europe and is developing more.

In fact, we already input on average more electricity to England and Wales from France and Belgium, than we do for Scotland.

The current connections to France, Ireland and the Netherlands have the capacity to provide electricity for almost 3.5 million homes (4GW).

And there are new advanced interconnector projects where other European countires could potentially provide electricity for 5 million more (6GW).

These include:

– NEMO to Belgium.

– NSN to Norway.

– And ElecLink to France – through the Channel Tunnel .

All to be operational well before 2020.

The market price is paid for power traded in this way.

The UK does not currently provide financial support for network infrastructure or support generation in these other countries.

Why would we pay over and above the market price for Scottish power?

Poorer apart

In an independent Scotland, only Scottish households and businesses would bear the extra burden of upgrading the Scottish grid and supporting Scottish renewables.

And the analysis we are publishing today sets out how this would add at least £38 to the averages household’s yearly bill.

And £110,000 a year to the bills of a medium sized manufacturing firm.

I say at least.

Because our analysis shows that in some scenarios, where the full costs of supporting large scale Scottish renewables falls to Scottish bill payers alone, it could be as much as £189 extra per year per household, or over £600,000 for a medium sized manufacturing firm.

The SNP insist that the integrated market will continue in its current form.

They insist 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.

They have even gone so far as to claim the continuing UK would face blackouts if it doesn’t play the ball their way.

If that isn’t the negative politics of fear and bullying, I don’t know what is.

And if that is the way the SNP would conduct negotiations on behalf of an independent Scotland, I would seriously fear for the future.

So let me be crystal clear.

As the analysis in the paper published today proves, in the event of independence there would be no need for the continuing UK to support an independent Scottish state’s energy costs to ensure its own security of supply.

The lights will stay on, with or without Scotland as part of the UK.

The SNP insists that the continuing UK will have to buy Scottish electricity to meet our renewables targets.

But why would the continuing UK not instead invest in burgeoning renewables within its own borders?

English and Welsh offshore wind is booming.

England and Wales have huge tidal powers reserves.

And we have more hours of sun in the average year than Scotland.

And with the interconnectors being built to Europe, renewable credits can be sourced from wherever they are cheapest.

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.

And bills in Scotland are likely to rise as a result – by as much as £189 per household.

Despite all this, the SNP insists that bills would go down in an independent Scotland.

They have said they would pay for some social policy costs through general taxation rather than through bills – for things like energy efficiency and supporting the most vulnerable.

But that is just robbing Peter to pay Paul.

Putting these costs into taxation would mean either higher taxes or £175m that can’t be spent in other areas.

Conclusion

The whole point is this.

As the UK we are a family.

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

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.

The United Kingdom provides security and economies of scale that cannot be matched by Scotland alone.

The United Kingdom supports Scotland’s bright energy future – and benefits from it in equal measure.

But its more than just economics.

The United Kingdom is our way of life, our identity, our comfort.

It’s what we built together.

For better and for worse.

We are integrated precisely because we choose to be governed jointly.

And I would urge the people of Scotland not to walk away from our future together.