Tag: Ed Davey

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.

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

Introduction

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

It feels like I’ve never really been away.

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

Visiting new energy projects.

Seeing the incredible progress being made in Scottish renewables.

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

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

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

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

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

Being here with you is business as usual for me.

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

And I want to celebrate that today.

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

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

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

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

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

But let me start with the progress being made.

Progress

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

That has now increased to 40%.

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

As a whole the United Kingdom is making phenomenal progress.

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

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

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

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

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

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

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

Many on the continent are casting envious glances our way.

And the pipeline is looking very healthy.

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

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

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

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

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

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

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

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

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

Energy Act 2013

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

Now it is law.

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

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

This sends out a strong message.

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

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

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

Certainty, stability, predictability.

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

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

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

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

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

Auction design is now being developed.

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

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

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

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

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

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

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

In a world where carbon is properly priced.

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

Costs are already reducing.

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

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

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

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

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

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

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

Because I recognise the huge and complex issues you face.

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

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

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

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

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

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

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

And that brings me to my final point today.

Scotland in the United Kingdom

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

Whether to stay within the United Kingdom family.

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

I don’t have a vote in this.

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

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

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

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

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

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

Why?

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

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

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

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

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

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

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

As a United Kingdom, we act as a family.

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

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

This is business as usual in the United Kingdom.

It’s the way we do things.

It’s natural.

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

Instead everyone across the UK pays their fair share.

And the money goes where the money is needed.

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

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

Sharing support, sharing benefits and sharing costs.

Scotland alone

But this positive case also leads to the negative.

We are an integrated, border-blind, market.

What happens if there is a border?

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

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

Around 4.5%. A very small proportion.

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

We would have to strike a new deal.

I have experience in negotiating cross-border energy deals.

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

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

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

Negotiating post-independence energy contracts would be no different.

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

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

But let me be frank.

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

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

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

Scotland alone would need to subsidise its remoter parts.

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

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

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

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

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

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

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

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

But this goes against all commercial logic.

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

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

Conclusion

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

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

These things should not be trivialised.

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

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

I see success and I celebrate it.

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

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

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

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

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

Investment, consent, construction and generation.

Scotland – a world-leading renewables energy hub.

The United Kingdom – the best place to do business.

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

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

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

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

As Paul King wrote in the Conference supplement:

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

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

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

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

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

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

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

The challenge

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

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

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

Taking control of their consumption.

Becoming smart savers.

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

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

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

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

Together, that’s our challenge.

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

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

Progress

So we need to remember what’s been achieved.

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

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

Because of the work you’ve done.

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

Over three quarters of homes have double glazing throughout.

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

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

But of course more needs to be done.

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

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

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

Over five million homes could benefit from cavity wall insulation.

And almost eight million solid wall homes remain untreated.

A lot of potential business.

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

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

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

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

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

So let me turn to ECO and the Green Deal.

Energy efficiency policy framework

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

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

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

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

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

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

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

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

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

Yet the prize remains large.

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

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

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

So let me start with improving ECO.

ECO

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

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

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

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

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

But of course ECO does have a cost.

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

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

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

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

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

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

And they have not been cut back.

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

These principles will continue to underpin ECO.

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

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

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

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

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

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

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

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

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

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

Driving the energy efficiency market

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

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

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

That is the underlying proposition of the Green Deal.

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

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

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

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

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

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

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

And we need to tackle that.

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

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

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

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

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

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

Nonetheless, we need more outcomes.

We need the Green Deal to help deliver more activity.

More investment.

More energy efficiency.

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

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

The assessment process needs to be improved.

And the old incentives weren’t taken up.

So what do we need?

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

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

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

Where are we on delivering these?

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

It started off too clunky and too complex.

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

And where to go for more advice.

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

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

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

Vital for the privately rented sector.

Let me be completely candid on this.

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

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

And we’ve corrected it.

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

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

And there is more work in train.

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

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

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

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

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

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

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

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

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

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

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

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

Again we’re taking advice from the industry.

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

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

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

Conclusion

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

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

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

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

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

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

Working with manufacturers and retailers will be part of this.

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

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

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

Just like the roll out of smart meters.

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

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

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

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

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

So there is action being taken across the piece

But the vision for energy efficiency is clear.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SETTING THE SCENE – ECONOMIC & STRATEGIC CHALLENGES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Third, Europe is facing an unprecedented energy investment challenge.

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

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

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

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

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

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

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

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

HOW SHOULD EUROPE RESPOND?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

CONCLUSION

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

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

Thank you.

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

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

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

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

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

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

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

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

The taxes you pay.

The 660,000 jobs the industry supports.

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

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

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

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

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

SERVE THE PUBLIC

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

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

You’ve admitted as much to me.

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

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

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

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

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

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

And that means opening up.

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

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

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

But let me start first with that energy security challenge.

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

ENERGY SECURITY CHALLENGE

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

Energy is the largest infrastructure programme across government.

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

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

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

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

This includes upstream extraction as well as infrastructure and networks.

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

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

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

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

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

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

ENERGY BILL

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

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

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

Significant political consensus, worth reminding people of.

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

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

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

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

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

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

And much more is in the pipeline.

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

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

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

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

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

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

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

RISING BILLS

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

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

So we do need our energy companies to be profitable.

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

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

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

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

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

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

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

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

Because without profit we won’t get investment.

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

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

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

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

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

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

REDUCING BILLS

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

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

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

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

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

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

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

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

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

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

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

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

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

Price fixing would crush competition rather than encourage it.

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

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

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

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

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

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

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

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

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

And that is what I want to concentrate on now.

Competition works.

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

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

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

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

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

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

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

OPENNESS

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

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

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

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

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

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

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

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

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

This should not be a reactive process.

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

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

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

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

But trust is only one part of the equation.

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

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

RETAIL MARKET REFORM

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

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

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

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

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

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

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

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

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

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

So our reforms are opening up the retail market.

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

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

I am determined that this trend continues.

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

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

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

WHOLESALE MARKET REFORM

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

Here the UK’s performance is poor.

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

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

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

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

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

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

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

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

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

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

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

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

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

If abuses are found they must be addressed.

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

So I can be clear with you.

The CMA has teeth.

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

So trust is about playing by the rules.

And rules have to be enforced.

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

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

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

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

Set the right rules and enforce them properly.

That is what we are doing.

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

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

CONCLUSION

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

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

There is no quick fix.

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

That is the bad old days of conflict and division.

We need to make sure we keep bills affordable.

But we also need our energy sector fit and healthy.

Delivering the power we need.

Delivering jobs and economic growth.

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

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

And I know that you are rising to this challenge.

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

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

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

Introduction

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

Edinburgh is one of the great European cities.

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

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

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

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

People in Scotland have embraced renewable technology.

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

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

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

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

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

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

Committed to creating a market that incentivises clean energy.

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

And what is that ambition?

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

Playing a leading role internationally in tackling climate change.

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

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

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

The challenge

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

Not either/or.

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

I need to meet both objectives when making decisions.

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

Let me give you three.

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

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

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

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

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

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

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

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

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

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

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

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

Even shale gas is not the silver bullet people think.

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

Climate Change

And, of course, there is a third reality.

Climate Change.

Climate Change is a real and present danger.

The scientific evidence is overwhelming.

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

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

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

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

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

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

We have to reduce carbon emissions.

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

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

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

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

Increasing efficiency, reducing waste.

To achieve this we need to recognise one last reality.

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

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

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

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

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

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

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

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

Green growth with Scottish renewables

And what a success story it is.

You all know the statistics.

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

Over 35% of electricity used here generated by renewables.

A massive source of inward investment.

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

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

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

This is green growth.

These are green jobs.

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

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

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

The new Aikengall 2 windfarm – 100 new green jobs.

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

And it’s not just the big companies.

It’s the small ones too.

From overseas and home grown.

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

Take some of the members of Scottish Renewables.

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

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

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

Gaia Wind – the fastest growing private firm in Scotland.

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

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

This is the future.

Because the world is not standing still to watch.

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

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

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

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

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

So this is a global race.

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

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

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

Electricity Market Reform

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

But energy is the largest producer of emissions.

Much can be done through energy efficiency.

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

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

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

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

The current electricity market can’t deliver that.

First, because it is skewed to fossil fuel capacity.

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

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

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

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

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

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

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

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

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

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

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

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

And that is what I am doing.

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

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

And this is a powerful pitch.

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

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

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

Stronger together

And this brings me to my final point today.

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

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

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

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

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

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

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

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

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

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

But commitment and ability to deliver are two different things.

My point is this.

An independent Scotland will be just that – independent.

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

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

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

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

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

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

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

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

These are the uncertainties that independence will bring.

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

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

Divergence isn’t just possible – it is likely.

Devolution is working for Scottish renewables.

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

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

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

Together we have the best of both worlds.

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

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

Conclusion

So let me conclude ladies and gentlemen with this.

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

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

And with this drive comes growth and jobs.

Green growth and green jobs.

Scotland has been showing the way.

You have been showing the way.

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

Powering the United Kingdom, and protecting our planet.

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

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

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

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

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

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

Joint endeavour

But my key message today is this:

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

Energy efficiency can be a huge boost to your firms.

But it’s not going to happen overnight.

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

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

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

I want you to be ready to take advantage.

Because this is a joint endeavour.

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

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

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

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

Together, we need to get this right:

To help people struggling with rising energy costs;

To help get the economy moving again;

And to be part of the climate change solution.

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

Climate change

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

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

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

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

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

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

Energy bills

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

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

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

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

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

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

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

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

Green growth

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

An opportunity for green growth.

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

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

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

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

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

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

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

And just look at the size of the market.

Almost eight million homes potentially needing solid wall insulation.

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

Over six million could get more loft insulation.

And this is just the tip of the iceberg.

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

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

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

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

The energy efficiency market place

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

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

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

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

How is it all going?

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

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

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

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

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

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

Big companies and networks approved to oversee things.

75 Assessor organisations are registered.

And over 600 installer organisations too.

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

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

Conclusion

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

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

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

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

This is a joint endeavour, working together.

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

Help us help you get this market going.

Help us get you working on people’s homes;

Replacing their boilers.

Insulating their walls.

Double-glazing their windows.

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

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

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

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

It will be a fabulous achievement.

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

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

I hope you’re in.