Address to the Syndicat des Énergies Renouvelables 15th Annual Symposium

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Edward Davey addresses the Syndicat des Énergies Renouvelables 15th Annual Symposium on Europe`s role in tackling energy and climate change issues.

Introduction

Thank you for your introduction Mr President.

Mr President of the National Assembly, Ministers, Deputies, Senators, mesdames et messieurs:

We have an old saying in English “les événements n’attendent personne”

“Time waits for no man”

The world is changing around us fast.

New centres of economic power and global influence rising in the South and in the East, becoming energy hungry and changing the geopolitics of energy.

New technologies, stimulating our economies, powering our societies, changing the way we live.

And the threat of climate change proven - a threat growing and evident in the changing patterns around us.

The latest UN Inter-Governmental Panel on Climate Change Report makes the situation crystal clear.

Without radical reductions in greenhouse gas emissions, the world is set to be potentially four degrees hotter than today – with serious consequences for our people and the planet.

We’re expecting the UN reports on adaption and mitigation in the next few months.

This will give us further understanding of just how damaging climate change will be for our societies.

So the question the world is facing is not whether we tackle climate change – it is how.

European leadership

For the last few decades, we in Europe, including you here at the Syndicat des Énergies Renouvelables, have been leading the world on the how of tackling climate change.

Developing the new technologies required to decarbonise our societies – and boost our economies at the same time.

Pioneering the financial instruments designed to ensure that decarbonisation makes economic sense.

Embracing the concept of ‘green growth’.

The UK Government has an unwavering commitment to emission reduction through green growth.

Our domestic legislation, framed in the ground breaking 2008 Climate Change Act, commits us to progressive emissions reductions through to 2050.

Our Carbon Budgets system keeps us on track.

And today, with the publication of our emissions statistics for 2012, I can announce that the UK has met its first carbon budget for 2008-2012, with a reduction of 22.5% below base level, well beyond the 12.5% required of us by the Kyoto Protocol.

And like France we bring our commitment to tackle climate change to the European level

I have been working hard with my fellow Ministers in Europe to establish the Green Growth Group - an informal grouping of 13 like-minded EU Member States, including France, dedicated to working together to help drive Europe in a low-carbon, pro-growth direction.

Working with my dear colleague, Phillipe Martin.

I want to see Europe’s global leadership role continue.

So I was why I was greatly encouraged by the Commission’s proposals for a 2030 emissions reduction target for Europe of at least 40%.

Because emissions reduction is the criterion by which we measure success.

It is the only target that matters for tackling climate change.

It’s the measure used in global climate change talks.

Only by being ambitious on emissions reductions can we maintain leadership and influence countries like the US and China, ahead of 2015’s critical global climate talks.

We are already working closely with the French Government on the Europe 2030 target.

I pledge today – publicly – we will work side by side with you to make sure the key Paris climate change conference in 2015 will be a success.

The planet needs it to be.

2030 framework

Here in Europe, 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 becoming the rear view mirror.

You in France have a saying too “Autres temps, autres mœurs.”

“New times require new values”.

In 2007, when the 2020 Framework was put in place, practically no EU Member State had established climate policies;

Most renewables technologies were immature;

And we were at the peak of an economic boom.

Now, seven years later, renewable technology is maturing and other technologies like Carbon Capture and Storage, new nuclear and energy efficiency are set to contribute to the low-carbon mix over the coming years.

And We are in a different economic environment that is challenging European countries to address competitiveness and growth.

As we reduce emissions, we have to take advantage of the opportunities for low-carbon growth. Green Growth.

And we have to maintain competitiveness as we transition to a low-carbon green economy.

So the 2030 Framework has to be fit for a new time.

But Before I turn to the key role renewables can play, let me just dwell on what I mean by the Green Growth opportunity.

Green growth

The global low carbon and environmental business market is now worth around €4 trillion a year and is expected to grow at over 4% a year for the foreseeable future.

And Europe has carved out a 22% leading share of this global market worth over €900 billion a year and supporting around 8 million European jobs, including in renewables.

But we are far from alone in embracing the opportunity green growth has to offer.

Our competitors, especially China and the US, are aggressively targeting low carbon business.

Global clean energy investments have grown sixfold since 2004 to nearly €195bn a year.

China is investing over $1.2 trillion in its green economy between 2011 and 2015.

The US is securing record sums in clean energy and 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.

But it also throws down a huge challenge for Europe.

The EU’s share of global clean energy investment has fallen from 40% in 2009 to just 25% today.

We need to reverse that decline – attracting private sector investment into low-carbon energy.

We need to provide a stable policy framework and that is what an ambitious 2030 Framework must do, alongside reform of the Emissions Trading System.

But we cannot ignore the issue of competitiveness.

Let me be clear, EU climate change policy is not driven by industrial policy.

But the two have to go hand in hand.

Because we are going to have to build our way to a new energy society -and take our citizens and businesses with us.

Competitiveness

At the present time, the United States pays a third of the price European countries pay for gas imports and one fifth of the price of imports to Japan.

Japan and Europe pay more than twice the price for electricity than US consumers, with China paying double.

The sheer scale of international energy price differentials, particularly with the US, can have a significant effect on competitiveness and exports.

And so an effect on where carbon emissions occur.

But if we to address these price differentials properly, we need to recognise why they have occurred.

Some have chosen to focus on the cost of subsidising low-carbon electricity generation in Europe as the reason for the differentials with the US.

But this does not bear close scrutiny.

For the vast bulk of the UK and European economy you could abolish all green levies and all climate change policies, and it would still not make significant inroads into the energy price differentials with the United States.

Why?

Because there has been a strategic change in the terms of trade between the US and the rest of the world.

Due to shale gas.

As the latest IEA investigation into energy and international competitiveness sets out, lower prices in the US are primarily driven by the exploitation of their shale gas reserves and relative lack of export capacity.

This has driven down both gas and electricity prices in the US, relative to Europe and Asia.

So the problem is not climate change action.

It’s the shale gas revolution we have to respond to.

So what is the answer?

Well it’s clear we have to get our own house in order, so that we in Europe can trade our energy properly and bear down on prices.

And this goes further than the 2030 Framework.

First, we must step up the integration and interconnection of European energy markets so that countries can buy clean, competitive, low carbon electricity from wherever it is cheapest.

That means across Europe we must fully implement the EU’s energy liberalisation legislation by the end of next year and facilitate investment in the physical links that make the interconnections possible.

So wind from Northern Europe can flow south.

And sun from Southern Europe can flow north.

There are so many advantages the single energy market offers renewable energy.

And the UK and France should be better linked.

We believe interconnection between the UK and France could be boosted by up to 5GW with a number of Projects of Common Interest being pursued.

So we must look at the opportunities that regional projects can offer to drive this process.

A key project for the UK and Northern Europe is the innovative work to explore how a North Sea Offshore Grid could support investment and cross-border trading in offshore wind, wave and tidal energy.

You heard it here first – a British Minister calling for a European supergrid.

Second, we must develop strategies and invest more and urgently in focused R&D and innovation for Europe’s energy intensive industries that go beyond the sticking plaster of State Aid and, dramatically cut the energy usage and/or carbon emissions from our energy intensive industries.

Energy efficiency through major new technology.

Third, unless the potential of home-grown electricity and gas production is unlocked, in the UK and across Europe, we won’t see downward pressures on prices strong enough to offset fast rising demand.

That must include renewable energy, above all.

But for Britain it will include unlocking the potential for European shale gas.

And whether gas is unconventional or not, lets remember, gas is much better for the environment than coal when generating electricity, with half the carbon footprint.

With the climate change imperative to take coal out of the mix, and with commercially viable carbon capture and storage still some way off, gas provides a bridge to the future.

Not at the expense of renewables and other low carbon energy generation, but complementary to them.

Within this context a 40% emissions reduction target for 2030 is eminently achievable for Europe.

And, frankly, it is the least we should be aiming for.

We believe climate change science suggest Europe will need to be more ambitious.

The UK Government believes that, in the context of a global deal 2015, a 50% target should be on the table.

Renewable Energy

So what role will renewables play in this 2030 scenario?

Quite simply - without renewables we cannot hope to achieve the emissions reductions that are required.

So the UK is committed to renewable energy, now, to 2020, and far beyond.

From a low starting position in 2007, I am pleased to report that renewable energy in the UK is booming.

Renewable electricity generation in the UK has more than doubled since 2010.

Up to 15% of British electricity now comes from renewables – enough energy to power more than 10 million homes - halfway to our objective of generating around 30% of our electricity from renewable sources by 2020.

Indeed I believe we are on track to beat our renewable electricity targets for 2020.

Offshore wind is a particular success.

The UK has more offshore wind operating turbines deployed in the sea than anywhere else in the world, and is internationally recognised as the best place to invest.

Last year alone electricity generated from offshore wind leapt by 51%.

I am determined to see the UK retain its global lead in this sector and we have set out the framework to achieve that.

The first contracts under our new regime should be signed in the spring. And more projects should receive contracts later this year.

We have a range of developers investing in offshore wind.

And, in many cases, these are new players to the UK market, which is very welcome.

The progress we have made means that offshore wind is moving from a niche sector to a moremature, mainstream renewable technology.

But we can do more.

Cost reduction is crucial to the long-term success of offshore wind.

I am clear that cost reduction is achievable and that offshore wind can play a very large role not just before 2020 – but out to 2030 and beyond.

You here at SER have been very supportive.

And I am pleased that you will be running your fourth edition of ‘Windustry’ in Lille this year to help strengthen industrial collaboration between Britain and France in this vital area.

But it’s not just wind.

Across the renewables sector the UK pipeline is looking impressive.

Since 2010, £31 billion worth of private sector investment in renewable electricity has been announced with the potential to support over 35,000 jobs across the UK.

And now the stable regime we have put in place under our new Energy Act is creating the world’s first low carbon electricity market and has the potential to unlock additional investments of at least £40 billion in renewable electricity generation projects up to 2020.

Wind – offshore and onshore – solar, biomass, Tidal.

The key elements of our reforms are aimed to secure this massive private investment.

Contracts are for the long term.

Prices are visible.

And the legal, financial and political framework we are putting in place is designed to last, not just for the next few years, but reaches out ten, twenty, thirty years into the future.

So we are confident that we have a domestic framework that means a bright future for renewables in the UK.

Renewable technologies have been maturing over the last decade.

Some technologies are now approaching grid parity - ready to compete directly with fossil fuels.

But others still have some way to go.

The good news is that costs are coming down all the time.

In the UK, there has been a reduction of almost three-quarters in raw solar PV costs over recent years.

Support rates needed for onshore wind reduced by 10% last year.

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

Flexibility

So at an EU level, our Framework for 2030 needs to take account of changed circumstance.

Not just those I set out with regard to investment and competitiveness, but including how far renewable technology has already developed.

And we need to take account of the low-carbon mix taking shape in each Member State.

I am clear, we cannot reach our emissions reductions targets without renewables.

But I am equally clear, renewables are not the only technologies we have to pursue.

Both the UK and France remain committed to nuclear power playing an important role in electricity generation, and bringing down emissions.

Just last week, at the Franco-British Summit, I met with Phillipe Martin to discuss taking forward co-operation on nuclear power, as well as on interconnection and renewables.

Our nuclear partnership has already borne fruit with the UK Governments agreeing key commercial terms with EDF to build the first British nuclear power station in a generation.

But it is not just nuclear.

Take CCS. Without Carbon Capture and Storage being rolled out in the near future, the chances of dealing with emissions globally are severely damaged.

The EU should put itself in the forefront of CCS development, both for the climate and the commercial opportunities for our companies.

Carbon capture and storage, nuclear, hydrogen, gas in place of coal – they all have an important part to play if, globally, we are going to bring down greenhouse gases.

That is why the UK believes we need a technology neutral approach to how individual countries meet their emissions targets.

In the UK, our electricity market reforms are aimed at mobilising the power of the market and competition to determine the low-carbon electricity mix in the 2020s.

Our focus will be on overall decarbonisation of the power sector rather than technology specific targets.

Indeed, we are legislating now for the UK to have its own power sector decarbonisation target for 2030, to be set in 2016, that will drive the electricity market competition between renewables, nuclear and CCS.

All low carbon technologies will play key rolkes in our future – but the winning technology will be the most cost-effective and will get the largest market share in the next decade.

So we believe we must move away from hard, binding technology-based targets and allow the market to determine the low carbon mix.

We should not limit investment and innovation in one low-carbon area - at the expense of another.

And we should not define for each country their low carbon energy mix.

This may sound challenging to the renewables sector. It isn’t. It’s a huge opportunity.

Our analysis shows that an ambitious emission reduction target that France and UK are backing in Europe will still stimulate massive investment in renewables across the EU, but without all the inflexibility, costs and risks of a technology specific target.

Conclusion

So mesdames et messieurs, the goal is clear.

A 2030 Framework based around an ambitious emissions reduction target so that Europe play a leading role in tackling global climate change.

A Framework that maintains European competitiveness and boosts investment and green growth – hand in hand with an integrated and interconnected European energy market that bears down on costs for consumers and businesses through competition.

A Framework that prices carbon effectively and discriminates in favour of all low-carbon technologies, and away from fossil fuels.

In this future, the role of renewables remains vital.

In this future, Europe’s energy security is strengthened.

In this future, we can demonstrate that going green means going for growth.

And in this future, Europe leads.

ENDS

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