`The climate risk opportunity`

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Speech by Baroness Verma to BusinessGreen Leaders Forum, Managing Climate Risk & Building Climate Resilience

Thank you for inviting me to this important event and for giving me the opportunity to meet so many business leaders.

Business leaders, entrepreneurs, investors and key decision makers who all share one common threat. You get the threat we all face from dangerous man made climate change.

But you are not just passive observer of great change, you get this. Climate change is a real risk that we all need to address. The dangers of Climate Change are just too big to be left to government alone.

The Climate Change Risk Assessment, published last year, shows that unless global action is taken to respond to climate change, the UK could incur significant costs and miss out on important business opportunities, both at home and abroad.

This call to action will see us shift our whole economy towards a low carbon, resource efficient path.

By 2050, this path will lead our electricity generation to have near zero carbon emissions.

By 2020, 15% of our energy generation will be from renewable sources.

The vision is ambitious but achievable and this is a path abundant with opportunities for UK businesses.

Indeed, the CBI recently estimated that a third of the UK’s growth in recent years has come from the green sector.

We had a £5 billion trade surplus in green goods and services in 2011-12 and the sector employs close to a million people – that’s on par with the UK’s financial services sector.

So working to decarbonise our energy sector isn’t just the right thing to do for our planet – it is the right thing to do for our economy too and is helping us to compete in the global race for jobs and growth.

By working together can maintain UK competitiveness whilst laying the foundations for strong and sustainable growth in the future and, crucially, ensure that we are delivering the best possible value for hard-pressed consumers.

But before I go any further, let me turn to the three key points that I’d like to make today:

  1. How far the UK has already come in driving green growth
  2. The opportunity to go further through innovation
  3. importance of collaboration between government & industry

How far the UK has already come in driving green growth

Our Energy Bill is set to drive the necessary £110 billion of investment in our energy infrastructure, helping to secure low carbon growth at the lowest possible cost to the consumer.

The Green Investment Bank has also been up and running for a year.

The first of its kind, the bank has a total of £3.8 billion to specifically invest in green infrastructure.

Examples of investments to date include:

£100 million towards the conversion of the Drax power station in Selby.

£125 million to finance the Green Deal.

£45.6 million in the Walney offshore wind farm off Cumbria.

Since 2010, DECC has recorded industry announcements, regarding investments in large scale renewable energy, totalling over £29 billion, with the potential to support around 30,000 jobs.

Renewable generation is just one part of the market in green goods and services, a market worth £3.4 trillion globally.

At the start of this year, we launched our flagship programme to help improve the energy efficiency of British homes and businesses.

It’s still early days for the twenty year Green Deal programme but already we are seeing significant interest.

81% of people who have received Green Deal Advice report that they had, were getting or would get energy saving measures installed.

And the Green Deal is supporting jobs, with up to 60,000 expected in the insulation sector alone by 2015 – that’s more than double the 26,000 employed in 2012.

The opportunity to go further through innovation

To my second point, energy is one of the biggest opportunities to kick-start growth and boost employment but we need to be more forward-thinking, speedier and more innovative.

To get us to our 2050 target we need innovation in a wide range of low carbon energy technologies.

Innovation will not just bring down the costs of deploying these new low carbon technologies but it will also drive down the energy cost to the consumer.

Such is the importance of innovation that we expect to invest in excess of £1 billion, in this spending review period, to directly support innovation in a broad portfolio of low carbon technologies.

We’re investing in:

Offshore wind, which has the potential to add £200 billion to the economy up to 2050.

We are already seeing success with the Prime Minister opening the London Array on the 4th of July.

With its 175 wind turbines, this is the largest offshore wind farm in the world.

We’re also investing in nuclear, which is clearly a key growth industry that provides highly skilled jobs.

EDF anticipate their new nuclear power plant at Hinkley Point C will employ up to 25,000 people over the course of construction.

We have a £1 billion competition in Carbon Capture and Storage to help the UK bridge the electricity generation gap between fossil fuels and renewables.

The importance of collaboration between government & industry

Lastly, collaboration between government and industry is central to delivering the task of decarbonising our economy at the lowest possible cost to the consumer.

We want to ensure that UK-based businesses can effectively compete for low carbon opportunities, including those arising in wind power, wave and tidal energy, nuclear power, greener building technologies & ultra-low-carbon transport.

We published 11 sector Industrial Strategies which set out the long-term, whole government approach to how we support business to give confidence now for investment and growth.

DECC’s Innovation Programme directly supports over 150 companies, over 60 of which are SMEs.

The department for Business, Innovation and Skills has a range of programmes too. Funds such as the Regional Growth Fund and the Advanced Manufacturing Supply Chain Fund are there to encourage investment across sectors and regions.

Last year the government’s Offshore Renewable Energy (ORE) Catapult became operational.

Overseen by the Technology Strategy Board, the ORE catapult will stimulate capacity building, innovation and improvement in business competiveness with over £1 billion of private and public investment.

Closing remarks

So in conclusion, the vision for a low carbon future has been set.

The tools have been laid out.

We cannot be complacent about the path to reach our 2050 goals.

But equally it’s important that we recognise the huge business and investment opportunities that decarbonising the UK’s economy brings and the importance of ensuring that this is delivered in a way that is affordable for hard-pressed consumers.

As well as the value that the green goods and services sector can bring in terms of helping the UK to compete in the global race.

Thank you.

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