Now as someone whose party recently got trounced in the polls, who is not going to be in Government for the next 5 years, you may be wondering what’s the point of this speech?
I can't give you any insider tips on policy direction. I can talk a bit later on, and I will, about where I think the Labour Government will go and what I think they might get wrong.
But really, I thought the most useful thing for all of you, is that in Opposition, no-one screens what I say anymore…
So you have in front of you that very rare thing – a completely unfiltered politician…. And I plan to use that newfound freedom to its full extent today….
Because in our space – the world of energy and net zero – I believe there is a battle of ideas that needs to take place.
If we don’t engage properly with the challenges we face - how to best achieve lower global carbon emissions and domestic energy that is reliable and cheap – the consequences will be enormous, not just in this country but around the world.
So, I hope today I can share some of my thoughts from my time in Government. And ultimately, my main goal is to leave you all thinking….
And I’ll start here. The Left like to say the difference between my way of thinking and theirs is this: that they are the climate believers and we are the climate deniers.
But that’s manifestly nonsense and everyone in this room will know that.
It was under successive Conservative Governments that we became the first country in the G20 to have halved carbon emissions but we did that whilst growing the economy, largely driven by the enormous amount of clean energy we’ve brought into the electricity system and by coming off of coal. We’re one of a handful of countries to have done this.
I myself made my maiden speech in Parliament on the importance of renewable energy back in 2019 and I first met the current Secretary of State because the only all party parliamentary group I ever joined was on green finance.
So actually, the main difference between our current positions is this:
I think we are too focused on domestic emissions. We are 1% of global emissions overall. And I think we should be more focused on the role that Britain can play in the 99% of emissions that are happening elsewhere.
To just focus on the 1% is to set our sights too small.
It's too small for Britain, when we have so much to offer when it comes to innovation, and it’s too small for all of the workers in this room and their expertise.
The truth is that climate change is a global issue which needs global solutions, and we shouldn’t limit ourselves to only playing a role in our own 1% of emissions.
That 99%, that for me, is the ball game.
So. Let me explain a few areas where I believe the current approach of the Labour Government will fall into difficulties.
I know the Secretary of State will have said to you this morning, that we need to build every possible solar farm and wind turbine going. And that that will deliver us cheap energy.
But everybody in this room will know that renewables are not cheap in every single scenario. It depends on the price you pay for them. That sounds obvious, right?
If we spend the next 5 years bidding up the price of solar and wind then actually we could be increasing the price of electricity here at home.
If we overload our system with intermittents before planning and the grid can catch up then we’ll pay more in curtailments, if we don’t have a plan for the back up for when the wind doesn’t blow and the sun doesn’t shine, then we could be making the overall system of electricity much more expensive.
And if we rush ahead too soon, then we also miss out on the chance to build up British supply chains, and we’ll likely see more and more imports of turbines, cables, batteries and critical minerals, from China.
So it’s not the case that every single scenario with renewables you make energy cheaper in this country…
And it’s not the case that in every single scenario, you reduce our reliance on foreign regimes.
So come back my argument about the 1%, that’s not just important here.
Of course, as a British politician my priority is British billpayers and British jobs.
But this is also important because the 99% are watching.
At the moment, there is a handful of countries who are fully embarking on the clean energy project. But many more are looking on.
If we don’t get this agenda right in the UK and similarly minded countries, then the entire global agenda around clean energy could fall.
Developing countries will always need to prioritise access to cheap energy because that is the pathway to prosperity for their people.
If we make energy clean but expensive in the UK, then we will be world-leading – that’s for sure – but no-one’s going to follow our lead.
In fact we’d actually be adding to global carbon emissions, because we would simply be driving our businesses abroad to countries with cheaper and more polluting systems.
And you can see that happening in refineries, in steel, in other industrial sectors at the moment.
If a factory moves from the UK which has virtually eliminated coal to a country which is say 60% powered by coal. That is worse for global emissions. That’s worse for climate change.
That’s why on our drive for clean, if we care about climate change overall, we cannot lose focus on the need for cheap energy.
The second point that I’ll make is on global market distortion.
We should be looking at the overall impact on bills here. But we should also look at the price being paid here compared to auctions around the world.
If we pay over the odds in Britain, then far from driving down green premiums for other less wealthy countries we could be pricing other countries out.
Now we’ve seen this over the last few years, when there was an energy crisis or a need to procure vaccines, wealthy countries were able to pay up and other less wealthy countries were priced out. That is how global markets work.
But if you think that climate change is a global challenge, and if you think there is a time limit to us reducing overall emissions, then you have to ask whether that approach makes sense.
Because we are in a global race for energy.
In my view, demand in countries like Britain is actually going to go up – despite what some in my former Department used to tell me - because of energy hungry data centres, and the potential need for air cooling systems in the summer.
And in developing countries around the world, the priority of my counterparts in energy will be to lift their people into prosperity through cheap energy. There are still 600 million people in Africa who have no access to electricity.
If the choice is between a fossil fuel power system that they can build now or a power system which is expensive with supply chain constraints then of course they’ll pick the former.
That’s why pricing is important, not just for British billpayers but when you’re thinking about a global energy transition.
The third point I will make is about innovation and the Government’s 2030 target.
As I said, I think innovation is the biggest contribution that Britain has to make to climate change.
And my worry is that because of this new, rushed, and likely expensive domestic target, we are going to lose focus on the innovation of all the technologies which mainly come on stream after 2030.
Fusion energy. Small modular reactors. Space solar. Carbon capture. Carbon removals.
These could be some of the most important achievements from Britain when it comes to climate change.
However, none will be ready at scale by 2030. Some won’t be mainly operable in this country, like carbon removals.
And therefore I worry the current Secretary of State’s approach will mean Britian is losing out on the chance to play a much larger role, a role focused on the 99%.
That means losing out on the exports, investments and jobs that come with the creation, in your country, of what become globally dominant technologies.
A focus on the 1% alone is also leading us to a system of ever-narrowing targets specifying which product will be sold to which consumers at which prices, and in which quantities, as decided by the Government.
That is ultimately a centrally planned model for an economy – it's just happening by the back door.
And what do we know about centrally planned economies?
Well, you end up with mountains of butter and lakes of milk and factories piled high with mink that nobody wants to buy.
Because what you're risking as a Government, ultimately, is directing productive capital to parts of the economy which might not be the most productive.
And the people who that ultimately hurts are not just the taxpayer whose money you’ve wasted, or the billpayer whose energy is more expensive, but it’s also the people in this room.
I want you all to work in the most productive sectors globally, and I want that to happen here in Britain. I don’t want you to watch whilst those jobs are being created abroad.
And that’s why I argued in post for a more technologically agnostic approach. An approach which ultimately makes space for innovation and allows different technologies to compete with the most productive ones winning out.
If I think about just the workers in this room, not the companies that you represent, not the sectors that you're here for, just the workers in this room… I want you to be in the most productive jobs possible.
I want you to be working on the best energy technologies that can be created, and in order to do that, you need to have a more free-market system than we have now.
One of the things I was constantly told, including by some in my department, was that all the technologies we need had been invented and this was now just a question of delivery and implementation.
But I would point out that this has never been true. Not for the entire history of humanity. And never in the face of a major global challenge like this one.
So I would like to see a system where Government doesn’t tie itself, or industry, into ever-more-prescriptive targets and quotas. I want to see a system which leaves much more room for innovation.
Yes, Government can provide support and encouragement. That’s why I launched the £1 billion Green Industries Growth Accelerator, and supported the growth of British developers of carbon capture, hydrogen, nuclear, fusion and others.
But our objective must be to develop these and other technologies and think about that export potential, not just domestic implementation here.
And here is one of the risks of Labour’s approach with GB Energy. It’s actually a repeat of the Gordon Brown playbook.
Labour are very good at naming things with catchy titles. But when it comes to the small print, they can't tell you what any of those things will actually do.
The National Wealth Fund has been immediately folded into the UK Infrastructure Bank, and GB Energy, I’m afraid to say, is a copy and paste job – again, from the UK Infrastructure Bank legislation.
Apart from one particular change. It gives the Secretary of State powers to direct funds. That’s not quite the independent energy company that all of you were being sold just a few months ago.
And far from focusing on emerging technologies, at the moment, the primary focus seems to be mature technologies.
And the risk there is this: that it just displaces private sector capital, doesn’t speed up decarbonisation, or lower bills for households.
So in closing, let me say this: Our workers in Britain are some of the most skilled in the world.
We have some of the world’s best innovators, and both of those things are particularly true when it comes to the energy industry.
And so my message to the new Government is this:
In our drive towards clean energy, let’s not forget that cheap energy is just as important.
As we look at the 1% of global emissions that are happening here in Britain, let’s not forget about the 99% that happens outside our borders.
I want to see this energy transition happen. But I want to see that happen in a way that works for Britain.
We need to get out of the trap of limiting our sights to the 1% of emissions that happen in Britain. The Government’s thinking too small. We need to think bigger.
We need to think about the 99%.
Thank you.
