Environment: Low-carbon Technologies

Lord Smith of Finsbury Excerpts

Wednesday 14th July 2010 Lords Chamber

[Lord Smith of Finsbury]

My Lords, I join in the thanks to my noble friend Lord Haskel for initiating this important debate, and I echo my noble friend Lord Giddens’s warm congratulations to my noble friend Lord Prescott on his typically robust, well informed and passionate maiden speech. I join in the warm welcome that my noble friend has been given on all sides of your Lordships’ House.

As chairman of the Environment Agency, I am acutely aware of the reality of climate change. The agency stands at the point where environmental change, changing weather patterns and the challenge of climate change have their greatest impact on individuals and their lives. We have to deal with the increasing incidence of flooding, the increasing threat of drought, the extremes of weather that we are increasingly going to experience, the difficulties of scarce water resources that we may well encounter in years to come and the impact that climate change is having and will increasingly have on biodiversity.

The report issued this week through the United Nations by Pavan Sukhdev that looks at the economic importance of biodiversity is likely to be as important in many ways as the Stern report was in looking at the economics of climate change itself. The conclusion, of course, has to be something that is almost universally agreed across all sides of this House: we have to reduce our carbon emission as a country, and we need to make the shift as rapidly and sensibly as we can to a low-carbon economy.

My noble friend Lord Prescott graphically outlined the disappointments of the Copenhagen process. He himself played a game-changing role in the original Kyoto conference, and the progress that he was outlining to us needs to be a real possibility for the future. There is, however, a temptation for us to take the view that because Copenhagen was such a disappointment, and because other countries have not signed up in legal form to carbon and other greenhouse gas emission reductions, we should therefore not do anything ourselves. We cannot and should not wait for the rest of the world to take action.

My central point today, and the reason why the topic that my noble friend Lord Haskel has chosen is so important, is that insisting on high environmental standards and driving low-carbon emissions presents an economic opportunity for this country, not a potential burden. A huge potential market is opening up now around the world for low-carbon technologies, innovative products and carbon-free ways of generating and using electricity and of finding new products to ensure that we can continue as a developed world—and, I hope, as a developing world—to have high standards of living but in a low-carbon way.

There are real opportunities here, but unless we insist on those high standards and put in place both the regulation and the incentives to ensure that industry responds, we are not going to seize them. Look at what happened, for example, when wind technology began to take off. It was Danish and German companies that seized the opportunity, invested in product design and made the products. Now, if we want to buy wind turbines, we frequently have to go abroad to purchase them.

A recent report by PricewaterhouseCoopers surveyed businesses across the world at a very senior level. The result of that research was that there was a common thread across the whole business community: they got the seriousness of climate change and they wanted to be part of the low-carbon future, but they wanted certainty and clarity from government in order to enable them to get there. That is why I welcome the coalition’s commitment to putting a floor price in place for carbon. That is probably the most important thing that can possibly be done in order to get that clarity and certainty. Of course it needs to be done in the right way, at the right place and with the right prognosis for the carbon price in place as well, but it presents a real opportunity.

There are three obvious areas, among many, where government decisions, actions, incentives and investment can help. The first is carbon capture and storage. The coalition Government have, rightly, committed themselves to continuing with the four demonstration projects that the previous Government put in place. I welcome that. We need to get on with it, though; we need to ensure that we are ahead of the game, using the advantages that we have with regard to this technology. We have much more usable carbon storage areas under the North Sea than many other countries do—let us turn that to our advantage and develop this technology quickly.

The second area is electric cars. The full carbon benefit of electric cars comes only when we decarbonise electricity production, but none the less we know that it will take years for the technology of electric cars to be fully developed so we ought to be putting the effort in now.

The third area is wave and tidal power. We have done far too little as a country up to now in the research that is needed into the development of wave and tidal. We are a country surrounded by waves and tides; we ought to be able to use these forces of nature to our advantage. We need the Government to provide the right framework, to stimulate the research and early development that are needed, to support innovation, to help with the provision of essential infrastructure, to require standards and, yes, to insist on regulation where necessary, and then the marketplace will respond. It needs to be a partnership between the Government putting the framework in place and the market then doing what the market does best, which is to innovate and be entrepreneurial and develop the products and sell them to those who wish to purchase them.

I am pleased that this development of the low-carbon economy has been such a priority item in the agreement that formed the coalition. There now needs to be urgency about its implementation.