100 YEARS OF UNIVERSITY OF LONDON LECTURE SERIES – SIR ED DAVEY
Date: 13 February 2020
Birkbeck Clore Management Centre
We live in interesting times.
And twenty-twenty could be one of the most interesting years since 2016.
Remember 2016? The US voted for Donald Trump. The UK voted to leave the EU. And the same British public named the National Environment Research Council’s new boat Boaty McBoatface.
I can confirm that I didn’t predict any of those three outcomes.
So I’m not going to make predictions for 2020. Whether it’s on the US elections.
Or on the challenges of the Brexit negotiations – the first free trade talks in history seeking to make trade less free.
But I do want to talk about the challenge of COP26, this year’s UN climate change talks.
To be hosted in the UK for the first time, this November – just after the US elections. And just as the Brexit negotiations are supposed to be concluding.
Global Britain under Prime Minister Johnson has the chance to lead the world on these vital global climate change talks.
Can our wiff-waff Prime Minister do it?
This lecture may disappoint some, because my intention tonight is not to give you the many reasons why I am sceptical about our Prime Minister – whether it’s Johnson on Trump. Johnson on Brexit. Or Johnson on Climate.
Let me say simply this about the Prime Minister. Now he’s forced to come face-to-face with the reality of Government, and not the rhetoric he’s survived on up till now, it will be interesting to see if he’s been keeping secret some hidden talents all these years.
Instead my intention is to offer some thoughts and some advice on how the British could regain climate leadership this year, and culminate such efforts in Glasgow, by concluding climate talks as successfully as the French did 5 years ago, in Paris.
And I want to divide my lecture into 3 parts, drawing on my 3 years as Secretary of State for Energy and Climate Change. And of course my two years studying part-time at Birkbeck for my MSc in Economics.
For woven through my talk is the tensions and trade-offs between politics and economics. And the insight I hope to provide is based on what is fast becoming my own evolving approach to political leadership, which I would tentatively label liberal realism, applied here to saving our planet.
In the first part of my lecture, I want to argue that the pathway to global climate leadership begins by demonstrating far more credible and urgent climate policies at home. The UK needs both to state that the world is facing a climate emergency, that requires urgent action. And prove that we, at home, are on an emergency footing, taking urgent action ourselves.
Next I will argue that Britain’s climate leadership pathway must include a clear demonstration of how best both to engage ordinary people – voters, citizens – with the climate challenge, and to win their active support for what hitherto have been considered politically challenging policies. So that climate emergency politics become something leaders of all countries want to embrace rather than run away from.
Finally, at the critical international level, the challenge I see is for Britain to conjure up diplomatic magic to bring our fracturing world together for Glasgow’s climate talks, for what may prove to be one of our last best chances to tackle the climate emergency – before the fires burn out of control and the flood levels rise beyond our control.
In a world of Trump, Bolsonaro and Putin – of US-China trade wars, deliberate Amazonian destruction and fossil-fuelled conflicts – I don’t underestimate the scale of this diplomatic challenge.
But a Prime Minister who was serious about Global Britain would surely want to take on that task.
So here’s how.
Britain’s domestic record on tackling climate change is actually quite good when compared internationally – despite the pace of progress slowing in the last four years.
The Climate Change Performance Index – an independent monitoring tool that enables comparison of climate protection efforts and progress made by individual countries – regularly has the UK in the top 10 countries globally.
Some argue our progress is partly down to offshoring our emissions to countries like China – in other words, we have only reduced our emissions because we now import the goods we consume from our countries, rather than making them ourselves. Yet even when we correct for such deindustrialisation, Britain’s climate record does seem to compare favourably with many similar countries.
Nevertheless, it is frustrating to see Conservative Ministers bask in that record, when I would argue any relative success is largely down to the leadership of progressive political parties who have led the way and contributed by far the most – and that we still need to do so much more.
Let’s remember that Britain’s first big intentional step forward was taken under Labour, with the Climate Change Act in 2008. This was without doubt a landmark moment – the world’s first comprehensive climate law, bringing in serious targets, rolling carbon budgets and an independent scrutineer, the Climate Change Committee. This was a huge political statement made possible by the seminal work by Nick Stern – the Economics of Climate Change – itself commissioned by Gordon Brown.
I would then immodestly argue that Britain’s policy framework received a major boost, with the contribution of 2 Liberal Democrat Energy and Climate Change Secretaries of State between 2010 and 2015, Chris Huhne and myself.
It’s true this was a Coalition Government. Yet for Conservatives to take much credit for the progress we made then flies in the face of the many fierce political battles I and other Lib Dems had to wage day in, day out to win for climate policy.
Our strategic blocker was the then Chancellor, George Osborne. He tried, amongst other things, to minimise support for low carbon power, especially renewables. I eventually outfoxed him after a year-long battle over what was then called the Levy Control Framework, a budget control mechanism for the subsidy payments then necessary to expand renewable electricity generation. But it was arguably the toughest fight of the Coalition, given the long term significance of our victory.
Yet Osborne was hardly the only one. From Eric Pickles to Owen Patterson, Conservatives lined up to thwart us.
Pickles in particular tried to stop energy efficiency regulations becoming law – telling me once that “regulations were communist”. I worked my way round Mr Pickles, got my energy efficiency regulation – minimum energy efficiency standards for the private rented sector. So I guess that makes me a Communist!
And Pickles was even worse when it came to using planning policy to stop investment into renewable power. Indeed, to my mind he abused his planning powers as Secretary of State in his mission to try to stop the growth of onshore wind power. At one point I even urged leading lights in the wind industry to take my fellow Cabinet Minister to court, I felt he was overstepping the mark so much, in his efforts to stop our work in renewables.
So it was largely despite the Conservatives rather than because of them, that we managed, inter alia, to nearly quadruple Britain’s renewable power. Make Britain the world leader in offshore wind power. And legislate for green power auctions.
And if you need any more evidence who should take the credit for the climate progress of the Coalition – just looked what happened afterwards: after the 2015 election, the Conservatives effectively banned onshore wind in England and Wales. They slashed solar subsidies far too quickly, decimating an early stage industry. They ditched our world leading carbon, capture and storage competition. Scrapped our zero carbon homes law. Privatised the Green Investment Bank. I could go on.
I recount these facts not simply to score a few political points. Though for me, in this climate contest at least, the Liberal Democrats did win.
My serious reason for this climate history lesson is both to contextualise the need for a much more proactive, urgent British domestic response to the climate emergency, and to evidence that we can make much faster progress, if we choose, and if we have the political will and leadership.
Moreover, the success of Liberal Democrat renewables policy in Government was far more historic than many recognise. I would argue it was an example of liberal realism in action – where we married a progressive vision on climate with a pragmatic and innovative approach to real-world business.
Above all, we did this in what was then a radically new approach to managing subsidies for renewables.
We transformed Britain’s power industry, by switching from an on-demand approach to subsidies – where the developer was guaranteed a particular subsidy level, so long as they met certain criteria – to a competitive model, where the developer couldn’t even be sure they would get any subsidy if another developer were to underbid them.
Our market-based auction policy helped dramatically reduce the price of renewable power, particularly offshore wind power.
Now wind power is price competitive with fossil fuel-generated electricity, even without taking into account the unacceptable cost of the pollution from gas and coal power stations.
To give you a sense of this green economy revolution, let me talk prices. For electricity, prices are quoted as the cost of a unit of electricity, measured in terms of megawatts per hour.
I signed my first major offshore wind farm contract in 2013, at the eye-watering price of £140 per MW/h, – a price nearly 3 times the then market price of power.
And I’ve been criticised by the National Audit Office for signing such early contracts, at such high prices.
But I was right, and they were wrong.
For without pump-priming the industry, as we did, we would not have provided the stability and confidence for the private sector to invest for the long term.
We wouldn’t, for example, have seen the massive investment by Siemens in a wind turbine blade factory in Hull, bringing 1,000 climate jobs to that city.
We wouldn’t have built up competition in the supply chain – that proved so essential to achieving everything from scale economies to manufacturing innovation.
Thanks both to the pump-priming and the competitive subsidy auctions, the price of offshore wind electricity tumbled.
So that after only 6 years, rather than offshore wind power coming in at £140 per MW/h, we saw prices as low as £40 per MW/h. Below the wholesale market price. Heralding a future of subsidy-free green power.
This is nothing short of a revolution in Britain’s electricity generation – and is helping us take coal off the grid far faster than countries like Germany.
And politically, our offshore wind success has made it far more difficult for the Conservatives to reverse our progress, even if they have slowed it.
Indeed, it has become increasingly difficult for even this Government to ignore the increasingly strong economic and financial case for renewables.
Yet Britain has so much more to do, to get our own carbon house in order. This is not a moment for reluctant converts. Given the evidence of dangerous climate change, Britain must be accelerating climate action.
Since it’s clearer than ever that we face a climate emergency, now is not the time for the UK to preen itself, and complacently stroll towards a little more action, some time in the future.
Now is the time to sound the alarm, draw up emergency action plans and act on them.
Let me give a few practical examples of action that we could take in Britain, if we want to show the world we are serious again on our own climate policy.
On green power, the deployment of offshore wind should go faster. And we now need further strategic support for innovation and early deployment of less mature technologies in tidal and marine power – especially tidal lagoons and tidal stream turbines. We must diversify and grow the UK’s future green electricity options, and we have to get serious again about carbon, capture and storage, both for electricity generation and industrial decarbonisation.
And when it comes to back-up power and the storage of electricity, for when the sun doesn’t shine and the wind doesn’t blow, the government has dragged its feet shockingly.
For me, as we tackled the price challenge of green power, the next challenge was always going to be renewables’ intermittency issues.
So from 2021, we will have the option of using cheap Norwegian hydro power as a sort of remote battery back-up for our system. Once National Grid and Noreway’s StattNet have completed the construction of the interconnector cable project I signed off on in March 2015. What will be the world’s longest subsea power cable, will link our power grid to Norway’s. So in seconds, green hydro power can be available.
There’s huge potential for many more such economically sensible, climate-friendly back-up interconnector projects – connecting the UK’s grid to green power in Scandinavia, on the Continent, in the Republic of Ireland and even with Iceland’s abundant geothermal power.
Yet government energy policy has recently languished in indecision. And steered away from the notion of further European integration of our power markets. Brexit ideology above energy market reality.
On storing electricity, using technologies ranging from batteries to pumped hydro storage, the technology-neutral capacity market I established helped incentivise some storage capacity onto the grid. And alongside National Grid’s own development of so-called frequency response services, there has been a quiet revolution in power storage at scale.
But once again, indecision over energy policy has meant the pace of regulation and system design – so crucial for future stages of storage deployment – has simply not had any priority.
This is not the action of a Government seized by a climate emergency.
Of course, our red bus-loving Prime Minister wants us all to believe that when it comes to green transport, we are in the climate fast lane. I’m almost surprised he hasn’t run adverts to that effect on the side of a bus.
And to be fair, it’s true that on green transport, the Government are making some of the right noises and decisions, at long last. From cycling to buses, to High Speed 2, it would be churlish to deny signs of progress potential.
But the threat of the 3rd runway at Heathrow still looms over a truly sustainable transport policy for Britain. Boris Johnson could win genuine climate plaudits, were he to keep his promise, and lie down in front of the Heathrow bulldozers, metaphorically, you understand.
When it comes to electric vehicles, the Government have tried to take credit for bringing forward the ban on new petrol and diesel cars from 2040 to 2035. Yet 2035 still means the UK lags behind the ambition of countries like Sweden, the Netherlands, Ireland, Israel and Denmark who are opting for 2030 or even 2025 in the case of Norway. Many expect even larger countries like Germany to opt for 2030.
If the UK did as well, just imagine the impact on the automotive industry. Just imagine how fast electric vehicle prices will tumble.
Likewise we need far more urgency and leadership when it comes to replacing the methane gas we use as our main energy source for heating space, for heating water and for cooking.
Decarbonising Britain’s heating systems is widely thought to be amongst the most challenging core policy challenges we face this decade.
Experts still seem divided between the electrification of heat, with heat pumps etc, and the possibility of repurposing the existing gas network, boilers and appliances with a zero carbon alternative to methane, such as hydrogen.
Answering this policy choice dilemma ought now to be a priority, but there’s little evidence Ministers are seized of its importance.
Above all, the Government’s failure to launch major hydrogen trials at scale to test the viability of a non-fossil fuel gas for heating looks increasingly like a big mistake.
So from green power through to zero carbon transport and heat, we need far more urgency.
Yet my main demand of Government – to prove greater global leadership by example here in the UK – is to focus on capitalism itself, and the rules of capitalism in the UK.
For if we are going to catalyse the shift from dirty energy to clean energy, and to see a response that is equal to the scale and urgency of the climate emergency challenge, we have to go back to how our current economic system is working.
We have to begin with a philosophy that says markets are our servants, not our masters. And therefore that it is totally legitimate for a democracy to impose new rules and regulations on our capital markets.
Be they London’s Stock Exchange. Or our banks. Pension funds or the debt markets.
And in what I have called the decarbonisation of capitalism, I propose a new set of climate laws for the City, to require the calculation, recognition and integration of climate risk into investment decisions.
From mandatory disclosure and reporting of fossil fuel investments in a financial institution’s balance sheet, to requirements for large firms in the corporate and financial sectors to publish their own long term strategy for moving to net zero.
I’m particularly enthused about new climate accounting rules.
After all, there’s nothing more enthusing than accountancy.
But never forget the accountants, if you want to make money work for you.
Imagine if we required all audits on larger businesses and financial institutions, to include a new set of net zero accounts.
Accounts where any fossil fuel assets on a firm’s balance sheet or investment portfolio after 2045, had to be given a value of zero.
Imagine the impact on share prices and the market’s long term valuation.
People are already discussing the concept of “climate insolvency” – whereby a business or a bank is unable to show any net worth, once its exposure to climate risk and climate valuations are properly revealed.
Such ideas are where truly radical climate policy must now go.
And if Britain were to lead, and be the first to green our financial markets and develop climate capitalism, we really could claim to be global leaders on climate again.
But demonstrating climate leadership at home – walking the walk – is a necessary condition for global climate leadership, it is clearly not sufficient.
To convince the world to follow such a pathway, Britain has to convince world leaders that the climate pathway could work politically for them too.
Given the huge diversity of political systems and energy resources globally, I don’t pretend that will be easy. But my perhaps surprising conclusion is that it may be easier than people think. It will involve taking on vested interests of course. But above all it must involve taking the people with you.
In today’s divided politics, that might seem like a pipe dream.
In Britain, over the past three years, Brexit has torn through our politics infecting and affecting every area of our economy and media.
But a small, hardy band of activists and politicians has successfully managed to get the climate emergency into the headlines.
This has been no mean feat. It has taken organisation, dedication and co-operation between progressives from many different parties and none.
In many businesses, this has taken climate action from being the pet project of a couple of employees or a cheap attempt to seem socially responsible, to a board room priority.
In the media, we have turned the issue from mere “hug a husky” colour supplement coverage into front page headlines and prime-time election debates – blocks of ice included.
In global politics, we have taken it from the disastrous Copenhagen Summit to the Paris agreement, ratified by every nation on the planet baring a few like Iran and Turkey. Although, admittedly, Donald Trump then came to office and preferred to side with Erdogan and the Ayatollah than the rest of the planet.
But the UN’s COP in 2015 was a landmark moment. For many of us who were involved in helping to make it happen, the Paris Agreement and the years of work leading to it, was the most important success of our political careers.
And COP this year in Glasgow is the most important global gathering since Paris in 2015. Britain as host has the chance to map out a new global approach to the climate emergency for the next decade.
But the world is not the same place it was in 2015.
Where there was Obama, we now have Trump.
Where Britain was leading the EU to be more ambitious and exercise global influence, we now have Brexit.
But on the progressive side of the scales, we have new weights we can use to offset the climate deniers. From Greta Thunberg to the School protests. From the evidence from the fires of the Amazon to the burning bushfires of Australia.
Our challenge is to turn the much greater awareness of populations around the world into global political action.
In the UK, we have an opportunity to lead this. Despite everything, we are more united in the need for more action. Throughout our society I sense a greater impatience for that action, now.
But we must harness that impatience to empower this year’s climate talks in Glasgow’s COP to address the climate emergency with urgency – but that will require a new political approach.
We must fling open the doors of the UN’s climate talks to different voices – the campaigners, the NGOs, the charities and a cross-section of politicians – especially those who do not happen to sit behind a mop of blond hair and a despatch box.
Those new voices – from civil society and politicians from political parties across the parliaments and assemblies in our family of nations – must play a much bigger and a much more serious role in scrutinising this Government’s approach to Glasgow’s COP. Before, during and after.
Such a scrutinising group logically follows on from the work currently underway in the Climate Assembly UK – a citizens’ assembly commissioned by 6 cross-party Commons Select Committees, due to report later this spring.
If the UK can demonstrate that such participative, deliberative approaches to forming and informing climate policy can work and have real value, and can help citizens and voters to embrace the changes we need, this could make a powerful contribution to reassuring more sceptical politicians.
Given we know a future net zero economy and society will require changes in everything from how we travel to what we eat, such reassurances have the power to help catalyse more urgent global climate action.
So let me finally focus on COP 26, the UN climate talks in November, and how the UK can use the opportunity of hosting the COP, to regain leadership.
And I should start by wishing Alok Sharma, the new Minister for COP26, appointed today, the very best of luck. Alok now has a vital job to do – and it falls to him to try to reassert UK leadership.
It won’t be easy given the preparations for the COP so far appear to have been shambolic. But it is in everyone’s interests that Alok and the UK succeeds.
So what would success look like?
The key climate objective for this COP is for every country to make new public commitments to taking more ambitions climate action – so that when we add every country’s commitment up together, the world’s combined promises would keep the world below 1.5 degrees.
Let me give a little more background on this – as it is fairly crucial to understanding the challenge.
These country-specific climate commitments are called in the jargon, their Nationally Determined Contributions – or NDCs.
Dreamt up at the Lima COP in Peru in 2014, the NDCs quickly became central to the climate talks especially the crucial Paris Climate Treaty, when most nations began to set out their individual NDCs.
To date, the sum total of published NDCs would leave the world emitting way more greenhouse gases than would be consistent with keeping global warming below 1.5 degrees.
So we need more ambitious climate commitments.
And this year’s Glasgow COP26 would be seen as a success if countries significantly raised their level of ambition in their NDCs, so the world moves to a climate pathway where we are collectively promising to reduce our combined emissions fast enough, to keep warming below 1.5 degrees.
This is a challenging diplomatic ask. And it will become really tough if Donald Trump wins re-election just before Glasgow. Like-minded world leaders could then use American withdrawal from the COP process or American lack of ambition in the COP process, for an excuse not to act.
Remember, the success of the Paris Treaty was partly down to the strong leadership of President Obama.
So what should Boris Johnson be doing – and what should Alok Sharma be doing?
My advice would be to have 4 priority focuses: Europe, China, India and the USA.
Europe first – because the EU as a whole remain easily our closest allies on climate, as on so much. We should keep our European colleagues on the inside, and by our side, throughout the COP.
At the 3 UN COPs when I led the British delegation at the climate talks, we of course caucused and organised within the EU. Sharing a negotiating position with 27 other countries – especially the Germans, French, Spanish, Italians and Portuguese – gave us both clout and reach.
As a group, our collective historic relationships spanned most of the globe.
Plus the European position is already high on climate ambition – not least following the internal EU 2030 agreements I brokered between 2013 and 2014, and the EU’s recent adoption of net zero.
Working closely with our European friends may be challenging to do for thus Government – especially during a year and the final weeks of the Brexit negotiations. But it is essential.
China second. Assuming the Coronavirus is by then under control, and assuming there hasn’t been a dramatic change of heart in Beijing, China could become an ally on ambition – a marked change of position from the past.
Although the Chinese will not want to lead and go public early on pressing for ambition in countries’ NDCs, they do now see economic and security benefits from the climate agenda – coupled with urgent health benefits, from cleaning up urban air pollution.
One of the greatest unsung climate achievements of the UK, has been successive Foreign Secretaries – especially David Milliband and William Hague – allocating significant resource to climate diplomacy in Beijing and Shanghai. My advice would be to reinvigorate such work as soon as possible.
Then India. India is vital in and of itself to any final agreement – but also because of the influence she has elsewhere. The increasing controversies surrounding Prime Minister Modi may or may not make him more willing to lead initiatives – it is genuinely difficult to tell.
Yet significant diplomatic effort to create a moment in the Glasgow sun for the Indian delegation could reap rewards for the COP. Modi gets climate change more than any previous Indian Prime Minister. He has written 2 works on his environmental policies – both called Convenient Action. Solar and wind power are growing exponentially across India. And Modi may well now be thinking of his own personal legacy.
And finally the US. So much depends on what happens on Tuesday 3rd November. Though any climate diplomat should hope for the best and plan for the worst.
And the worst means of course Trump 2. The hope must be that the Republican Party’s political calculations around energy have moved in the last 4 years – wishful thinking though that may be.
But with the rise of Tesla. With solar and wind now producing 10% of US power, and growing fast. And with the impact of climate change an ever greater issue for key Republican bases like US farmers and the US military, there are arguments that can be used.
And they should be.
But you can tell by that whistle stop tour of the world’s major powers that there’s work to do.
The question is – will Prime Minister Johnson be willing to spend sufficient high levels of his political capital abroad on these climate talks – ahead of Brexit and ahead of trade deals?
The jury is out – but it is our collective job to push him every day of every week, throughout this critical year.
So to conclude.
Can the UK regain global leadership on the climate emergency?
It is certainly politically possible. But it will require a dramatic change of pace from the Government.
Whether on domestic climate policy – when March’s Budget will be a clear test.
Or on engagement with the British public – when Ministers need to open up the process very soon to civil society.
Or finally, on diplomacy, where we must begin to see an urgent intensification of effort this Spring, or the opportunity may be lost before we even get to Glasgow.
For my part, I and my part will make campaigning for emergency action at COP26, the top priority for our work in 2020.