Ladies and gentlemen can I start by thanking Sir Tom McKillop and the Royal Bank of Scotland for co-hosting this event and congratulate him for the excellent work which RBS is doing to finance investment in low carbon projects and support research into new technologies, particularly renewables.  You really are a testament to the ways in which business can be energized by a low carbon strategy and a model for the businesses represented at this summit today.   

When I first proposed holding this conference - last November - the price of oil was dollars a barrel, up from just dollars a year before.  Today it is over 0 dollars. 

The resulting energy and fuel price rises are hurting families and businesses - and pose a real risk of increased instability and damage to the global economy. 

This makes our summit today particularly well timed.  For every country of the world is having to face up to the consequences of this global change.   And I want to tell you today what I believe this means for us here in Britain.

Our response must have two elements.  First, we need to facilitate a reduction in short-term global oil prices through commitments to greater investment and transparency in the market.  Second, we must set out a clear strategy to reduce, progressively over time, our dependence on oil.  And these elements are importantly linked: by reducing demand in the future – and hence giving greater certainty and creating a more stable oil market – we can help reduce prices today.

That is why I went to Jeddah last Sunday to urge a new deal between oil producing and consuming nations, based on greater transparency about medium and long term trends in supply and demand.  I am pleased to say the conference agreed steps to improve common understanding of the market.   Consumers and producers also agreed to work together to ensure that there is sufficient access to capital and technology to bring new oil supplies onstream, often in increasingly difficult physical conditions around the world, and to improve energy efficiency. We will take this work forward through a follow-up conference in London at the end of this year.

But although our aim must be to get the high current oil price down, we also need to recognise the need in the future to take a new course. Let’s be in no doubt: our economic and social prosperity – today and in the next generation – requires us to progressively reduce our dependence on oil.  All our needs as a country, all our goals as an economy, point in the same direction. To tackle climate change, to improve energy security, and to create jobs and stimulate business growth: to achieve all of these, we need to reduce our demand for energy, and to develop and deploy alternatives to fossil fuels.

And this is not just true for Britain.  Every country in the world – the developed world, the emerging economies like China and India, and, yes, the oil producing nations too – now shares a common interest in this transition to a low carbon global economy.   For the threat of climate change – the prospect, as Stern put it, of the global economy suffering damage in this century equivalent to the two world wars and Great Depression of the last – is a threat to the prosperity and security of the whole world.   

No-one should under-estimate the scale of this endeavour.  Meeting our climate change goals requires Britain to become a ‘clean economy’: that is, to replace traditional fossil fuels with low carbon sources of energy right across the country, and to do so at much lower levels of energy demand than currently projected.  And we must start now.  To have a chance of stabilizing the global climate at 2 degrees celsius above pre-industrial times – that is, to avoid dangerous climate change - the International Panel on Climate Change has shown that global emissions need to be at least halved by 2050. And to achieve that, emissions need to peak in the next 10 to 15 years. 

This is a big challenge.  A challenge that requires courage and leadership.  But it is a challenge which doesn’t daunt me; on the contrary, it inspires me.  For I believe that the benefits to British families and business of reducing oil dependence and tackling climate change will be immense:

·        an improvement in our energy security because we have more diverse supplies;

·        a reduction in projected energy bills for consumers and businesses;

·        and the creation of hundreds of thousands of new jobs and business opportunities to meet the new demand for environmental goods and services.  And this is the biggest prize of all: the chance to seize the economic future - securing our prosperity as a nation by reaping the benefits of the global transition to a clean economy. 

For the fact is that, in the 21^st century, the global low carbon economy will be a key driver of our economic prosperity.  

Look at the way this happened in the past: when the steam engine, the internal combustion engine and the microprocessor transformed not just technology but the whole economy: the way society was organised and the way people lived.  Now we are about to embark on a fourth technological transformation - to low carbon energy and energy efficiency.  And in their wake – as before – will come a myriad of changes in the way we live, the way we move around, the way we run our businesses, the things we produce and consume - which will make the low-carbon economy a new engine of productivity and economic growth.

Globally, it is estimated that environmental industries – including renewable and nuclear energy, waste management, pollution control, energy efficient products and so on - will be worth 0 billion dollars by 2010 – equal to the size of the global aerospace industry. And by 2050 the overall added value of the low carbon energy sector could be as high as trillion dollars per year worldwide, employing more than 25 million people.

My goal is simple: I want Britain to take a disproportionate share of these jobs.    

Today in Britain our environmental sector is flourishing – over 400,000 people employed in 17,000 companies, with an annual turnover of £25 billion pounds. 

We are already leading in offshore wind, integrated pollution control, energy control systems, carbon trading, water and waste management, and environmental instruments and monitoring.

But the opportunities for the future are even larger:  if Britain simply maintains its share of global growth we could have over a million people employed in our environmental industries within the next two decades.  So building our own low carbon economy – and helping one to be built worldwide by achieving an international climate change agreement next year - offers us the chance to create thousands of new British businesses and hundreds of thousands of new British jobs.

As Britain was to the age of steam and California was to the age of silicon, so in the clean energy age I want Britain again to be a beacon of innovation and wealth creation. 

Indeed, just as America led the way in the industrial age creating a mass of high paying blue collar jobs, I want Britain to lead the way in the environmental age creating new green collar jobs.

Already many British companies are succeeding and growing in this field, many of them here today.  I want to help more companies to grow like yours have, and to help them grow bigger and faster --- developing and commercializing new technologies, creating jobs, and reaping the rewards of export markets. 

So let me set out for you our strategy to build Low Carbon Britain. 

Our first priority is to provide the fundamental economic conditions for jobs and business success: economic stability, low inflation, competitive markets and an entrepreneurial, pro-business culture.   This Government has built the foundations on which our prosperity over the last decade has been built and we will never put these at risk.   

Second, we are setting a clear, credible, long-term policy framework --- because we know that only this will encourage businesses to invest and accelerate the development of low carbon products and services.

Through the Climate Change Bill we are the first country to put into legislation a statutory cap on our emissions ---- with five-year carbon budgets set on the advice of an independent climate change committee providing certainty for investors, business and consumers.

Under the Bill every new policy will be examined for its impact on carbon emissions - not just those which reduce emissions, but those which increase them.  Where emissions rise in one sector, we will have to achieve corresponding falls in another.

And within this overall framework, we are establishing long-term low carbon policies across our economy.

In energy, for example, we have committed to meeting our share of the EU target for 20 per cent of energy supply to come from renewable sources by 2020.

In transport, we are proposing that the EU adopt an ambitious target of reducing, by 2020, average CO2 emissions of new cars to 100 grammes per km, providing real incentives for the development of new low-carbon engine technologies. 

In housing, we have agreed a timetable for all new homes in Britain to be zero carbon from 2016 – with new commercial buildings to meet this target in 2019. 

And it is by setting and holding to these long-term policies that we will drive investment and innovation in energy efficiency and in alternatives to fossil fuels.

Third, we want to reduce energy demand.  We need to see a step change in the efficiency with which this country uses energy --- not just to reduce carbon emissions but because it can cut the bills of every household and every business that is now feeling the squeeze of higher energy prices. 

Our aim is that within a decade:

• every householder able to do so fits loft or cavity wall insulation, installs low energy light bulbs, and uses low-energy consumer goods;
• and every business is able to manage its energy bill through efficiency measures.

So building on our new one-stop shop for consumer advice and information on greener consumer behaviour, I can announce today that the Government will shortly begin a new advertising campaign showing people what they can do now to reduce their energy and fuel bills - simple things like turning off standby and fitting new showerheads.

Over the next three years 5 million more homes will benefit from discounted or free loft and cavity wall insulation, and another 3 million will get discounted or free energy efficient appliances.

And we have agreed with the main energy companies that by 2011 they will spend a total of £150 million pounds a year to help their most vulnerable customers, including through social tariffs, trust funds, rebates and debt advice.

It is important to emphasise the importance of these measures.  Making our homes energy efficient is not some green policy of interest only to enthusiasts for cavity wall insulation.  It is the simplest, most effective, way in which families and businesses can reduce their energy bills, and governments can help them.  Altogether, households that install insulation, have more efficient electrical appliances and use energy efficient lightbulbs can save up to 20 per cent - an average of £170 pounds a year - off their energy bills. 

So later this summer we will announce new incentives to help households reduce their energy bills even further. 

And in the autumn we will consult on a new Suppliers Obligation aimed at changing the way in which energy companies operate ----- incentivising them not to supply ever more units of electricity and gas, but to make profits from reducing not increasing demand. 

The fourth element of our approach is a major drive to move to clean energy supply.

For two hundred years, coal, oil and gas have supplied the British economy with the plentiful and secure energy that has powered our progress and our prosperity.

But over the coming decades we must move from a largely fossil fuel based economy to one primarily powered by low carbon energy ------ particularly renewables and nuclear - and when it can work commercially, carbon capture and storage. 

At present around 8 per cent of total energy supply in Britain is from low carbon sources: 2 per cent from renewables, and 6 per cent from nuclear.

In order to meet our global climate targets, by 2050 virtually all energy for electricity and most of the energy used for heating, cooling and transport in our country will have to come from low carbon sources.

And because we need to replace a third of our electricity generating capacity in the next twenty years and most of the new plants will still be operating in 2050, we must start this technological transformation now.

After extensive public consultation, the Government confirmed its view earlier this year that it will be in Britain's long-term interest - both to secure a diverse range of energy supplies and to reduce emissions - to replace our ageing fleet of nuclear power stations with new ones. 

Now we are taking the steps needed to make sure these plants get built.  Despite opposition from some, we are reforming the planning system to reduce unnecessary delays. The nuclear inspectorate is getting extra resources to make sure the new plants will be safe.  We have come forward with a plan to work with local communities on safely disposing of nuclear waste. And the Department for Business will make sure British businesses and workers benefit as the new stations get built.

Today we launch the next major element in our low carbon energy plan - the consultation on a new Renewable Energy Strategy. 

Last year I committed the UK to fulfilling our share of the EU renewables target.  This means, by 2020, increasing the proportion of our energy coming from renewable sources to 15 per cent.  Now we are setting out how we will achieve this.  And let me tell you: this is a green revolution in the making.  It will be a tenfold increase on our current deployment of renewables, and a 300 per cent increase on our existing plans: the most dramatic change in our energy policy since the advent of nuclear power. 

It will require an investment programme of around £100 billion pounds over the next twelve years. 

It will mean – by 2020 - renewables accounting for over 30 per cent of electricity supply, 14 per cent of heat supply and up to 10 per cent of transport fuels.

It will save an additional 20 million tonnes of carbon dioxide a year. 

And it will reduce our gas imports by up to 16 per cent.

So what does this mean in real terms?

Well first, it will turn the North Sea and our other coastal waters into the equivalent for wind-power of what the Gulf of Arabia is for the oil industry.   This year Britain will surpass Denmark as the country with the highest operating offshore wind capacity in the world, at over 400 megawatts.   By 2020 we will have installed around 14 gigawatts – that is around three thousand offshore wind turbines, meeting up to 50 per cent of our renewable electricity.  The North Sea has now passed its peak of oil and gas supply -- but it will now embark on a new transformation into the global centre of the offshore wind industry. 

And yes, there will have to be more windfarms onshore too.  And we are determined that they will be sited in the right not the wrong places, and that local communities will benefit from them. 

We will also need to increase substantially the energy we derive from waste and biomass.  

We will build new systems of decentralised energy – including microgeneration technologies like solar, micro-CHP and ground source heat pumps – again with the benefits flowing to local communities and householders. 

And in the longer term, we will need more tidal and wave power.  Our environmental and economic assessment of a tidal scheme in the Severn - which could in itself supply 5 per cent of the country’s electricity needs - is now well under way.

Of course, it will be for the private sector to make the investments in these technologies.  But today the Government is setting out how – right across the board - we will get rid of all the obstacles that have in the past held renewables back. 

John Hutton will announce the details later this morning, but some of the key elements on which we will consult include:

• one - raising the level of the Renewables Obligation and extending it to 2040;
• two - introducing financial incentives such as feed-in tariffs or equivalent mechanisms to bring on renewable heat, decentralised energy and microgeneration;
• three - removing, without delay, the barriers that currently prevent renewable generators connecting to the national grid;
• four - changing the planning system to speed up renewable applications, requiring regional and local authorities to plan for renewables, and giving local communities a real stake in them;
• and five - reducing delays and objections to new renewable installations from the Ministry of Defence, civil aviation and shipping.

And because I know that achievement of these targets needs more than a strategy on paper - it needs practical delivery on the ground: we will examine - as we are doing for nuclear - how Government across Whitehall works to facilitate investment and to overcome operational obstacles.

And in all this we will ensure that the costs for families and for businesses remain affordable – with a clear focus on keeping prices down. 

Increasing our renewable energy sources in these ways, on this scale, will require national purpose and a shared national endeavour.  So today I want to launch a serious national debate about how we are to achieve our targets. 

And let me say that the reforms in our Planning Bill passed by the House of Commons yesterday are absolutely essential to delivering this.  This poses a real challenge to the other major parties – you cannot ask to be taken seriously in your commitment to low carbon energy if you do not provide for the means for it to be achieved.  Real politics is not about being a pressure group; it is about taking hard decisions.

On planning - as with all the other long-term challenges facing Britain - I had hoped it was possible to build a consensus for action, both in the country and across Parliament.

It is a grave disappointment that the Opposition have chosen not just to duck the issue, but to vote against all the reforms we are making, committing themselves to repeal those reforms if they ever got into power.

The final element in our approach to building a low carbon Britain is to ensure that it is British businesses and British jobs which benefit from the low carbon policies we put in place. 

We estimate that our renewables programme on its own will generate around 160,000 jobs.  Our new nuclear build programme will create approximately 100,000. There will be many thousands more from energy efficiency measures.  The Government is determined that as many as possible of these – and the millions of comparable jobs being created across Europe and the world - will be in Britain. 

So we will work with our Regional Development Agencies and Devolved Administrations to identify key constraints in the supply chain and encourage British businesses to overcome them.

We will identify and correct the skill shortages that may impede the manufacture and deployment of low carbon technologies.

And we will work with industry on a new low-carbon manufacturing strategy to ensure that we are equipped to be world leaders in securing value and jobs from the growth in low carbon markets - including electric and hybrid cars, low carbon aerospace and low carbon construction, along with the associated environmental services and finance. 

I can also tell you today that we will increase our commitment to supporting innovation in renewable and other low carbon technologies, with the aim of making Britain one of the world’s leading centres for alternative energy R&D.

That is why we are raising the Research Council's energy programme to £300 million pounds over the next three years - and creating up to one billion pounds worth of R&D spending through the new public-private Energy Technologies Institute. We are incentivising new technologies through the tax system – for example with our R&D tax credit and lower rates of Vehicle Excise Duty for cleaner cars.  And the £400 million pound domestic Environmental Transformation Fund will then help to bring new technologies to market.

We are also the first government in the EU to launch a competition for a commercial-scale demonstration of carbon capture and storage – essential in a world in which coal and gas will continue to be burned. &nbs