Thank you very much, it’s a great pleasure to be here and also a great pleasure to have it completely confirmed that it’s ok to only talk about one of my jobs this evening. And actually I’d much rather talk about climate change.  It would be the obvious thing to talk about, even if you hadn’t specified it, because of course the Climate Change Committee did, on Monday, produce our first report...

I’m very pleased also that I’m talking to such a wide array of people from the Public Sector and from Government because actually Government now has a very major challenge of taking forward the recommendations that we have made.  Obviously consumers and business have a challenge as well, but there is a crucial role for Government both in its own operations, and its own carbon footprint but also, obviously, in policy.  We have now proposed a set of targets for reducing carbon emissions; we have described that we believe that it is possible to achieve that, but there is a lot work now to make sure that we do actually achieve it.

The Climate Change Act sets up an innovation in the governance of carbon emissions across the world, because it commits the UK Government to establishing legally binding limits on carbon emissions, legally binding carbon budgets, as they are called, for each five-year period throughout this century starting from (20)08 to (20)12 then (20)13 to (20)17 onwards.  For each, it says we are going to define a total amount of carbon that the UK will emit.  The Government will be breaking the law if we emit more than that.

Now, there are probably some people here from the Ministry of Justice, and they could have a lovely debate as to what it means when the Government breaks the law.  Indeed if the Government breaks the law, what happens?  Do we take the Secretary of State for the Department for Energy and Climate Change off to the Tower and deal with him or her appropriately?!  Actually, whatever you think it means legally, what it clearly does mean is a very very strong political commitment to setting targets and then sticking to them.  The way that the system has been set up, once the Government accepts our recommendations, and I’ll come to that in a minute, it is very difficult for them to escape the pressure to meet them.  The other thing that the Bill says is that in setting the targets, the budgets that we will have, the Climate Change Committee has a role in advising on those targets and making recommendations – which is what we did on Monday morning.  The Government then has to take those, decide whether it accepts or changes those and then it has to put it to affirmative resolutions to both Houses of Parliament to put those into Law.  Then, thereafter, every year we (the CCC) produce a report monitoring against progress, which has to be laid before Parliament and the Secretary of State has to give an account for.

I think, whatever you think of the legal position, this is going to create a very strong sense of an independent pressure on Government to achieve a reduction in carbon emissions.  I think this is very welcome, moreover, that this Act has gone through Parliament with almost total cross-party support.  I can’t remember the precise figures, but in the final vote in the Commons, it was something like 450 votes for and 3 votes against.  You can have a good search of the internet to find out who these three people were and they include some famous mavericks.  As there are, in our Lordships House as well, some famous sceptics. 

The Climate Change Committee has, therefore, been working, throughout this year, to produce our first report and what we were charged with doing was first of all recommending what the emissions target should be to 2050, and then setting proposals for the first three budgets (20)08 to (20)12, (20)13 to (20)17 and (20)18 to (20)22.  What we have said, in brief, is this:

First that the UK should aim by 2050 to have its carbon emissions, actually its total greenhouse gas emissions, not just CO2 the other gasses as well, 80% below 1990 level.  Despite the fact that we’ve cut those emissions by 13% in the last 18 years, it is still 77% below the current level.  Now some of you may doubt that, because when people tell you that you’ve cut by 13% already and to get to 80% you have to cut another 77% they say that can’t be right, but I assure you it is.  If you sit down with a calculator and a piece of paper, that’s how percentage reductions work, 77% reduction from the current level. 

We’ve said that, first of all by working out what the world has to do, to have a climate which will warm, it will warm.  It’s almost certain that the global climate will warm by about two degrees, perhaps more that two degrees, that’s almost unstoppable now.  But we want to make sure it doesn’t warm by three or four degrees, because once you get to that level of warming there could be really very harmful welfare effects and beyond four degrees frankly, catastrophic effects on human welfare.

So our aim is to make sure that we don’t get there.  We believe that in order not to get there at the world level we have to have global emissions down from about 45 giga-tons today to something like 20 to 24 giga-tons by 2050 a 50% or so reduction at the global level.  Then when we work out what might be a reasonable UK share of a global deal that gets us to a 50% reduction a figure of 80% looks good. 

We’ve then also said, however, that we are looking at the 2020 budgets and we’ve recommended budgets to 2020 which do three things.  One, they have to be budgets which get us on a path to 2050, there’s no point in like St. Augustin deciding to be good but not quite yet.  If we want to get there by 2050 we have to be on that path, which is in the direction by 2020.  Secondly, we need a set of targets for 2020 which are reasonably compatible with what we have agreed at European level as well, because Europe has a clear set of climate targets.  It is the actual legal negotiator in the Kyoto framework, because environment is a very clear European Union competence, one of the key levers to pursue emissions reduction is the European Emissions Trading Scheme.  So what we do must logically fit within the European framework.  The third criteria we used in thinking about the 2020 targets was, ‘what was doable?’  If you look sector by sector at transport, at road transport, at aviation, at agriculture, in the residential homes, in business, what’s doable?   Then we said ‘do these three things sit together?’  Can we set a budget which makes sense as a path to 2050, which is in line with the policy commitments which we’d made at European level and which is doable on a bottom-up basis on that sector by sector analysis? We are convinced that they are. 

We’ve set out actually two targets.  The European Union has a sort of two-fold approach to what the 2020 targets should be.  It talks about cutting at least by 20% greenhouse gasses by 2020 unilaterally but by 30% if there is a global deal at Copenhagen next year.  We’ve actually suggested a similar pattern for the UK, which is at least a 21% cut on a unilateral basis and a 34% cut on the basis of a global deal at Copenhagen next year.

Again that makes sense as an approach that we are going to the rest of the world and saying there is quite a lot we are willing to do unilaterally, there’s even more that we are willing to do as part of a global deal in which everybody is pulling in the same direction. 

So, let’s say 80% cut, 77% from today by 2050, 34% by 2020, that’s what we’d really want to occur because we want there to be a successful global deal at Copenhagen.  Well how are we going to do that and what is it going to cost? 

All our cost estimates suggest that the cost of getting there by 2050 will be no more than 1% or 2% of GDP sacrificed at that level.  There probably is a net economic cost, but it’s not huge.  Also even getting there to 2020, which is in a sense a harder target because we have to get going from a bit of a standing start, we think the cost of getting those reductions by 2020 will be less than 1% of GDP.  We think the cost of that is well below the harm which would occur if we and the world failed to take action on climate change. 

So I guess the interesting thing is why are we so confident that by 2050 we can reduce our greenhouse gas emissions by 77% from the current level at a cost at GDP of only 1% to 2%?  The answer is that when we look at the technologies which are becoming available, when we look at the opportunities to save energy and to improve energy efficiency which already exist, even without new technologies, and when we look at the opportunities for people to make behavioural changes which are relatively small, not major changes in lifestyle, but simply being sensible, and you add up all that and work out the cost it’s not nearly as expensive as you might fear. 

Let me just give you an idea, across the different sectors, of what needs to change.  I was talking to a Sunday Times journalist today and he kept on bringing me back to ‘stop talking about GDP figures and overall targets, I want to know when Mr & Mrs Ordinary get up out of their bed in 2020 how different will the world be?’  Well let me say a few things that talk to that.

First of all I said there are some things that are going to change that Mr & Mrs Smith, Mr & Mrs Patel and Mr & Mrs Whoever-it-is won’t notice.  Because they will switch on the electricity switch and they’ll still get electricity out of it, but the carbon intensity of that electricity will be dramatically reduced.  The metric to think of here is at the moment every time we on average consume a kilo-watt hour of electricity we put up about half a kilogram, 500 grams, of CO2 into the atmosphere.  We think we can have that figure down to 300 grams by 2020 to below 100 grams by 2030 and to well below 50 grams by 2050.

So one of the things we are doing which will not be visible to as it quotes ‘the ordinary citizen’ in their ordinary life is the electricity will have much less carbon attached to it.  And how are we going to do that, we are going to do it fundamentally through a mix of three different technologies, bundles of technologies.  One of which is renewables, primarily to begin with wind but subsequently other renewables such as wave and tidal.  Nuclear as well, we do believe that nuclear is a cost efficient technology.  I know that it is controversial for some people and we recognise that and we say that we understand that some people don’t like it in principle but if in principle it is acceptable we believe that it stacks up in cost.  The third technology is carbon capture and storage, still running fossil fuel plants but taking out the carbon from those.

You run all those together and I think we should have a very high confidence that by 2030 we can have reduced the carbon intensity of electricity already then by 80%, more than 80% - from 500 grams per kilo-watt hour to below 100 grams per kilo-watt hour.  It turns out that that is a very important thing to do, not just because of the carbon emissions that come from electricity generation today, at the moment about 25% of our greenhouse gas emissions come from electricity generation.  So you might think well we’re just attacking that 25% of the problem, but actually electricity is probably even more important than that suggests.  Because once we’ve de-carbonised electricity we will almost certainly apply electricity to parts of the economy, parts of activity where we don’t apply it at the moment.  If you turn to transport we believe that we probably are on the verge of quite a significant take off of the use of electricity in transport – electric cars.  I see that Boris Johnson has volunteered to buy an electric car as long as it’s a very very big one.  I’m confident that somebody will make the car that Boris wants.

We believe that it is quite possible that by 2020, 40% of the new cars being bought will either be plug-in hybrids or pure electric.  Of course that doesn’t mean 40% of the cars on the road, because it then takes you a time to churn out the stock, but it does mean that 10 years later it’s 40% of the cars on the road.  If you look at what the car manufacturers are planning we are on the verge of major new product launches of electric cars.  Actually, an interesting point which I didn’t realise is, even if the electricity takes 500 grams per kilo-watt hour, electric cars are already more efficient than internal combustion engine cars in terms of carbon efficiency.  Because although you lose all that carbon when you actually generate it, and there’s a lot of energy in the transformation process in electricity generation, it’s less inefficient than what goes on in an internal combustion engine.  An internal combustion engine only turns about a third of the energy in the fuel into kinetic energy whereas once you have an electric motor as long as the electricity is coming from low-carbon sources something like 90% is turning into real kinetic energy in the car.  So a major revolution, we believe, can occur in surface transport.

We also believe that electricity will be applied increasingly over the years to the production of heat in homes.  But well before we get to that there is a huge opportunity in residential homes, without new technologies, simply to improve the efficiency of our insulation and to improve the efficiency of our existing electrical appliances.

If you look at an early 20th century UK home, probably some of you live in such a home around London, in the streets of Fulham or somewhere like that, a classic sort of turn-of-the-century London house and you heat it up, unless you’ve been very very thoughtful about your insulation and your double glazing, about two-thirds of the energy you’re using is not actually heating the house it’s heating the air outside the house.  We can do a lot to stop that.  One of the easy ‘wins’ for us to get early reductions in carbon emissions is simply to do things like insulate lofts better, put in double glazing, put in more efficient boilers etc.  The interesting thing about those opportunities is they don’t cost the economy or individuals anything, if anything they make money for people, they have a high rate of return.  The cost curve analysis that we do they end up as negative a forms of project.

Now of course, if you are a theoretical economist, -and I am a theoretical economist in many ways,  I know not all of us want to be a theoretical economist but some of us have to be -  this is a deeply worrying fact that there is a negative cost opportunities that no-body has seized, possibilities to do things and be better off than before.  You have to understand a theoretical economist is a person who sees a ten pound note on a pavement and refuses to pick it up because he knows it isn’t there, because if it was there someone would have picked it up already.

But it turns out that actually because of all the inertia and hassle effects that prevent us doing sensible things there are opportunities all the way across the economy to improve efficiency in ways which actually make us money. 

So there are a whole range of things that we can do, we can de-carbonise our electricity, we can introduce electricity into surface transport at the car and light van level.  The future for heavy-goods vehicles may eventually be bio-fuels or hydrogen.  We can apply electricity more efficiently to the heating of homes through ground-source heat pumps and air-source heat pumps and we can adjust our behaviour in small but sensible ways.  There are quite a lot of offices throughout London where you have people in the winter taking off their jackets because it’s heated to slightly too hot and in the summer making sure they keep their jacket on because the air-conditioning has been set too low.  There are simply sensible things we can do, and I bet they exist in Public Sector buildings as well as private, to be sensible about forms of behaviour like that.

There are also things we can do in agriculture, a sector that we looked at and which we need to get to grips with.  We can also drive our cars more efficiently, indeed there’s three million tonnes of CO2 we could achieve a saving of immediately if everybody just obeyed the motorway speed limits.  That is there as  a recommendation - I’ve yet to receive the Jeremy Clarkson counter-blast to this terrible invasion of personal freedom.

So, the report is there, we’ve launched it and I think we now turn over the next year to beginning to monitor progress against that which, of course, will become more and more interesting as we go through the years. 

The thing I wanted to end up with here is if you think about the role of the Public Sector in this there is hardly an area of Government which does not have a role to play, or an element of Public Sector that does not have a role to play, in this agenda.  If we talk about delivery in Public Sector, the Public Sector that actually delivers end services to consumers - Schools, Hospitals etc. – are major emitters of carbon.  Emitters of carbon from 2012 are going to be subject to the Carbon Reduction Commitment, emitters of carbon which we ought to be trying to make beacons of best practice rather than in some cases laggards.  There are major opportunities throughout those sectors to improve our carbon emissions. 

If we talk about the policy development across all the areas of government we need to pursue objectives.  Department for Transport has very important objectives in relation to cars, in relation to light vans, a very important issue, and indeed all the modes of transport.

Local Government areas and the issues of the housing stock, enforcement of building codes, incredibly important issues in the area of the policy on electricity generation, and I could go on…

I think it is clear that across the whole of these different areas of Government there are roles to play and indeed one of the things that we going to do, we are going to try do by September next year,  is to do a sort of logic tree  - if we are going to meet the budget that we have set out in terms of a reduction of carbon emissions and greenhouse gas emissions overall, if that has got to reduce by that, break it up into a logic tree of what are all the intermediate things that have to happen, grams per kilometre per car, grams per kilo-watt hour of electricity, number of kilometres travelled, number of re-charging points available on the streets for people to re-charge electric cars.  We are going to break it back to a whole load of intermediate things that we will be measuring which tell us, not only are we on target now, but given where we are on those intermediate things, are we going to be on target when we look in three or four years time. 

So I hope that by next year we will have for many of you created something which you may not thank us for but, is a new set of intermediate targets which will have to be met if we are going to meet this overall target of getting our carbon and greenhouse gas emissions down by 80% by 2050.

Thank you very much.