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No area of business will be affected more quickly or more significantly by the United Nations climate negotiations in Copenhagen than the energy industry. The world needs to be on a path to “decarbonise” its electricity supplies, transform how transport infrastructure is powered and significantly reduce domestic demand for energy. And with scientists telling us that emissions need to peak by 2020, that transformation must begin right away.
These times of transformation are when new industries and innovative businesses prosper, to the benefit of the economy. It will be the strength of particular businesses that determines whether they or their competitors succeed as the world makes the necessary transition to a low carbon economy. Success, however, requires action from government. This means creating the right conditions at home and securing a good global deal on climate change.
Copenhagen must provide a deal consistent with the scientific view and give clear targets for emissions reductions for all developed countries. Only with certainty about the scale and speed of the transition to a low carbon economy can investors afford to make the sort of large, long-term strategic decisions the world needs them to make.
The UK has put its carbon reduction commitments into domestic law, with a binding pledge to cut emissions by 34 per cent by 2020 and 80 per cent by 2050, compared with 1990. We need other developed countries to make clear and binding commitments. If Europe can raise its commitment for a 20 per cent reduction in emissions by 2020 to a 30 per cent cut, it would make the carbon price more robust and give investors the confidence they need to invest in a low carbon infrastructure.
But the issue is not just about developed countries. While the emissions in the atmosphere at present are largely a developed country legacy, about 90 per cent of future emissions growth on current patterns would come from developing countries.
As in the developed world, as developing countries sign up to take action on emissions, new opportunities will emerge to develop the types of low carbon technologies that are needed. It is morally right that the developed world uses its financial muscle to support developing countries leapfrog the high carbon growth path and go straight to low carbon, but there is also an economic case for the commitment.
Copenhagen can play a key role in supporting low carbon technology. Carbon capture and storage, for example, has the potential to cut carbon emissions from fossil fuel power stations by about 90 per cent. To support this, the UK recently announced a levy to support up to four full chain carbon capture projects and a requirement that all new coal-fired power stations demonstrate carbon capture at commercial scale.
But, the challenge of developing carbon capture technology is more than one country can meet. It is also more than the market alone can meet. According to the International Energy Agency, we need 100 projects that demonstrate the full chain of carbon capture in both developing and developed countries by 2020. That is why Copenhagen will be vital to the future of carbon capture. It can provide the political will and finance to drive the technology forward.
While carbon capture may get most attention at Copenhagen, the effects of the deal will reach much more widely. Nuclear, wind, solar, biomass and all the other low carbon energy technologies also need development.
By combining international and domestic action, the UK government is setting out to create the conditions where business can thrive. Using an active industrial policy to support and unlock the inventiveness and energy of the market is our best chance of beating climate change.
Political leadership is the most important ingredient of a deal this month. But we need all the voices of society to make an ambitious agreement happen. UK business has led the way in arguing the economic case for action on climate change, with the Confederation of British Industry at the forefront. Their leadership has been a galvanising force in political debate.
With that support and the right political will, I believe that Copenhagen can help usher in a period of greater economic prosperity and protect the planet for future generations.
The writer is UK secretary of state for energy and climate change