Minister for Transport, Infrastructure and Climate Change
Speech to Business in the Community conference
I want to emphasise two points in this speech. The first is to remind you that climate change is a real and present danger, and secondly, perhaps more fundamentally, that we need to take action now.
Business with its supply chains, and large customer and employee base, as well as an eye for economic opportunities, has a big role to play.
In my experience, the importance of an issue is often directly related to the number of weighty and learned documents which have been published on the subject.
I can tell you that a lot of weighty documents have been published on climate change.
However, they often contain crucial information.
The Handbook of Climate Trends for Scotland tells us that climate change is with us already.
- Heavy rainfall events have increased significantly in winter, particularly in the north and west where winter rainfall has increased by almost 60 per cent
- The snow season has shortened and
- The growing season length has increased significantly
Publications on climate scenarios suggest that in Scotland by the 2080s
- Annual temperature will rise by up to 3.5 oC in the summer and 2.5 oC in the winter
- summers will be drier particularly in the south and east and
- the chance of extreme storm events and the risk of flooding will increase
We also know that the developing world will experience the effects of climate change more severely, and at an earlier stage.
The Stern Review tells us of the benefits of early action on climate change. If we act now the cost of climate change will only be around 1 per cent of global GDP by 2050. Lord Adair Turner, chair designate of the newly established Committee on Climate Change (I'll tell you more about their important role shortly) gave the following analogy to explain what that really means.
"what that means is that the UK would then have to wait until some time between June and December 2050 to reach the standard of living it would otherwise have reached in January 2050, a standard of living which is likely to be about two to two and a half times the present level."
But doing nothing could cost the world the equivalent of 5 - 20 per cent of global GDP.
Government purpose and targets, Leadership and economic opportunities
We know that Scotland taking action on its own will not make a significant difference to global climate change (we produce only around 0.15 per cent of global emissions). But we need to demonstrate leadership to the rest of the world to encourage other countries to tackle climate change, partly for our self preservation and partly through the moral imperative. It is, after all, the developed world that has put most of the CO2 into the atmosphere.
All Government action is based around the single purpose of sustainable economic growth. One of our key targets for sustainable economic growth is to reduce our emissions by 80 per cent by 2050 and to reduce our emissions in the period to 2011.
But the need to adapt to the unavoidable consequences of climate change and to drive down emissions also creates new opportunities for business. Scotland has benefited hugely from the Scottish inventors and entrepreneurs that came out of the industrial revolution and we can gain advantage again by leading the world in the new low carbon economy.
I'd now like to set out what the Government is doing and touch on what business can do.
Scottish Climate Change Bill
One of this Government's key actions is to bring forward a Scottish Climate Change Bill. The consultation on our proposals for a Bill has just closed. It attracted over 20 000 responses from 145 countries. This emphasises the global nature of climate change. I hope you took the chance to comment, I know that over 100 business people attended consultation events including two specifically for business.
We propose to set a statutory target of reducing emissions by 80 per cent by 2050 but the Bill includes other important aspects such as five year carbon budgets. You might think these are a little technical and not of great interest. But the key point to take home is - that it is the purpose of the Scottish Climate Change Bill to provide a framework for delivery of the 80 per cent so that businesses and others, know exactly what they are being asked to do over the short, medium and long terms.
We will introduce a bill into Parliament before the end of the year.
UK Climate Change Bill
We are also working in partnership with the Westminster Government and Devolved Administrations on a UK Climate Change Bill to provide a shared framework for the UK. The Bill sets a target for the UK to reduce carbon dioxide emissions by at least 60 per cent by 2050.
Committee on Climate Change
The UK Bill has one particularly important measure. This has been the recent establishment of an independent Committee on Climate Change chaired by Lord Adair Turner. He will be a familiar name to you as a former Director General of the CBI.
The Committee brings together experts from climate science and policy, economics, business and finance to provide expert advice to all the governments of the UK on setting carbon budgets and reducing emissions.
Five members of the Committee have already been appointed and we are now recruiting for further members, looking for expertise in a number of areas, including business. Applications close on Tuesday, May 6 and the details are on the Scottish Government's website.
The Bill is not meant to deliver all the policies we need to reduce emissions - it is a framework to ensure this and future governments make continued and sustained progress on climate change and to give business the certainty it requires to invest in new technologies.
We are working to put in place a set of policies across all sectors that will take Scotland along the pathway to 80 per cent.
An initial assessment of policy options is being conducted by AEA Technology and we expect to publish their report fairly soon.
The next step will be to consider the policy options more closely, to consider, for example, their cost effectiveness, and to take further expert advice. This will include advice from the Committee on Climate Change.
EU Emissions Trading Scheme and Carbon Reduction Commitment
The Stern Review highlighted that the development of carbon pricing is a key policy for emissions reduction.
We already have in place one carbon pricing mechanism - the EU Emissions Trading Scheme. This covers the emissions of our major combustors - power stations and large industrial installations and regulates almost 50 per cent of Scottish CO2 emissions. Its purpose is to deliver cost-effective and ambitious carbon emissions reductions through the buying and selling of carbon credits.
And we are also working in partnership with the UK Government to introduce the Carbon Reduction Commitment in 2010. This will be a scheme to reduce emissions by large commercial and public sector organisations and will deliver significant savings.
Technological innovation and renewables
Stern also emphasises the importance of the development and deployment of low-carbon technologies to achieve deep cuts in emissions.
To this end, the First Minister launched the £10 million Saltire Prize on April 2nd. This is the world's largest ever single prize for innovation in marine renewables.
The Scottish Government is also:
- supporting the delivery of 10 megawatts of marine energy from our waters by 2010, helping to make Scotland the world leader in wave and tidal power
- Tripling the funding for community renewables and microgeneration to reach £13.5 million
I've set out our plans for emissions reduction but adapting to the unavoidable impacts of climate change is equally important. The climate will change over the next 30 to 40 years because of past and present emissions. We cannot prevent this but we can adapt to it.
We are seeking effective options to reduce our vulnerability to these consequences which will safeguard communities, minimise disruption to services and infrastructure, and help business take advantage of opportunities that these changes may bring.
To this end, we are developing Scotland's first adaptation strategy to identify action required in Scotland.
Business has an important role to play in all this work. Businesses are responsible for half of all CO2 emissions, with SMEs responsible for almost half of those emissions. The CBI's Climate Change Task Force report, published at the end of last year highlighted that:
- Firms will fundamentally have to change their business models
- Business and Government must work together to encourage the take-up of greener products and to promote new ways of doing things and
- With early action the cost for each household can be limited to around £100 a year by 2030
The Scottish Government is already working with business to cut emissions by:
- providing interest free loans of up to £100k to help SMEs invest in energy efficiency
- funding the Carbon Trust in Scotland to deliver consultancy advice through carbon management for large energy users. Last year the Trust helped Scottish businesses implement measures that will save around 200,000 tonnes of carbon and £15m during their lifetime
- funding the provision of advice to small businesses through the Energy Savings Trust
Providing leadership and taking action are key. I've been impressed by the example shown by the Business Delivery Group over the last year in raising the profile of business in tackling climate change, for instance in the Business in Parliament event in January. And also Scottish Business in the Community by getting everyone in this room today to share their experiences.
And there are business opportunities. New markets for lower carbon energy products are likely to be worth $500 billion dollars by 2050. Scotland can be a leader in the development of clean energy and low carbon technologies.
One business which is benefitting from climate change through green innovation is Falkirk-based bus builder Alexander Dennis. The company has developed a new generation of low carbon environmentally friendly buses which have helped boost company profits by £120 million and secured 750 Scottish jobs. It now supplies 70 per cent of London's bus fleet and is selling double deck buses to the US.
I have set out the action the Scottish Government is taking to tackle climate change, through developing a statutory framework for action to give business certainty, assessing policy options, encouraging innovation and ensuring that we plan for the unavoidable consequences for climate change.
Business has an important role to play through collaborative action, developing new technology and mobilising your customers, employees and supply chain to tackle climate change. I look forward to hearing from you this morning of your experiences:
- of what has worked and
- your ideas for what will work