The financial implications of climate change

Below are highlights from a speech given by Amber Rudd, UK Secretary of State at the Aviva conference.

“It is no surprise therefore, that the Bank of England has been taking climate change very seriously indeed."

Economic security

“Climate action is about security, plain and simple, economic security. If we don’t act, it will become increasingly hard to maintain our prosperity, protect our people and conserve our countryside. The economic impact of unchecked climate change would be profound. Lower growth, higher prices, a lower quality of life, not to mention many properties and businesses at higher risk from flooding and extreme weather. So I see climate action as a vital safety net for our families and businesses.”

“The bottom line is this, if we are acting on climate change to preserve our economic prosperity, we have to make sure that climate change action is progrowth, probusiness.”

“If we act in the right way, decarbonisation supports our other priorities. By focusing on storage and reducing energy demand, not just generating more energy, we also help to meet our energy security needs. By focusing on energy efficiency we help keep bills down for people and businesses.”

Pro growth climate action

“In December, world leaders will gather in Paris to finalise the first truly global agreement to limit greenhouse gas emissions. The UK is lined up with the progressive countries of the world on this. We want a strong, ambitious, rules based agreement that makes the shift to a clean global economy irreversible. Why? Because that is the best way to convince the private sector and investors we mean business. Without the commitment, energy and innovation of private enterprise, across the world, we will not succeed in making the transformation to the global low carbon economy we need.”

Controlling costs

“The transition to a clean economy here in the UK does mean making up front investment supported by the tax payer, and in energy, from bill players. Let’s not pretend it doesn’t. This is used to develop clean energy supplies and to help people cut their bills by cutting energy waste.”

“To work for everyone, and to maintain support for climate action, decarbonisation has to be sensitive to the impact it has on people’s pockets, and wider economic circumstances. And that means we have to control public subsidies, taking tough decisions on what schemes and projects are supported.”

Clean growth

“While we in the UK have been one of the pioneers, we are not a lone outrider. Globally, the progrowth, premarket, business community has seized the climate change agenda. The last 10 years has seen a dramatic boom in global clean energy investment. Renewables accounted for nearly half of all new power generation capacity in 2014 with investment reaching US$270 billion.”

“Green bond investments tripled in the last year. 40 countries have adopted or are planning carbon pricing. Over 150 multi nationals, including oil companies are using carbon pricing to guide their investment decisions. One of the most positive developments is the momentum building to phase out inefficient fossil fuel subsidies that encourage consumption. As the Prime Minister told the UN last September, these fossil fuel subsidies are economically and environmentally perverse. The IEA have estimated that globally they run to almost US$550 billion a year. The UK does not subsidies fossil fuel consumption, and we are working with G20 and others to bring them down.”

Paris 2015

“Getting a global deal on climate change in Paris in December is one of my highest priorities this year. And all the signs are that a deal is in reach. There is still a long way to go and there is no room for complacency. Key for me will be to ensure three things. First, that the deal must keep the global 2 degrees goal within reach, because that is what the science tells us will avoid the worst effects of climate change, and so that must remain our ambition. Second, the deal must include a set of legally binding rules that give us confidence that countries will deliver on their commitments. Third, that we agree a process of regular five yearly reviews where we can increase our goal ambition, taking account of what the science says is required and taking advantage of the increasingly lower costs of renewables and advances in technology.”

“As a whole, the deal needs to send a clear signal that the future is low carbon.”

Edited from speech by Claira Lloyd

Published on 24/07/2015


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