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Andrew Mitchell: Ending Labour's support for polluting energy projects

I'd like to thank the Overseas Development Institute for their kind invitation to speak here today. In recent years the world has become less stable and more dangerous.

Over the past few years, the world has woken up to the imminent threat of climate change and the need to reduce carbon emissions to the atmosphere.

The science is clear.

The threats to our planet are unprecedented.

And within our lifetime, the consequences could be catastrophic.

Already, the facts are moving faster than our willingness to act.

Climate change is already part of the daily lives of poor people around the world.

But if we take action, it is still 'doable' to ensure a maximum global temperature rise of only two degrees centigrade and protect humanity against the worst consequences of climate change.

This week, as the countdown to the Copenhagen Conference enters single figures, some of my colleagues in the Shadow Cabinet will deliver speeches on different aspects of climate change, reaffirming our commitment to the issue.

In this, the first speech in the series, I will argue that climate change isn't just an environmental issue; it is also one of international social justice.

Because a problem caused overwhelmingly by the developed world is having its earliest and most deadly impact on the developing world.

Those that can least take the pain are being hit first and hit hardest. It is a matter of morality, responsibility and simple justice that we put their interests first at Copenhagen.

Specifically, I want to make six key points:

First, that any deal must aim to keep temperature rises down to a maximum of two degrees.

Second, that any deal must be consistent with the interests of the world's poorest countries.

Third, that environmental considerations are absolutely central to my Party's drive for effectiveness and value for money in British aid.

Fourth, that we must end the use of the Export Credit Guarantee Department to promote 'dirty' fossil fuel power stations around the world, and instead make it a champion of green technology.

Fifth, that a Copenhagen deal must make global fossil fuel subsidy reform a priority.

And sixth, that rich countries must take steps to help give poor countries a bigger voice in global climate negotiations.

Let me now take each of these in turn.

How big a cut in emissions is big enough?

The latest science demands a cut of 40% by 2020 from developed countries if we are to hold the rise in global temperatures to less than two degrees.

Anything above two degrees and we will be heading into dangerous territory.

The balance of commitments entered into by the developed and developing worlds must be a fair reflection of each country's capacity to contribute to emissions reductions, and of their historical contribution to the problem.

The litmus test as to whether a deal is a success or not is simple.

Will it keep global warming to two degrees?

If the deal on the table doesn't look like it is going to do this, then the British delegation must have the nerve to reject the usual back-slapping and face-saving statements, and to stand up and say 'No, this is not good enough'.

The summit in Copenhagen is a historic opportunity for the world to take bold collective action to deal with the looming menace of climate change.

We want to see - indeed the whole world wants to see - an ambitious global deal to limit emissions and make available substantial financial resources for adaptation and mitigation. The international community needs to come together to agree a deal that is fair for the developing world. As Greg Clark has made clear, binding global mechanisms are by far the best way to lock-in international adaptation and mitigation commitments.

No deal at Copenhagen should be regarded as serious unless it finds an international mechanism to help people in the world's poorest countries protect themselves against future floods, famine and drought in addition to what is needed to help relieve their current poverty.

We need to ensure that our entire approach to development is consistent with our commitment to environmental sustainability. That is the best way to help people in the world's poorest countries protect themselves against future floods, famine and drought - while stimulating growth and trade.

It is simple common sense that using aid effectively to reduce poverty around the world requires a smart approach to the effects of climate change. 

If we win the election next year, our top priority will be to make British aid as effective as possible in reducing poverty.

Much of DFID's aid is amazingly effective. Just look at our funding for the Global Alliance for Vaccines and Immunisation, which has saved the lives of at least an estimated 3.4 million people since 2001. This is something of which every British taxpayer can be incredibly proud - and I wish the current Government would do a better job of highlighting and celebrating successes like this. 

Our own commitment to spending 0.7% of national income as aid by 2013 was made in 2005 - a time of relative prosperity. We've stuck by it through the time of crisis, and we will honour it if we are elected. We've stuck by it because it is the right thing to do, and because it is profoundly in Britain's long-term national interest.

But the quality of aid matters just as much as the quantity of it. In our Green Paper earlier this year, we set out some of the steps we will take to ensure aid is more effective:

An Independent Aid Watchdog to provide evidence about the impact of British aid on the lives of poor people around the world. So we know what works, and what doesn't - allowing us to base future spending decisions on evidence, not guesswork.

Results-based aid, linking aid payments to actual achievements on the ground, not simply to vague promises of action and impressive-sounding strategy documents.

Tough scrutiny of multilateral agencies, giving more money to those that reduce poverty effectively - and unapologetically cutting or even abolishing funding for those that are letting poor people down.

Our priority - even our obsession - will be value for money and effectiveness.

And it is in this vein that we will approach all of DFID's aid in a climate smart manner.

For climate change is a fact of life that will both affect and be affected by international development policy across the board:

If we want effectively to promote gender equality and empower women, then there is no greater challenge than giving women the tools and the voice to deal with the changing climate, where they are on the frontline. As the UN Population Fund reported last week, societies where women have more say over their own lives and have access to education, healthcare and legal protection will be more resilient to both ongoing and sudden weather-related disasters.

If we want effectively to promote long-term sustainable agriculture - an area which DFID has sadly neglected in recent years - then we must ensure the support we give to farmers takes account of changing rainfall and unpredictable seasons.  We must promote crops that are suitable to the changed and changing circumstances, and we must support research into technology that gives farmers up-to-date usable weather information at their fingertips.

If we want effectively to tackle HIV/AIDS then we must know that any treatment we support must be complemented by food security.  Households living with HIV/AIDS are often already on the margins of society and struggle to ensure they have the food and the livelihood to keep going.  When changing weather patterns threaten food security, the whole fight gets harder.

And if we want effectively to address conflict - the enemy of development - then we must recognise the intersection between a growing population and increasingly scarce resources.  In Niger, the population has risen from 2m people in 1950 to 11m people in 2009.  With the current birthrate there will be 50m people by 2050 - almost a fivefold increase in just 40 years.  This growing population, in one of the world's poorest countries, will face desertification and lower rainfall.  So giving women control over their own reproduction and empowering them in their families and communities is not just fundamentally right, but will also help in the fight against climate change.   

Those countries recognised by the UNFCCC as the most vulnerable are Least Developed Countries, Small Island Developing States and Africa.  Many countries fall into not just one but two and sometimes all three of these categories.

So DFID must be alert to climate change as a fact of life in all of its poverty reduction work. 

The test of any spending will be: does this reduce poverty effectively? And an integral, crucial part of that test will be: does this spending take into account its environmental context and impact?

Aid can only be called truly effective if it is climate-smart: if it takes into account environmental considerations and impacts. 

And let us take a broader economic perspective.

Aid can work miracles when it is effective, but it is ultimately wealth creation that allows poor people to lift themselves out of poverty. 

Wealth creation - harnessing the spirit of businesses and entrepreneurs to drive development - will be central to our international development policies.

Economic growth is the only sustainable route out of poverty, and in itself helps countries be more resilient to the effects of climate change.  But we must go further: growth which is not green, is not sustainable.

In the same way that a low carbon economy is good for Britain, so low-carbon growth abroad is a positive goal to work towards.     

Many developing countries have 'leapfrogged' landlines and moved directly to mobile phones. This has been driven by new technologies and by the market.

We now need to help find ways to encourage private companies to help poor countries leapfrog carbon-intensive energy production and move directly to low-carbon technologies.

There is much that we can do to help promote low-carbon growth, and to help spread new technologies. But we should 'first do no harm'. Unfortunately, under Labour, British taxpayers' money is being used to subsidise 'dirty' fossil fuel power stations.
 
This brings me to my fourth key point.

It is scandalous that now the world has woken up to the threat of climate change, Labour ministers are using taxpayers' money to guarantee unsustainable energy projects that are contributing to global warming.

Figures from the Department of Business Innovation and Skills reveal the Export Credit Guarantee Department is providing approximately three quarters of a billion pounds worth of support to fossil fuel projects.

What's more, according to the NAO, since 2000 ECGD has not rejected a single application for support on the grounds that it did not meet minimum environmental and social standards.

This has got to change.

We will bring to an end Labour's guarantees for 'dirty' fossil fuel power stations.

Today I can announce that under a Conservative government, ECGD will never again support investment in 'dirty' fossil fuel power stations.

We will take bold, unilateral action. This will send a message to the rest of the world that we are ready to lead from the front on ending environmentally harmful subsidies.

It will be a priority at the OECD Export Credit Group and other multilateral fora to press for other countries and their export credit agencies to follow our lead.

This will be the basis of my Party's position when the OECD Common Approaches is next reviewed in 2010.

And we can go further.

Our vision is that UKTI and ECGD should become a champion for British companies that develop and export innovative green technologies around the world.

The potential here is huge: if we take action in the right way, we can help cut carbon emissions while boosting economic growth in developing countries.

Professor Vijay Modi of Columbia University has shown that solar power and other green technologies are highly viable and beneficial for developing countries, because they can be much cheaper sources of energy than their current energy generation capacity, and because they synch so well with existing liquid petroleum energy generation.

However, government guarantees are needed to catalyse private sector investment in this area, because of the risk associated with large-scale projects in developing countries.

This will not only help boost economic development in poor countries, because cheaper energy will be made available, it will also reduce emissions.

And it would help British companies take advantage of a rapidly-growing market that could be worth billions of pounds in the future: creating jobs and wealth here at home.

At the moment, this is a market we are missing out on.

According to government figures, the UK has less than a 5% share of the global market for green goods and technologies.

These government figures also show that the market shares achieved by Germany and France, normalised to their GDP, are around 50% higher than the UK's share.

Given that the world market for green technologies is expected to be worth billions of pounds in the years ahead, we can and must do better.

So a Conservative government will make UKTI and ECGD much more proactive in encouraging British companies to invest in international green technology projects.

And a Conservative Trade Minister, working jointly between the Department for Business Innovation and Skills and the Department for International Development, will work as a priority to ensure that when opportunities for exporters arise in markets where ECGD support is relevant, the ECGD is more than ready to support British companies in investing in green technology projects around the world.

In his speech on Wednesday to the Green Alliance, William Hague will say more about supporting technology development and transfer in developing countries.

The prize is great: a boost to poverty reduction, and support towards a path of low-carbon economic growth.

And going forward, I'm keen to explore new ways of using UKTI and the ECGD to promote poverty-reducing, job-creating investment in the poorest countries. There is real potential for using taxpayer guarantees to encourage British business to invest in the countries which need foreign direct investment the most, particularly during the current crisis which has seen global investment flows fall substantially.

For the sake of our future prosperity, we must wean ourselves off our dependence on fossil fuels and set our economies on a low-carbon development path.
 
Yet currently, much of the world's fossil fuel production and consumption is actually subsidised by governments.

A recent report from the United Nations Environment Program estimated that fossil fuel subsidies worldwide, largely in non-OECD countries, amount to around $300 billion per year.

The OECD estimates that removing these subsidies could reduce global greenhouse gases by over 10%.

These subsidies are, in the vast majority of cases, economically illiterate, developmentally questionable and environmentally perverse.

They're a clear reminder that government failure, as well as market failure, poses real risks to the environment.

Protecting the poor from high energy prices is often the justification for fuel consumption subsidies.

Yet we know that fuel subsidies are almost invariably badly targeted.

Isn't it scandalous that, according to an IMF review, on average over 80 per cent of the benefits of fuel subsidies in developing countries go to the top three income quintiles?

And when oil prices rise, governments in many developing countries struggle to contain the rising costs of maintaining fuel subsidies.

A much better way to protect the poor is to eliminate fuel subsidies, and allocate some of the savings to well-targeted poverty reduction programmes and social safety nets.

When the government of Indonesia implemented a subsidy reform program in October 2005...

...it put in place an ambitious cash transfer scheme targeting 15.5 million poor and near-poor households - some 28 percent of the population.

The cash transfers more than compensated for the resulting fuel price increases and prevented an increase in poverty due to the price increase.

Prior to reform, total subsidies in Indonesia had been higher than the health and education budgets combined.

And similarly in Ghana, when the Government accepted that, one, it could not maintain its policy of subsidising petroleum products and, two, that the price subsidies most benefited the better-off...

...it liberalised fuel prices, while eliminating school fees at government-run primary and junior secondary schools and implementing a program to improve public transport.

Such best practice should be applauded and disseminated worldwide.

As well as providing a source of revenue for more effective social welfare systems, the savings from scrapping inefficient fuel subsidies can free up money for investment in clean water, schools, healthcare, and renewable energy infrastructure.

The British Government has said little on the reduction of fossil fuel subsidies as part of a post-2012 agreement.

I would like to see G20 countries take the lead and phase out fossil fuel subsidies in five years, and for others to end subsidies by 2020.

If we are to reduce global carbon emissions and achieve the Millennium Development Goals...

... real action needs to be taken on the progressive reduction of subsidies and market distortions.

I believe that subsidy reform is a key element of our response to the huge economic, environmental and social challenges of the coming years, and should be at the top of the diplomatic agenda.

Finally, my sixth point, rich countries must take steps to help give the poorest countries a bigger voice in global climate negotiations.

If at the Poznan summit last year, as I did, you went for a walk around this gathering of the 192-member United Nations, you would have seen far fewer people from the world's poorest countries than you would have expected.

The small Pacific island state Kiribati is expected to be the first country in which land territory disappears due to rising sea levels.

Yet at Poznan, the Kiribati delegation numbered only three representatives, while the US delegation had over 80.

Due to the size of their administrations,...

...their limited capacity for crucial preparation, ...

...and the impossibility of affording the legions of expert lawyers and negotiators that the industrialised countries can bring to negotiations...

...the least developed countries and small island developing states lack the diplomatic clout to have much of an influence on global climate policy.

Some even find themselves asking representatives from local NGOs who have been lobbying them to cross over and join their official delegations.

It's time we shifted more control from the powerful to the powerless.

Because if they don't have a seat at the table they're not going to be part of a fair deal.

That is why my Party has called on the Government to explore ways to ensure their voices are heard, for example through an advocacy fund to help the very poorest developing countries take part in international negotiations.

And climate change negotiations won't simply stop with an agreement at Copenhagen.

There will be a plethora of implementation meetings for years to come. 

Lessons could be learnt from the EU's TradeCom facility programme which provides significant capacity building support for African, Caribbean and Pacific countries for effective participation in international trade negotiations.

I would like to see agreement at Copenhagen for the UK to explore, with our international partners, ways to offer more support, for example perhaps through establishing an international version of the TradeCom facility, a "UN ClimateCom facility" as it were.

As we look ahead, beyond the financial crisis, there is a triple challenge facing every country.

The task of rebuilding our economies will be tied up with the need to strengthen our societies and to tackle climate change.

Copenhagen is a chance to do all of these.

To go the way of a new global low carbon economy.

To entrench the opportunities for the developing world to participate in that economy.

And to keep global warming below two degrees.

Everyone in the world looks to our representatives in Copenhagen in December to reach an agreement that will come to be looked upon as a turning point for the future of our world.

Thank you.

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