Rt Hon David Miliband, Foreign Secretary

In the midst of the global economic slowdown, it is tempting to make the transition to a low carbon economy a secondary objective, but actually it is integral to our future economic health. With high oil and gas prices fuelling inflation, our dependence on high carbon energy is now actually contributing to our economic woes. And it threatens our environmental security and geopolitical stability. We need to use the EU to set a new global, low-carbon course.

The environmental consequences of our reliance on fossil fuels are well known - greenhouse gas emissions will bring more drought and other extreme weather conditions; ice caps will melt and sea levels rise. But these are not just environmental problems – they will harm our economic development and future security interests.

Indeed, energy needs are already threatening to reshape the geopolitical map - from new tensions over oil and gas in the Arctic to soaring oil and gas revenues emboldening energy rich states. There is a risk that constructive international cooperation gives way to destructive competition between nations.

Whilst our focus may currently be on Wall Street, our reliance on limited supplies of oil and gas is now a primary cause of global inflation and has been a major contributing factor in the global economic slowdown. Central banks have faced a dual challenge – how to ease the credit crunch without exacerbating inflation. With the world’s population set to rise from 6.6 billion to 9 billion by 2050, and developing countries enjoying rapid economic growth (20,000 new vehicles appear on Chinese roads each day) this is a structural shift rather than a temporary aberration.

It is easy to be fatalistic, to conclude that greater insecurity – both physical and economic - is inevitable.   But there is an alternative future. By diversifying our energy supplies we can avoid a new global scramble for resources in which we become increasingly beholden to the fuel rich. By building a low carbon economy we can not only curb greenhouse gas emissions and reduce the inflationary pressures, but create green jobs and green growth.

The technology exists, or is emerging, to make this possible. By shifting to nuclear and renewables, and by cleaning coal through carbon capture and storage, we can generate low-carbon electricity. More energy efficient appliances and much better insulation will reduce energy consumption in the home. And with car manufacturers developing the technology for hybrid cars that combine electric and petrol engines, a post-oil transport system - run entirely on electricity or hydrogen - is becoming a genuine possibility for the longer-term.

The biggest question is how we accelerate the process: how we build the political support to drive  economic investment in a low-carbon revolution.

The EU can, I believe, be the catalyst.  This organisation which began with cooperation on coal and steel as a way of preventing conflict and instability in Europe must return to its roots. Today, it needs to apply all its tools - regulation, markets and negotiating positions – to set global standards and avert an energy scramble leading to conflict not within its borders, but beyond its borders. There are three priorities:

First, we must use our negotiating clout to broker a global deal on climate change beyond 2012. The most difficult questions at the next year’s global summit in Copenhagen will be the level of ambition we set ourselves and who should pay for mitigation and adaptation. EU leadership is vital if we are to achieve an ambitious global deal – we can and must lead the way. The targets we set ourselves last year - to reduce our emissions by 20% by 2020, and by 30% in the context of an international agreement – place us in the vanguard of the battle against climate change. And our carbon markets will stand us in good stead when it comes to financial transfers help the developing world leapfrog straight to low-carbon energy.

Second, the world needs a global carbon market to help developed countries find the most cost-effective sectors to reduce their emissions, and to transfer funds so that the developing world can leapfrog straight to low-carbon energy..  The EU Emissions Trading Scheme is the foundation for this.  We need to ensure its long term future with caps set centrally as the European Commission have proposed rather than by member-states. But we also need to link it to carbon markets which are now emerging in other countries – the US, Canada, and New Zealand.

Third, we can drive global investment in green technology. By setting ambitious EU standards on new vehicles and appliances we can use the clout of the world’s biggest single market to drive innovation around the world. And by agreeing to an EU level incentive mechanism we can bring on Carbon Capture and Storage demonstration plants by 2015, putting the EU in a position to deploy the technology by 2020. This is critical and urgent – it is only by applying the technology at scale that we will bring down the costs of clean coal and jump start global use of CCS. And we need CCS not just to help us to meet our own EU emissions targets but to bring down emissions in all countries that rely on coal for their power generation.  

Ultimately, the EU will be judged on whether it delivers on its 2020 commitments. Anything less than full delivery will undermine EU’s claims to global leadership on climate change and beyond because whether you measure it in economic, environmental or geopolitical terms, it is becoming increasingly clear that we can no longer afford our dependence on high carbon energy. The difficult economic climate is not an argument to delay the low carbon transition; it is a reason to speed it up.