Energy Secretary Ed Davey has warned England relies on Scotland to help achieve the UK's renewable energy targets... but Scotland needs England to help pay the bills.
In his first major speech as a Cabinet Minister, Mr Davey said he is working towards delivering the low-carbon future the country needs.
And he described how efficiency programmes like the Green Deal, cleaner and greener fuel and emerging technologies such as carbon capture and storage will provide a more secure and prosperous country.
And in a shot towards critics of renewable energy, Davey warned: “We need to try every low carbon technology we can get our hands on.”
Speaking at the Scottish Liberal Democrat conference at Inverness over the weekend, Davey started by explaining the Coalition Government's “radical new approach” to energy efficiency.
And he said that despite the lobbying, the vested interests and the critics, he was "personally committed" to ensuring the Green Deal was a success.
“Everyone knows saving energy is the cheapest and quickest way to achieve our three goals of energy security, affordable bills and low carbon,” he described.
“The win-win-win of warmer homes, lower bills and less pollution is hardly news. There have, after all, been plenty of Government insulating schemes in the past.”
But Davey said this would be the first Government to seek to make reducing energy demand at least as important as how supply is increased.
He added: “The Green Deal can help us tackle Britain’s energy wasting polluting housing stock. We have the oldest and least efficient housing stock in Europe. We use more energy heating our homes than Sweden – yet their average temperature is 5 degrees colder.
“With the Green Deal, householders can make their homes warmer – at no upfront cost to them. Firms will help them cut their electricity and gas bills – getting their money back from future savings on future energy bills.
“What’s really clever, thanks to the Energy Act 2011, the firms get their money back from whoever lives at the home that’s been insulated – even if the original tenant or owner has moved on.
“This new system tackles the market failure that previous governments just ignored.”
Davey said the Green Deal business model will create a whole new market that can survive without subsidy or regulation, that can attract new businesses to take-on existing energy suppliers and “opening up real competition in reducing energy demand.”
He described how the Green Deal would “drive innovation, drive up green jobs and drive down energy bills.”
“Make no mistake,” he said. “This is so radical that it will be really difficult. The lobbying against it. The struggling to stop it. The vested interests who hate it.
“Getting the Green Deal going is and will be a major challenge. But I couldn’t be more personally committed to seeing it through.
“So today I’m giving notice... Later this year – but especially next year – this is your chance to get serious about saving energy, saving the planet and saving people money.”
The Energy Secretary went on to describe how the UK needs to change the way it produces electricity to tackle climate change and protect the country from volatile oil and gas prices.
“We will actually need to increase electricity production,” he explained. “Because we also need to shift from polluting petrol and diesel transport to cleaner electric vehicles.
“And of course we will also need to decarbonise electricity. Because if we generate electricity more cleanly, we will go a long way to meeting our 2050 emission reduction targets.
“And in practice that means three things.
“First, renewables like wind, marine, solar, tidal, hydro, bioenergy, heat pumps and so on.
“Second, new nuclear. But without public subsidy and with guaranteed financial provisions for future decommissioning.
“And third, clean coal and clean gas – delivered by carbon capture and storage. CCS.
“What’s been quite remarkable in my first month is how many people seem to think that their low carbon energy technology is the only one that matters. The only one that can save us.
“It’s either renewables. Or nuclear. Or CCS.
“So for some, onshore wind subsidies are wrong – because of shale gas.
“For others, nuclear is just not needed – because we have so many renewables.
“And for others, gas is just another polluting fossil fuel – when we have clean nuclear.
“Well, I have to give you a very unsexy, dull and boringly cautious message: 'we need to try every low carbon technology we can get our hands on'.
“And the fundamental reason is this: every low carbon technology has its risks, the future is not certain and the risk of dangerous climate change is just too great.
“In common parlance – when you’re planning for the future, you don’t put all your eggs in one basket.
“By subsidising renewables, we are seeing the costs of wind and solar tumble. And I am sure they will go down much more.
“And by being open to different low carbon technologies like nuclear and CCS, we are creating the biggest technology race and competition of recent times.
“That’s what our Electricity Market Reform proposals are all about. That’s what the Green Investment Bank will help deliver.
“And it’s what our competition for carbon capture and storage projects will help make happen.”
Davey told the conference: “As Energy Minister, I’m also conscious that we are some way off our low carbon economy. In other words, we still depend on unabated coal, oil and gas, and will do for quite a few years.
“And when we are successful with carbon capture and storage, we will be able to exploit these resources for many many more years. In the low carbon future.
“And that means we have to think about, work for and nurture these industries too.
“So, for example, on oil and gas. I will be working with George Osbourne and Vince Cable, to make sure our growth strategy considers their needs too. From this budget on.
“From new production and exploration to the important decommissioning industry, it’s vital our oil and gas regimes in the UK are and are seen to be stable and attractive for investment.”
On renewables, Davey explained how stability had already brought huge investment and can bring in even more in the years ahead.
But he warned: “Because I believe renewables are a classic case of how England and Scotland need each other – indeed, how devolution in the union has worked and is the best future for us all.
“Meeting our renewables target of 15% of energy by 2020 for the UK is a tough ask already.
“If England has to do it for itself, by itself, it will probably be even tougher – given Scotland has relatively more renewable sources.
“Yet the economics of renewables is that Scotland needs English consumers to help pay for the renewables, as the technology develops.
“The truth is, we need each other.”