Kwasi Kwarteng's speech to the Energy UK conference

Keynote speech by Kwasi Kwarteng, Secretary of State for Business, Energy and Industrial Strategy, at the Energy UK Conference.

I’m delighted to be asked today to give a keynote speech. I’m aware that time is precious but I have a few remarks that I would like to share with you. Thank you very much Emma Pinchbeck and Jonathan Brearley for providing the leadership you do in your respective organisations.

The theme of today’s conference is a ‘decade of delivery’ and I very much want to talk about the government’s vision for the decade ahead.

The recent issues that we have with the volatility of the gas price, the incredible spikes, and then falling back; this great uncertainty in the market shows exactly why we need to vigorously pursue our climate goals and to strengthen energy security – while, above all, protecting consumers and the planet.

Our recent pledge to decarbonise the UK’s electricity system by 2035 is a key, fundamental, milestone on the journey towards net zero. It will shift us away from volatile fossil fuels and also turbocharge our use of homegrown green technologies – from wind and hydrogen, to solar and Carbon Capture, Utilisation and Storage (CCUS). That will create a much more robust system, one where we’re less at the mercy of global price fluctuations. It’s an exciting vision, not only economically, but also with dealing with the climate crisis.

The UK has so far made great progress in diversifying its energy mix. But we are still dependent, perhaps too dependent, on fossil fuels and their volatile prices.

With COP 26 on the horizon, this week the Prime Minister made a commitment that will help us lead and show the world how committed we are to the fight against climate change.

By 2035 all our electricity will come from clean sources, subject of course to the security of supply.

We are bringing forward the government’s commitment to fully decarbonise the power system by 15 years.

For the first time, if we achieve our targets – and I’m confident we will – we will not be reliant on hydrocarbons. Instead our homes and businesses will be powered by clean and affordable electricity here in the UK.

Relying on homegrown power generation will protect consumers from gas price fluctuations. And it will in the long run bring down bills. We’ll use the wealth of Britain’s natural resources to generate cleaner and cheaper power while creating thousands of new high-skilled jobs across the UK.

And it was this that has captured my imagination - the new industries, the new jobs, the investment, that I think has marked a real opportunity for the UK. And it was in that spirit that I and Gillian Keegan, who was then an Education Minister, set up the Green Jobs Taskforce, whose work has been greatly appreciated.

The 2035 target isn’t something that’s been plucked from thin air. It’s based on past success; and that since 2010 we have managed to reduce carbon emissions in the power generation sector by 70%. In the past decade we’ve quadrupled the percentage of our electricity that comes from renewables. That figure was less than 10% in 2010; and it was 43% last year.

What has really inspired me as a minster is that this has happened not just because of government action, but government action working with the private sector. The Contracts for Difference scheme, which launched again this year, will be bigger than ever.

If we look back at the last ten years, we’ll see that £100 billion has been invested in offshore wind deployment. And the lion’s share of that has been through the private sector. And it’s thanks to that combination that we can achieve huge success in this area.

I think we need to complement our renewables, our technologies that supply clean power, even when the wind isn’t blowing and even when the sun, if you can believe it, isn’t shining. Gas with CCUS and nuclear is part of the mix as well, as in the Prime Minister’s Ten Point Plan, all of these things can come together to make sure that we have a sustainable, secure, and ultimately affordable system.

To this end, we published our hydrogen strategy. I was very proud to see that published only a couple of months ago, and that showed once again, a real world-beating ambition in a new and exciting technology, and we’re also determined to bring at least one large-scale nuclear project to a final investment decision this Parliament.

In terms of forward publications, we look forward to the comprehensive Net Zero Strategy, which will be published in the next few weeks, and we’re convinced that we can, at COP26 in only three weeks time, we can show the world leadership that many people expect from the UK.

I just thought in summing up I would say a few words about our current situation. I think the volatility of the gas price has shown that we do need to plan strategically, and I think Net Zero helps us do that, for a secure, affordable, and sustainable energy system. Over the last few weeks, as you can imagine, I spent many, many hours of my time speaking to industry participants, speaking to Ofgem, speaking to Jonathan and his team, the great work that they’re doing. I want to pay tribute to that, to make sure that customers and consumers are protected. That is absolutely a fundamental purpose, fundamental objective of anyone in my position as Secretary of State.

As Emma said, I think it’s going to be a difficult time. We may well see, I don’t want to pre-judge this, we may well see companies going out from the market. But so far I would suggest the Supplier of Last Resort process has worked effectively in making sure that customers and consumers had a continuity of supply, and I would like to commend Jonathan and his team for the incredibly hard work that they’ve put in, as well as BEIS officials.

It’s not often seen, but we’ve been working nearly every day, pretty much every day for the last four weeks without interruption. I’ve had Sunday calls with industry participants, we’ve had roundtables on Saturday evenings. Every single day for the last month we’ve been working and trying to chart a course through this current situation.

Just in brief summary, there are three principles which have always consistently guided my approach in these circumstances. First, government will not bail out failed companies, there cannot be a reward for irresponsible management of businesses. Second, customers, especially the most vulnerable, must be protected, must continue to be protected, from exorbitant price spikes. And third, the third principle I’ve always maintained is that the energy market should remain competitive.

No one wants to go back to the old market, but we all recognise that this is a market that’s evolving, and we want to make sure that it evolves in a considered, timely and ordered way. I’ve said repeatedly, and I’ll say it again, we are absolutely confident in the security of our supply.

I’m also happy that this has been confirmed by the Gas and Electricity Winter Outlook report the National Grid has published this very morning. I think that was a really salutary publication that shows once again that as far as energy security is concerned, security of supply, the UK is in an excellent place.

I think for lots and lots of reasons, that Emma outlined, and for reasons we can see, the decade of delivery will be challenging, there’s no question about that. But it also, as I look across the room into the sea of a lot of industry players, represents huge opportunity for the industry, which as Emma says is central to our economic performance, but also for the UK, for the jobs, the international leadership, and the prosperity that it will create, that it’s already created, and we see that in different parts of the country today.

I look forward to working with many of you, as I have done in the past, to make sure we can achieve these ambitious goals, and it’s very, very exciting actually when we look ahead at the kind of prospects we have, while obviously trying to negotiate what can be a challenging time. Thank you very much.