In a speech to the TUC’s annual Climate Change Conference yesterday, Energy Secretary Chris Huhn said that the Government is planning to radically reshape the UK energy system.

Mr. Huhn said that the UK needed new infrastructure to “rival the great 20th century civil engineering projects” in order to meet its renewables targets. The Government needed to create the right conditions to allow investment – and innovation – to bloom. By 2020, £200 billion of new energy investment would be required to replace a creaking energy infrastructure and deliver the new generation needed.

The Government estimates that all 26 million UK homes could benefit from the new Green Deal, with a market worth billions and the creation of up to 250,000 jobs across the country.  Some 2.8 million businesses would also able to cut their carbon and save their energy bills. The offshore wind sector alone could employ an extra 70,000 people by the end of the decade, in a market worth £6 billion.

Mr. Huhn commented that over a million people would be employed in low-carbon goods and services by 2015 - a workforce and a budget to rival the NHS. The global trade in low-carbon goods and services would reach £4 trillion by the end of this Parliament. Last year the British share of the market was worth £112 billion.

UK's energy future is electric

Mr. Huhn said it was increasingly clear that for the UK, the future would be electric, with the Government predicting a doubling of demand for electricity by 2050.

In order to secure the UK’s long-term supply of low carbon electricity, the Government is planning to reform the electricity market and create a new market framework for electricity later this year. The work on electricity market reform will look at how the carbon price, emissions performance standard, feed-in tariffs and other levers can deliver a secure, affordable, low-carbon electricity mix. Next month will see the publication of a technical consultation document, prior to the  launch of a White Paper and subsequent legislation.

The Government is also currently working on an Energy Intensive Industries Strategy which will look how key energy intensive sectors can reduce emissions, checking the short, medium and long term efforts to cut carbon. The Strategy will factor in improvements to industrial processes as well as alternatives – and take account of the impact on supply chains for UK firms at home and abroad.

However, Mr. Huhn said

“The Government will not be able to fund everything we want to fund. But we must play the long game; encouraging the sectors we know will be part of our energy future.”

Mr. Huhn warned that an energy crunch was coming that in its scale and its impact, could rival the credit crunch. Together with France and Germany, the UK is calling for a more challenging target of a 30%  reduction in carbon emissions, not 20%, by 2020.