Flicking a switch and the lights coming on is something that we take for granted. Yet we should not be lulled into a false sense of security. The assumptions we make about where our energy comes from, and how we use it, simply will not hold true in the future unless we plan for it.
We are already seeing how the way we produce and use energy is affecting the environment, with carbon emissions from the burning of fossil fuels raising temperatures around the globe. Carbon dioxide levels in the atmosphere are 35 per cent higher than before the Industrial Revolution and growing by the year. The Stern report showed that without concerted global action, the impact of climate change will be equivalent to a loss in world GDP of at least five per cent each year, and potentially as much as 20 per cent.
We also face a serious challenge in securing our energy supplies. Britain goes from being 80 per cent self-sufficient to having to import almost all our gas and more than half of our oil by 2020. Increasingly we will be required to look at importing energy from less stable parts of the world, and will be much more exposed to the international energy markets at precisely the same time that emerging economies, such as China and India, are increasing their energy consumption.
As if that were not enough, we are now faced with countries such as Russia, which are prepared to use their energy resources as an instrument of policy. Over ten years, I have watched energy policy go from being a relatively quiet backwater to something taking on a strategic importance that could be as crucial to our country's future as defence.
We need a policy that conforms to the rising concern about climate change and gives Britain the secure, safe and politically acceptable supplies of energy that our livelihood demands. Energy policy is creating new strategic alliances, and new tensions, in international relations. On top of all of this, we face these challenges at a time when the UK needs to replace a third of our ageing electricity generation capacity in the next 20 years.
Of course, as ever, there is an opportunity. This is not a question of energy security versus climate change - the measures we take can help us achieve both. We have already taken action to diversify our supply. In October, I launched the 1,200-km Langeled pipeline, which will deliver up to 70 million m3 of natural gas a day to the UK - so that we satisfy a fifth of our future gas demand from Norway.
We are supporting the development of new liquefied natural gas ports so we can import gas for the first time from Qatar and elsewhere. We are investing in renewables, and ensuring robust emissions-trading mechanisms in Europe. We are also making strides to reduce energy demand, decoupling resource consumption from economic growth, and have set ourselves a challenging target to reduce carbon dioxide emissions by 60 per cent below 1990 levels by 2050.
Our choice is not between growth or non-growth - it is between high carbon growth and low carbon growth. New technology is critical to this. Electricity, heat and transport account for most greenhouse gas emissions, but it is possible to achieve the same level of light, heat and mobility while cutting or even eliminating carbon emissions. We will therefore continue to work domestically and internationally to promote policies that accelerate the transition to a low carbon economy. For example, we will use regulation and standards where appropriate to phase out the least efficient products, as we will with inefficient light bulbs by 2011.
We must also secure cleaner energy supplies. Renewable electricity from wind, wave and solar power could supply up to a fifth of our electricity by 2020. We will encourage the design of energy-efficient homes. We will set out how we will use more bio-fuels and hybrid cars, and encourage people to use them. We will support the development of coal and gas-fired power stations fitted with technology that cuts emissions by up to 90 per cent.
We also need to consider what role nuclear power can play as a low-carbon source of electricity. Nuclear power accounts for about a fifth of our electricity, yet most of our nuclear power stations are due to close over the next 15 years or so. It is right that we consider how nuclear power can help to underpin the security of our energy supply without increasing our reliance on fossil fuels.
We can meet our carbon dioxide emissions targets, but only if we are willing to think ahead and take tough decisions over new wind farms - and give serious consideration to nuclear power.
Finally, to ensure the security of our energy supply, we need significant private sector investment in infrastructure to deliver the energy we need. We have brought forward legislation to streamline the planning process, and will publish better analysis on energy trends to help energy suppliers with investment decisions. We will continue to drive the development of transparent international energy markets, and tackle barriers to investment in the UK to enable the market to move in the right direction to meet long-term challenges.
This shift to a low-carbon economy will bring huge opportunities. Markets for low-carbon technologies will be worth at least $500 billion, and perhaps much more, by 2050, if the world acts on the scale needed. Tackling climate change and planning for our long-term energy security is the pro-growth strategy; ignoring it will ultimately undermine economic growth.
The decisions need to be taken now. The benefits will be felt in the decades to come. But taking them now is the only way to be serious about climate change while protecting our vital energy supply.