Our task now is to recognise low-carbon opportunities

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IT was easy to miss amid the turmoil of the global economic crisis, but last month EU leaders sat down to thrash out an agreement on climate change. And overall it seems to be a good one.

Although European summits – and this one is no exception – usually end in something of a compromise, with some good bits and some not so good.

This deal will allow Europe’s leaders to negotiate with the other big emitters like the US, China and India from a position of leadership.

Europe has walked the walk on putting in place policies that will cut emissions and can now try to take the rest of the world with it.

The key part of the agreement is that there will be a robust cap on the amount of greenhouse gases the European Union will allow. This means there will be a price for carbon all the way to 2020 and, in turn, ensures it now makes clear business sense to invest in low carbon technologies and increased energy efficiency.

The deal means we are going to see widespread auctioning of greenhouse gas emission permits and, although more could have been done here, what has been agreed is undoubtedly a real step forward.

It gives businesses a financial interest in cutting the carbon intensity of what they do. And the really important thing is that the cap will bear down on all emitters, helping deliver a lower carbon economy over the medium term.

Of course, in the middle of a recession, businesses and their employees have good cause to worry that changes in government policy and regulation could hit them at just the worst moment. Actually, what the package does is create new opportunities for business.

It is not just that government leaders have recognised the threat of carbon leakage – losing business and jobs to jurisdictions with no carbon reduction policies – but also that there are real openings to make money out of a lower-carbon future.

The rollercoaster ride of commodity prices in the past two years has made many businesses understand the benefits of increased energy efficiency.

Fixing in place a market for carbon over the next decade will mean efficiency will always pay, even if – however unlikely – the price of oil and gas stays low.

The task for the Government and for Welsh business now is to recognise the opportunities and get into the new markets. Nuclear power is one obvious area where investment in skills and plant could pay off if made early enough.

Britain is rich in sources of renewable power such as wind and wave, but each have their problems – for instance, the wind only blows strongly enough 10% of the time.

Nuclear offers us a low carbon source at an immediately affordable price and that is why it is right we are going to build a new generation of nuclear plant.

We now need to ensure that the economic benefit of the nuclear programmes is felt here in Britain through the construction and equipment supply and in the development of skills.

An added bonus from the deal is the support it gives to carbon capture and storage. This will be one of the most important technologies if we are to have a stable, low-carbon future energy market and at the same time exploit the coal reserves that still remain in Wales.

As well as making the necessary investment in the technology, we also need to ensure that we remove other barriers to the implementation of low-carbon energy sources, and the foremost of these is the planning system.

The recent passing of the Planning Bill should improve the flow of applications through the system, cutting delays, while still retaining democratic accountability.

As the letters page of the Western Mail demonstrates daily, new energy projects, even if for renewable sources such as wind power, are highly contentious.

And yet we need to renew our power generation capacity as well as making the shift to low-carbon. The Planning Bill should ease the process for the largest projects, but the many medium and small-scale schemes which will make a real difference still have to take their chances with the old system.

Here we need local politicians to show real leadership in explaining to their electorate why schemes are needed, and not just automatically oppose and make the job of ministers harder.

By David Rosser