Future looks good with 2020 vision

Forget about sleaze and spin, the proposals of the new energy report could change the world we live

Scarcely noticed amid the spin and sleaze, the government has slipped out a report that may be transforming Britain decades after Moore and Mittal have passed from memory. The "Energy Review" published by the Prime Minister's performance and innovation unit (PIU) on 14 February lays down a blueprint for the most fundamental change since the industrial revolution.

Perhaps it is not surprising that it got little attention. Energy policy traditionally languishes way down the political and public agendas - except during brief episodes such as the fuel-price protests. It is, admittedly, complex, unglamorous stuff. But it shapes the world all the same. Had the west in general, and the United States in particular, not become so dependent on oil from the Middle East, recent history would no doubt be very different. And energy policy is similarly driving global warming, probably an even greater long-term threat to the world than terrorism.

In fairness, Tony Blair - perhaps informed by a short stint as shadow energy secretary more than a decade ago - is rare among political leaders in realising its importance, and unique in ordering such a revolutionary review. It closely follows the equally radical Curry report into the future of agriculture, which he commissioned at the height of the foot-and-mouth crisis. If - and it's a big if - he turns both reports into policy, he will be able justly to point to the beginning of 2001 as the time when he set Britain on the track to sustainable development.

The energy report, the more important of the two, sets out a "radical agenda" for putting the country "on the path to a low-carbon economy" - one that avoids emitting the vast amounts of carbon dioxide now released by burning fossil fuels. It is driven by two requirements: the need to ensure secure supplies as North Sea oil runs down (according to the report, Britain may need to import 80 per cent of its oil within two decades), and the even greater imperative of combating potentially catastrophic climate change.

It concludes that Britain could cut its emissions of carbon dioxide, the main cause of global warming, by 60 per cent by 2050 - the minimum reduction that scientists say the world must achieve to bring global warming under control. And it says this can be done at relatively little cost - just 0.02 per cent of economic growth rate, denying Britain just 1 per cent of the total extra wealth it would accumulate over the next half-century. The report positions the Blair government in refreshing opposition to the Bush administration. On the same day, the president announced his global warming strategy, expected to increase carbon dioxide emissions by 14 per cent over the next decade. Anything tougher, he insists, will cripple the US economy.

Broadly speaking, the "Energy Review" gets its priorities right. It gives pride of place to "a step change" in the nation's energy use. It concludes that technically available cost-effective measures could cut use of fuel by 30 per cent, and save the economy £12bn a year. And it calls on the government to set a target of cutting the amount of energy used in homes - the most wasteful area - by 40 per cent by 2020.

Next come renewable sources of energy. Britain has the greatest potential resources in Europe, enough to provide all its electricity almost three times over. Wind power is already competitive with fossil fuels; all are expected to become much cheaper once serious attention is paid to developing them. Ministers "should immediately set a firm target of 20 per cent of electricity to be supplied from renewables for 2020", says the report, which also calls on them to "open options" for cars powered by hydrogen.

Nuclear power is presented only as a last resort. Contrary to cynical advance briefing by some environmentalists, this is far from being a pro-nuclear tract. The report was made more reactor-friendly on its way from the PIU to the Prime Minister, but it remains deeply sceptical. It concludes that, in contrast to renewable energy and conservation, there "is no current case for public support for the existing generation of nuclear technology". And although this is more deeply buried in the final version than in earlier drafts, the report insists that nuclear power should "fully internalise" such external costs as waste disposal - which would make it hopelessly uneconomic.

It remains possible that a new generation of safer, smaller and, possibly, cheaper reactors will be developed, but the report says this will not happen for "at least 15-20 years". New investment in nuclear power should only be considered if the drive for renewable energy fails, for example, as a result of the opposition holding up the building of windfarms in much of the country.

The report could be stronger. The renewables target is too timid: the PIU originally wanted to press for 30 per cent by 2020. It is unnecessarily scared of Britain getting well in advance of other countries. And it does not even mention proposals for shifting the burden of taxation from employment to energy, though studies have shown that this would dramatically cut pollution and create hundreds of thousands of jobs: the shadow of the fuel protesters still clouds its pages. Even David King, the government's chief scientific adviser, thinks it should have been bolder: he has called for the government to announce a deadline after which all cars that run on petrol or diesel will be banned, so as to force the industry to develop greener vehicles.

Yet implementing the report would revolutionise policy. Conserving energy has received only spasmodic support from successive governments. Renewable energy has done even worse, starved of funds - and sometimes even sabotaged - lest it challenge nuclear power. Labour came to office promising to ensure that a tenth of Britain's electricity would be generated from renewables by 2010, but financial rules introduced by the Department of Trade and Industry less than a year ago discriminate against them, and even the energy minister, Brian Wilson, admits their contribution so far is "miserably low".

The report will be followed by a white paper later this year. Will Blair rise to the challenge? There are hopeful signs. First, he seems to grasp that such a programme would be good for business, stimulating technical innovation that would allow Britain to cash in on what will become booming markets for clean energy. Second, and most unexpectedly, Iain Duncan Smith shows signs of taking up renewable energy as a Conservative crusade, keeping Blair's feet to the solar-powered fire.

There's more than a chance that the PM will fudge it, particularly if wealthy chums from fossil fuel companies lobby against change. But maybe, just maybe, he will live up to the challenge he has set himself and ensure that 2001, and his term of office, are remembered less for a succession of scandals than for really modernising Britain.

Geoffrey Lean is environment editor of the Independent on Sunday