During his G8 and EU Presidency last year the Prime Minister demonstrated impressive global leadership on climate change. However, the relentless rise of UK CO2 emissions has led to a rethink of the 2003 Energy White Paper which prioritised energy efficiency and renewables. Tony Blair's speech to last October's Labour Party Conference indicated an intention to produce a new White Paper with a different conclusion.

Fifty years ago Britain's first nuclear power station was launched with a promise of electricity 'too cheap to meter'. It took another thirty years before the real costs of nuclear energy were flushed out by the electricity privatisation process. Then it was finally admitted that the primary purpose of the first nuclear plants was to generate plutonium for Britain's nuclear weapons programme. Since then a further twenty years of nuclear power has seen the costs to the taxpayer pile up, and the nuclear infrastructure close down.

No new station has been built for twenty years. The older Magnox stations are shutting down: the flagship Thorp reprocessing plant is shut and may never reopen; the Mox fuel plant has never worked properly and has had to subcontract its orders to the French; our two nuclear generators have both been bailed out of bankruptcy by the taxpayer; and half a century of high level nuclear waste sits in corroding tanks at Sellafield without a solution in sight.

The 2003 White Paper described nuclear as 'a mature technology with no need of public subsidy'. Nevertheless, two years ago the government committed a further £70 billion of public money to clean up this legacy. British Energy has recently announced a further significant rise in decommissioning costs. After half a century of blank cheques from successive governments, nuclear currently provides about 19% of Britain's electricity. This equates to a mere 8% of the nation's total energy supply.

The dangers of nuclear waste and proliferation, and the astronomical cost estimates of waste management and decommissioning, have always provided the main argument against the further development of nuclear power. A legacy that remains unpredictably toxic for thousands of years symbolises the complete incompatibility of nuclear with any known definition of sustainable development.

Since 9/11 there has been another reason for rejecting the nuclear option. The planes that flew into the World Trade Centre could equally well have flown into Three Mile Island, Sellafield or Sizewell B-with unimaginable consequences. Equally, the terrorists who attacked the London underground could easily have used a dirty bomb made from material acquired from any one of our own nuclear installations. 9/11 and 7/7 have changed everything.

It can now be only a matter of time before a terrorist group acquires a crude nuclear capacity. It doesn't make much sense either to offer them more targets or to provide their raw material. Cost, waste, proliferation and terrorism have provided powerful arguments for rejecting the nuclear option as Britain's response to climate change. As the current debate continues, however, new and more subtle arguments against nuclear are emerging. These include the timing of nuclear new build and its actual impact on emission reduction targets, the capacity of the industry to build on time and to budget, the rates of return required by city investors for high risk projects, the nature of the financial guarantees to be provided by the taxpayer and the security of future supplies of uranium.

However, two further arguments should now put the final nails in the nuclear coffin. The first relates to our historic obsession with electricity production rather than the management of consumption. The second concerns the nature of our centralised system of energy supply and distribution. Both are inextricably related.

It is unsurprising that an island built on coal, and later discovered to be floating on oil and gas, should have always equated economic progress with the rapid and ever increasing exploitation of cheap fossil fuels. Two centuries of cheap coal financed the British industrial revolution and the consolidation of the empire. Two decades of cheap oil and gas financed the consumer binge of the last few years which is now relentlessly slowing down. For two hundred years cheap coal heated our homes and powered our factories.

No thought was given to the efficiency with which the fuel was used. For the last twenty years cheap gas was burnt to generate electricity to drive the growth in consumer electronics. No thought was given to the efficiency of the appliances. But now the party's over we simply cannot assume that an exponential growth in energy supply can continue to underpin rising economic growth. Coal, gas, oil and nuclear can no longer deliver cheap electricity. We now have to massively increase our energy productivity.

This means an unprecedented improvement in the efficiency with which we generate, distribute and consume all forms of energy. For forty years energy intensity has improved by almost 40% and carbon intensity by 2% per annum. Assuming these trends continue, these improvements in efficiency could help to deliver the target of 60% CO2 reductions by 2050. However, the increasing demands of a growing economy, new consumer technologies, rising aspirations and the gradual extension of wealth means we have to go much further.

If we are to successfully manage the transition to a clean energy future, we must now set annual targets for energy productivity improvements which match the predicted decline in fossil fuels and nuclear. As nuclear's current contribution to total UK energy supply is a mere 8%, and as not a single new nuclear station could be built much before 2020, it is almost irrelevant to the short term problem of CO2 emissions.

Current annual rates of energy efficiency improvements can comfortably fill the gap left by the end of nuclear. But tough new targets, and appropriate Government support both for known and emerging technologies, will be needed to deliver the extra efficiency we need to underpin continued economic growth. In the last ten years we have made significant progress in decoupling growth rates from carbon emissions. Now we need to do the same with nuclear.

Our homes contribute over 30% of total emissions. We are making some progress in improving efficiency standards for new buildings. However, the big wins lie in the retrofitting of the current housing stock where policy has been woefully inadequate. Better insulation, modern control systems for heating, lighting and appliances and smart metering offer the best response to a 25% increase in gas prices and the threat of a nuclear resurgence.

Our vehicles contribute over 20% of total emissions. But following the September 2000 fuel strike, the Government has behaved like a rabbit in the headlights. We urgently need to incentivise more fuel efficient vehicles and curb the annual growth in miles travelled. Although homes and cars are at the front line of energy efficiency policy, exactly the same arguments apply to schools, hospitals, factories, buses, HGVs and, above all, to aviation. By 2030 aviation could well be responsible for 60% of total UK emissions. No-one has yet suggested that nuclear could be in any way relevant to this problem.

And there is a further reason to confront the nuclear juggernaut. Our traditional unquestioned assumptions about cheap fossil fuels have been paralleled by our assumption that electricity could only be delivered by a national grid from a power station many miles away. This centralised model of electricity production has served the industrial nations well and underpinned two centuries of rising living standards.

However, it is hard to believe that this model can offer a solution to the major challenge of the 21st century: delivering sustainable energy to the two billion people living on less than a dollar a day in rural Africa, India, China and South America. Nuclear power and a national grid is neither practical nor affordable for many of the planet's poorest people. Nor is it credible that consumers in the northern countries will carry on cheerfully contributing to the mega profits of the multinational utilities once they discover that the new energy technologies can make a power station out of every home.

The micro-generation revolution, although in its early stages, has the power to utterly transform our attitude to energy production and consumption. The combination of truly intelligent building design, simple low tech forms of insulation, new control systems and the increasing use of micro-generation technologies will significantly reduce our dependence on centralised forms of electricity production.

Ordinary citizens are now installing solar water heating, solar photovoltaics, domestic wind turbines, ground source heat pumps and wood chip boilers. Within a few years these will have progressed from fashion accessory to domestic essential. Then we will see the further development of domestic fuel cells, the use of biomass and bio fuels and the various forms of micro CHP.

It's not hard to see that these emerging technologies have the capacity to deliver a revolution in energy supply as great as that which occurred with the development of fossil fuel burning power stations. The characteristics of the coming revolution, however, are much greater local control, much higher levels of efficiency, much greater dependence on renewable sources and, ultimately, cleaner and cheaper forms of electricity production.

In deciding our future energy policy it is important that we don't underestimate the scale of the changes needed to respond to the challenges of climate change. Equally, it is important to be hard headed about the practicalities, and the economics, of future electricity generation. That means that almost every technological avenue will need to be explored and some will turn out to be blind alleys. Others will not reach their full potential for many years to come.

What matters is that we make the best assessment of what is likely to deliver cost effective, reliable and sustainable power for fifty years into the future and beyond. The problematic technologies of the past may still make a contribution to our power supply but they cannot provide the total solution. Each nation needs to decide its own response to climate change and energy security in the light of its own natural resources.

The United Kingdom has Europe's best potential for wind and wave power and 300 years of coal reserves. Large scale renewables, increased use of CHP, clean coal technologies and carbon sequestration offer the potential for self sufficiency in electricity production within two generations. But if we are to extract the full potential of these resources we need a revolution in our approach to energy efficiency and a serious and sustained commitment to a strategy of decentralised forms of electricity generation. That offers the best way forward for Britain.

This article appeared in the pamphlet “What’s in the Mix?”, published by Sera in April 2006 SERA website