It was a great privilege for me to serve as environment secretary. I signed the agreement to end CFCs. And one of the most extraordinary and rewarding days of my entire time in government was when I was environment secretary. Just after the 1992 election, I spent a day in Washingtonand succeeded in persuading the United States government, under George Bush senior, to sign the Climate Change Convention, the forerunner of the Kyoto Agreement.

My successor, John Gummer, continues to be recognised as a leading international authority on the environment. This is a proud tradition, which I am determined to build on as leader of the Conservative party.

Looking to the Future
Today - out of government - we are still doing our bit. Despite the hot air generated by politicians, I am proud to say that we are taking the necessary steps to make our new headquarters in Victoria Street carbon neutral!

The environment needs a government that is prepared to set a regulatory framework that is fair, sensitive and effective, that is prepared to lead by example, and that is prepared to stand up and be counted in the international community.

Today is a unique opportunity for me to set out the Conservative stall in front of a distinguished and informed audience. Many of you here today have done so much to persuade British governments to do the right thing as far as the environment is concerned.

There are many issues that I could touch on. The environment encompasses almost everything we do. But I want to focus on the single most important environmental issue of all - climate change.

Climate change is one of mankind's greatest challenges. In the last 30 years, world temperature has increased by almost half a degree centigrade. We cannot predict with certainty what will happen now. The risk of abrupt climate change exists.

A recent report for the Pentagon states that "with over 400 million people living in drier, subtropical, often over populated and economically poor regions today, climate change and its follow-on effects pose a severe risk to political, economic and social stability". Climate change has happened in the past through a variety of natural causes. But I am persuaded that human activity is a major factor in the changes we see today.

As Margaret Thatcher put it in her speech to the United Nations in 1989, "it is mankind and his activities which are changing the environment of our planet in damaging and dangerous ways". Never one for fads or scare stories, she was the original sceptical environmentalist. And she was convinced.

The call to action is even stronger today than it was then.

Britain and the global community are still moving too slowly. The international effort on climate change desperately needs renewed leadership.

Labour's Failure on Climate Change
Britain is in a position to provide that leadership. We have done so in the past. We are one of the few countries likely to meet our Kyoto obligations, largely it should be said because of the Conservative led "dash for gas" in the 1990s.

We have a privileged relationship with the USA, which leaves us best placed to persuade them into the international fold. We assume the presidency of the G8 and the EU next year.

My concern is that we are squandering this opportunity. Because of our failure to follow up bold rhetoric with action that inspires trust.

The instinct of our prime minister is to lecture people. But on his watch CO2 emissions have actually risen. He has set ambitious long term targets for CO2 emission reductions but few people outside government believe that there is a coherent plan for achieving them.

Labour's policy on sustainable transport is now a jumble of contradictions.

Their renewable energy strategy begins and ends with onshore wind farms, despite the opposition from local communities.

Their support for new technology is well behind that of other leading economies, despite the fact that they could transform the debate and create great opportunities for British companies.

Their incompetence in managing European legislation has been unbelievable. Take fridges for example. When the new rules for disposing of fridges came into effect in January 2002, the UK had only two sites available for recycling and disposal. Defra incompetence led to enormous expense, the infamous "fridge mountains" and the transportation of redundant fridges to Europe where the appropriate machinery was available.

How can we expect to make progress if even the most basic environmental legislation cannot be properly implemented?

Above all, Labour have failed to engage the British people, whose decisions as consumers, taxpayers and parents are of crucial importance in shifting Britain towards being a low carbon economy. In fact, over issues like fridge mountains, they have alienated them.

Because of Labour's high-handedness, consumers, communities and small firms now more often than not see environmental regulation as a burden and a hindrance, rather than what it should be, as a step towards a sustainable future.

This is not the ideal background against which to assume the presidency of the G8 and the EU next year.

The Conservative Approach to Climate Change
So what would a Conservative government actually do? There are four key areas for action:

1. Re-asserting our international leadership in this area;

2. Creating a global market to encourage a reduction in emissions;

3. Renewing the drive for a diverse renewable energy sector;

4. And re-focusing on increased energy efficiency.

International Leadership
First of all, we must and we will reassert British leadership in the international arena. The best way is to lead by example.

HFCs
First, we must be more active in removing the causes of harmful emissions where we are able to. I can announce today that the Conservatives are committed to phasing out the use of hydrofluorocarbons, or HFCs, between 2008 and 2014.

HFCs have solved one problem - they do not damage the ozone layer. But they have caused another - they contribute significantly to global warming. Their impact is some thousands of times greater than CO2. HFCs currently account for two per cent of the UK's greenhouse gas emissions and they will have doubled by the end of the first decade of the twenty first century.

Some companies are already tackling this problem. Coca Cola - which owns around nine million refrigerators worldwide - is to phase out the use of HFCs in its refrigerators. Unilever has taken a similar stance, and Toyota is introducing non-HFC air-conditioning in their cars. These companies recognise that HFCs are not the way of the future.

These are welcome, but isolated, examples. Unless this issue is addressed as a matter of some urgency, and government gives a clear lead, then the situation will only worsen. That is why a future Conservative government will work with our European partners to phase out the use of HFCs over the next decade.

Bringing the USA into the international fold
Like the war on terror, or the drive for responsible free trade, climate change is an international issue that depends on international cooperation. No one can opt out of the fight against global warming.

That means persuading the Americans to join the battle against climate change. America generates a quarter of the world's greenhouse gas emissions, yet it has only four per cent of the world's population.

Their involvement is essential if we are to have effective action. It can be done. After all, we've been here before.

One of the greatest challenges I faced as secretary of state for the environment was to persuade the Americans to participate in the first Earth Summit. As I described earlier, I vividly remember my 24 hours of shuttle diplomacy in Washington before the Rio Summit, ending with me in the White House persuading the Americans not just to attend, but to sign up to the climate change convention, the forerunner of Kyoto.

It is very disappointing that Tony Blair has not succeeded in persuading the present administration that the challenge of global warming is one that cannot be shirked.

The Role of the Market: emissions trading and creative markets
We can help them by pressing the international community to harness the power of the free market to combat, rather than contribute to, climate change. That must be our second area of focused action.

Conservatives have shown how the market can be used to deliver environmental ends. In the past we pioneered market incentives for both recycling and landfill. Emissions trading is the next step. It is something we began to look hard at when I was environment secretary. It will give business the incentive to find the most cost effective route to reduced emissions and to make proper financial provision for the emissions it cannot yet reduce.

Europe's scheme is set to start at the beginning of next year. We have yet to see how effective it will be in practice, but we certainly support the principle. Schemes are already available in parts of North America. Together they will provide the building blocks for a global emissions trading system. The promotion of carbon trading will be a major objective for the next Conservative government. But to be effective it must be rigorously policed and must be built on a level playing field, with a consistent carbon value across all participants so that no nation's industry can claim to be at a competitive disadvantage.

Renewable energy
Our third major area of focus will be renewable energy. Given that only three per cent of our energy comes from renewable sources, the upsides are enormous if we can find cost effective ways to tap into the almost infinite reserves of renewable energy.

The government is betting the farm on onshore wind, focused as it is on its short-term 2010 renewable energy target. In doing so, I believe that they have made two mistakes that undermine the long term potential for renewable energy.

First, by changing the planning guidance, they have put the renewables sector as a whole on a collision course with local opinion. They have shifted power away from local communities and put it in the hands of developers and politicians.

We oppose the new guidelines. We are not against on shore wind but we believe that communities must be won over, not walked over. That is in the long term interest of renewable energy.

The government's second great mistake is its neglect of offshore wind, biomass and the emerging technologies of solar, wave and tidal power.

These are now emerging as potentially viable sources of renewable energy. I was delighted, for example, to hear of the first wave machine to supply electricity to the national grid, operating off the Orkney coast.

These technologies offer significant commercial potential but Britain is missing out. Even with offshore wind and wave power, where we have enormous natural and technical advantages, we are losing ground to the Danes and the Portuguese.

We should not allow these promising technologies to be victims of a classic poverty trap - what the environmentalists frequently call "the valley of death" - the gap between grant aid and the ongoing support provided through the Renewables Obligation. We support the principle of the Renewables Obligation but are consulting on ways to reform it so that it bridges the so-called valley of death and provides access to the necessary start-up funds.

I am convinced that, with the right incentives and with the right long term vision, the 21st century will be the age of renewable and recoverable energy, just as the 19th century was the age of the steam engine and the 20th the age of the internal combustion and jet engines. Man's ingenuity is almost limitless, and clean energy will dominate the planet and secure our future well before the end of the century we live in today.

Energy efficiency
If finding new sources of clean energy is one part of the equation, conserving the energy we use is the other. The fourth major focus for a Conservative government would be an urgent refocusing on the benefits of greater energy efficiency.

Energy efficiency has always been the Cinderella of the debate on climate change. It is not as exciting as renewable energy, its effects are gradual and unseen. But there are huge gains to be made.

Household energy accounts for more than a quarter of all our CO2 emissions. When I was secretary of state for the environment, I established the Home Energy Efficiency Scheme, which succeeded in assisting more than two million homes by the time we left office. But I know how much more there is still to do. Indeed, because of Labour's refusal to push forward energy efficient measures for public housing, we are well behind the energy efficient target set by the last Conservative government.

Home Energy Efficiency
The place where we can make the most progress is in the homes that we live in. We must face up to the challenge of Britain's ageing, inefficient housing stock. At least two thirds of it has yet to benefit from any energy efficiency measures at all.

It is estimated that insulating the walls of a quarter of a million homes would result in annual carbon savings of around 500,000 tonnes.

Only radical measures will ensure that we make real progress in this area. Fiscal incentives have been used in the past to make real progress. They worked, for example, when we introduced differential fuel duty to promote the use of unleaded petrol. They exist at the moment with varying rates of vehicle excise duty. We are looking at a similar approach to encourage homeowners to become more energy efficient. Today it is not a priority issue for most homeowners. Through the tax system we have the opportunity to change attitudes and make even clearer the financial and environmental benefits of energy efficiency.

For example an adjustment to stamp duty could be a powerful incentive to increase home energy efficiency. We are consulting on a proposal that all houses which meet a specific energy efficiency target, benefit from a reduction in stamp duty - much in the way that energy efficient cars benefit from reduced road tax.

The reform could work in either one of two ways.

If the home has been upgraded already, the stamp duty could be reduced at the point of purchase. If the home has still to be upgraded, the new homeowner could make the improvements and then claim a rebate on the stamp duty they have paid.

As I say this is the sort of radical measure that we must now consider if we are to make the necessary breakthrough on home energy efficiency.

But there may be other areas as well. We also have to consider simplifying the current building regulations that relate specifically to energy efficiency standards, and perhaps replacing them with one simple thermal target.

And we should be more ambitious about those standards, and more rigorous in making sure they are met in practice. We are way behind. Just remember that, on average, a British home consumes over three times as much energy as a German home. A Conservative government will consult on the most practical timetable to achieve zero emissions from new houses, without compounding the problems of affordable housing. That must be the ambition and we must strive to make progress towards it.

Microgeneration
Micro generation - low carbon power generated by individuals, small businesses and communities to meet their needs - is likely to play an important part in this drive towards greater energy efficiency. I know that the Green Alliance have been active in making the case for bringing micro generation into the mainstream, and I am sympathetic. We should be doing more to facilitate localised generation not least because it is an opportunity to engage the public more closely with the benefits of energy independence and efficiency.

Combined heat and power
We also want to make the most of a proven, but shamefully underused technology, which is more than twice as efficient as centrally-generated energy sources. If only we used CHP - combined heat and power - properly we could greatly expand the possibilities for household energy efficiency. For every 1000 megawatts of CHP energy operating in the UK, nearly one million tonnes of carbon are saved each year.

When I was secretary of state for the environment, the Conservative government created Britain's first CHP target. We set the country on a firm path to achieving it, and then increased it. Labour have missed our CHP target by four years and the reality is that CHP capacity is now in reverse as ministers invent excuses for inaction or actively discourage it. For example, the new electricity trading arrangements put CHP producers at a significant disadvantage.

CHP and micro CHP could be much more prominent, and they will be under the next Conservative government. We will give the CHP industry the confidence it needs to invest for a successful future. We will work closely with local authorities to encourage them to implement more community CHP schemes, particularly in new housing developments.

And we will learn from examples of local success. We will look closely at schemes like that in Woking, whose town centre now largely runs on CHP. Britain needs more schemes like Woking's, an entirely achievable goal that would make an immense contribution to our climate change objectives.

Transport
Our pursuit of energy efficiency must include the transport sector where it is clear that we must do better.

Transport contributes around a quarter of our emissions and that proportion is expected to grow, not least as aviation emissions are expected to double by 2020.

Over many decades, the car industry has made huge strides in making cars more fuel efficient through a combination of stick and carrot. The future looks even more promising. A new generation of cars, using LPG and hybrid technology, are on the market, offering up to 50% savings in emissions. But they represent less than 0.5% of the total UK vehicle fleet.

Biofuels can cut emissions by 50% compared with fossil fuels. But they represent less than 0.2% of the UK market. Hydrogen is coming. Ford and General Motors have promised production model hydrogen cars by the end of the decade.

These are exciting prospects for a government and society that has the vision and will to help the great polluter of the twentieth century become the most environmentally-friendly form of motorised transport in the 21st century.

A Conservative government will work harder to bring the future forward. Through the tax system we have opportunities to send clearer long term signals and incentives to both motorists and suppliers. Through action at the European level, we have the opportunity to set higher standards for monitoring and improving fuel efficiency and emissions. The carrot for the industry is the guarantee of a real market in the future for fuel efficient vehicles. But the stick to ensure action will be more effective and ambitious Europe-wide energy standards.

Government can provide leadership here not just through regulation, but by example. Between them, the Inland Revenue, Customs and Excise and the Home Office have 5,836 vehicles. Just 183 of them use alternative power. A miserable three per cent.

The next Conservative government will make it a point of principle for every car purchased by a government department to be the most fuel efficient or best alternative fuel car available.

Nor will we duck, as this government has done, the challenge of getting under control the fastest growing source of greenhouse gases - aviation.

Britain cannot solve the problem of aviation pollution on its own. But we should do more to inform consumers of the environmental impact of their choices. We should work to reach faster conclusions on the feasibility of including aviation in an EU, and eventually global, emissions trading scheme.

We should be more insistent in pursuing the principle of the polluter pays. And more imaginative in giving industry the incentives to pursue greater efficiency and less noise pollution. Promoting greener behaviour need not hold back economic growth or restrict choice. But the longer we delay action, the harder it will be to achieve that outcome.

Today I am giving you a sense of direction in relation to promoting greener transport. Over the next few weeks and months we will be announcing more specific ideas. We hope they will generate an honest debate, one which will engage the British people with the key challenge of adapting to achieve a more sustainable way of life.

In a sense, that puts the environment at a huge disadvantage. We talk about the need for a debate on the environment but in fact that there is almost no meaningful debate. It means that politicians like me can trot up to the odd conference, and make a fine and concerned speech, and go away again, perhaps coming back in 12 months to chuck around a few statistics to show what progress has - or has not - been made.

The urgency of global warming means that fine words are no longer enough. We need action.

I am the first party leader who has served as environment secretary. It's an issue I care passionately about. I want the Conservatives to carry on leading this debate. And we will.

The next Conservative government will replace aspiration with achievement and words with actions. We will reassert Britain's global leadership on climate change. We will renew the drive for a diversified renewable energy sector. We will champion renewable energy technology to bring forward the future. We will provide fiscal and pragmatic incentives to increase energy efficiency dramatically.

And we will engage the British people because in this debate we are all decision-makers.

We have inherited a diverse and beautiful world - we must hand it on, enhanced and not diminished.

It should be the ambition of every politician in this country - and indeed every politician around the world - to say when he or she leaves office: if you want to see my monument, look around you. I have left this world a better place than when I found it.