Ed Davey, the Energy Secretary, has revealed that Britain’s climate change policies could help halve the negative impact of spikes in global oil, gas and coal prices in the UK by 2050.
Oxford Economics was commissioned by the Department of Energy and Climate Change (DECC) to investigate how the UK’s sensitivity to oil and gas price shocks could be reduced by embracing low-carbon generating technologies such as, renewables, nuclear and energy efficiency measures.
Secretary of State, Edward Davey said: “Every step the UK takes towards building a low-carbon economy reduces our dependency on fossil fuels, and on volatile global energy prices.
“Only last year, the impact of the Arab Spring on wholesale gas prices, pushed up UK household bills by 20 percent.
“The more we can shift to alternative fuels, and use energy efficiently, the more we can ensure that our economy does not become hostage to far-flung events and to the volatility of market forces.
“Of course, there are costs to building more low-carbon plant, but the gains are so much greater, and crucially they are lasting.
“This is about building a more resilient economy and providing more stable energy prices for the generations that follow us”.
The analysis follows the recent news that the average dual-fuel energy bill in 2011 rose to £1,400, double that of just 7 years ago.
Oxford Economics estimates that, once the UK successfully transitions to a low-carbon economy, the UK will insulate itself from the effects of volatile fossil fuel pricing. As a result, disposable household income will increase as energy bills plummet. Business investment will increase and inflation will stabilise. The analysis also estimates that unemployment will decrease due to greater economic activity.
Ed Davey also confirmed that Government will publish its much-anticipated draft Energy Bill which will: “set out in detail how the UK’s electricity market can be reformed in order to keep the lights on, bills down and the air clean.”
The Bill will set out how Government proposes to attract the £110 billion required to build the necessary infrastructure to support the UK’s transition to a low-carbon economy.