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Climate policy could shield UK from external shocks

A Government report has indicated that British climate policies can help to shield the economy from oil and gas price shocks.

Research by Oxford Economics indicates that energy price spikes can damage economic growth, business investment and employment, but the negative impact could be halved in if the UK’s climate policies reduce UK demand for coal, gas and oil.

The results of the report were revealed ahead of the government;s draft Energy Bill due to be published next week, which will detail reforms to the UK electricity market. It will also look at ways the Government can attract the £100 billion needed to build low-carbon plants.

Commenting on the findings, Ed Davey, Secretary of State for Energy and Climate Change said: “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.

It is hoped that the reforms will help the UK to meet its climate goals of an 80% cut in greenhouse gas emissions by 2050, paving the way for new renewable and nuclear power plants and technology to capture and store emissions.

Research by Oxford Economics also indicated that a 50% increase in oil and gas prices would have reduced GDP by 1% in 2010. However, by 2050 the negative economic impact would be 0.7% under the current regime, which would fall to less than 0.4% under the low-carbon economy with less energy demand.

It also indicated that the UK’s sensitivity to oil and gas price shocks could be reduced by up to 60% through the introduction of climate change policies.

This was posted in Bdaily's Members' News section by Ruth Mitchell .