The report, produced by Oxford Economics, points to how plans for carbon capture and storage, renewable electricity generation and greater energy efficiency can protect the UK economy from the threat of ever increasing gas and oil prices.
The report contends that by 2050, and through a low carbon economy, the UK will be up to 50 per cent better protected from the following effects of volatile fossil fuel prices:
– Volatility on disposable household income reducing amount households would have to put aside to spend on energy bills
– The negative impact on the level of business investment
– Impact on inflation
– The impact on levels of unemployment, which could rise through increased economic inactivity caused by high energy prices
Energy minister 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 per cent.
“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 Renewable Energy Association (REA) reiterated the reports findings with chief executive Gaynor Hartnell stating: “Clearly, investing in renewables and energy efficiency will help protect the economy against increasing and volatile fossil fuel costs. Householders and businesses will benefit even more if they become more energy efficient and produce their own renewable energy. Fossil fuel price rises added over £160 to the average energy bill last year, whereas support for renewables only accounted for £20 of the average energy bill.
“There are so many other benefits that investment in renewables brings. We’d also like to see the Government audit the impact on employment, export earnings, increased tax revenues, improved balance of trade, greater energy security and increased choice and competition in the energy markets.”