Negative energy price spikes can be halved, says Davey
Climate change polices could slash volatility in global oil, gas and coal prices by 50% by 2050, energy secretary Ed Davey has claimed.
This bold statement follows the unveiling of Government commissioned report, which revealed how negative oil and gas price spikes could be reduced by using low-carbon forms of electricity generation, such as renewables, carbon capture and storage (CCS) and new nuclear.
Energy efficiency was also shown to play a major role in managing price variations, according to the analysis by Oxford Economics.
Speaking today (May 18) Mr Davey 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.
"Every step the UK takes towards building a low-carbon economy reduces our dependency on fossil fuels, and on volatile global energy prices. 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."
Following transition to the low-carbon economy, the report claims that the negative impacts of energy price shocks could be halved in four areas, which include; business investment, inflation, domestic energy bills and unemployment.
The Renewable Energy Association (REA) welcomed the report, but warned it is only a "first step" towards better understanding of renewables investment and energy efficiency.
REA chief executive Gaynor Hartnell, said: "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."
However, she added that the REA would also like to see the Government also 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.
Renewable energy consultancy WSP Future Energy global managing director David Nickols also welcomed the report, but warned that investors "need to see a consistent government message across all departments in support of its long-term energy strategy in order to have the confidence to invest in UK renewables".
He said: Moving to a large proportion of renewable power (electricity and heat) generation within a diverse energy mix will reduce emissions, increase security of supply and improve affordability and energy cost predictability for the longer term, as well as creating jobs and generating exports."
Next week, the Government is set to publish its draft Energy Bill, which will set out how the UK's electricity market can be reformed in order to "keep the lights on", costs down and reduce air pollution.
It will also set out how the UK can attract the £110bn of investment required to build new low-carbon plants.