In many countries, including the UK, there is a very fortunate synergy between climate change policy and economic stability.
The UK is a net importer of fossil fuels, particularly oil and gas, making it vulnerable to price shocks caused by events which may be completely out of the control of UK policy. This is precisely why we hear so much talk about energy security.
A volatile world
In addition to the pressing climate change issues, reducing our dependence on imported fossil fuels is vital in achieving economic stability in a volatile world. Policies which encourage energy efficiency and increase capacity of ‘home grown’ energy such as solar, wind and to some extent nuclear, can thus be seen to be beneficial on more than one level.
DECC recently commissioned a study by Oxford Economics on this very subject. The report ‘Fossil fuel price shocks and a low carbon economy’ can be accessed here.
The focus of the study was the effect on the UK economy of an oil and gas price shock (i.e. a sudden and unexpected rise in the import cost of these commodities). A quick look at a graph of oil prices over the last few decades demonstrates that there is a clear historical precedent for such shocks.
In many countries, including the UK, there is a very fortunate synergy between climate change policy and economic stability.
