U.K. efforts to switch to low-carbon power sources may lessen the negative impact of an oil-price shock, a study found before the government publishes its plans to attract investors in clean-energy generation.
The country’s proposed climate policies would reduce the effect of jumps in energy prices on disposable household income by half by 2050, research group Oxford Economics said today in a government-commissioned report. They’d also mitigate the impact on business investment, inflation and unemployment, it said.
Britain, seeking an 80 percent cut in greenhouse-gas levels by 2050, will publish a draft energy bill next week setting out reforms to the electricity market as it seeks funds to replace aging power plants, upgrade grids and expand renewable energy. Oil and gas price gains can push up consumer prices, squeezing incomes while boosting costs for energy-intensive industries.
“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,” Energy Secretary Ed Davey said in a statement accompanying the report.
The political turmoil that spread through the Arab world from late 2010 pushed up U.K. household bills by 20 percent last year, Davey said. Oil rose to almost $150 a barrel in mid-2008 from about $20 in 2002 as growth in emerging markets drove up demand, according to today’s report, which was commissioned by the Department of Energy and Climate Change last year.
Oxford Economics was founded in 1981 as a venture with Oxford University and provides independent analysis of global economic, industry and business trends, according to its website.