Davey: fossil fuel price spikes could be halved by climate policy

The Energy Secretary set up the case for climate change policies today by suggesting they could dramatically cut the impact of fossil fuel price spikes on ordinary households. His comments […]

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By Vicky Ellis

The Energy Secretary set up the case for climate change policies today by suggesting they could dramatically cut the impact of fossil fuel price spikes on ordinary households.

His comments come days before the draft Energy Bill is to be unveiled by the Government.

It is expected to lay out significant spending on nuclear power, as well as policies to attract £110 billion worth of investment to rebuild the UK’s aging energy infrastructure.

Referring to research commissioned by the Government, Ed Davey said they could cut the effect of volatile energy prices on disposable household income by more than 50% in 2050.

The Secretary of State said: “Every step the UK takes towards building a low-carbon economy reduces our dependency on fossil fuels and on volatile global energy prices.

“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.”

Mr Davey pointed to the effect of the Arab Spring on wholesale gas prices last year, which pushed up UK household bills by 20%.

The analysis, produced by Oxford Economics, suggests climate change policies could also halve the impact of global fossil fuel prices on inflation, as well as halve the impact on levels of unemployment.

This week, Big Six supplier SSE wrote a letter to a national newspaper suggesting a recent boom in natural gas including shale could mean investors were put off nuclear.