Question
To ask the Secretary of State for Energy and Climate Change pursuant to the oral statement of 29 November 2012, Official Report, column 388, on energy policy, what the evidential basis is for the statement that Government policies stand to reduce the UK's sensitivity to fossil fuel price strikes by approximately 30 per cent by 2020 and by around 60 per cent by 2016.
[132678]
Answer
Assuming the question refers to the statement that “Government policies stand to reduce the UK's sensitivity to fossil fuel price spikes by approximately 30% by 2020, and by around 60% by 2050”, the evidence base is the DECC-commissioned 2011 Oxford Economics report, ‘Fuel Price Shocks and a Low Carbon Economy’. This can be accessed at the following web address:
http://www.decc.gov.uk/assets/decc/11/tackling-climate-change/international-climate-change/5276-fossil-fuel-price-shocks-and-a-low-carbon-economy-.pdf
The key findings of this study are that the impact of a 50% increase in oil and gas prices (resulting from a supply shock) reduces UK GDP by around 1% in 2010; and, under the low carbon scenario of reduced energy demand, by around 0.7% in 2020 and less than 0.4% 2050. This indicates the impact on UK output from oil and gas price shocks could be reduced by around 30% in 2020 and 60% in 2050, compared to a 2010 baseline.