September 11, 2014
By Jason Anderson, Head of EU Climate and Energy Policy, WWF European Policy Office
A Cambridge Econometrics report released yesterday responds to the simple question: what would the economic implications be of meeting the UK’s carbon reduction goals to 2025 (the ‘fourth carbon budget’), compared to a scenario where they slow down their mitigation efforts?
The answer, of course, is not so simple to come up with, which is why the modellers’ expertise was necessary. The implications of cutting carbon are broad – more investment in low-carbon infrastructure and industry, increases in the associated employment, a faster shift from fossil to renewable energy, lower health costs due to reduced air pollution, and so on.
The net result is a major benefit to the economy, with household income rising £565 per year by 2030, heathcare costs down as much as £288m per year, a £5.7bn increase in government revenue, a 1.9% rise in production in energy-intensive sectors and a cut of £8.5bn in oil and gas import bills.
The biggest issues to contend with are, first, ensuring that energy efficiency measures are implemented even among the less well-off in society so that their fuel bills fall even as unit costs rise. This implies more robust programmes around fuel poverty. Secondly, a small number of energy intensive industries will similarly need to see enhanced investment in low-carbon technologies during a period in which they may need to be insulated from the full costs of transition, an approach already being undertaken through EU policy, though in a manner that requires considerable improvement.
As negotiators work behind the scenes to prepare for a European Council meeting later in October that will likely define the outlines of EU climate and energy policy through to 2030, this report adds to the stack of economic studies demonstrating the benefit of climate action and associated changes to industry and energy. At this point it’s clear that any failure or reluctance to reap the benefits of a low-carbon transition shows a singular inability to take the initiative needed to navigate change successfully.