New research by PwC, using historical data from five EU member states, shows that countries can decarbonise at faster than average rates without reducing economic growth or losing competitiveness while still generating new sources of economic growth and jobs.
This is the conclusion based on analysis of the long-term economic impact of energy policies in five European countries (Denmark, Germany, the Netherlands, Sweden and the United Kingdom) between 1970-2010. The report, commissioned by the European Climate Foundation, provides relevant background to the current discussions on EU competitiveness and decarbonisation in the context of the EU 2030 climate and energy policy discussions.
The European Union has seen waves of regulation and deregulation of the power sector. Historically, security of supply and affordability have been the driving forces of energy policy. More recently environmental sustainability and decarbonisation as well as innovation and growth were added to the list as key drivers of energy policy and investments in the power sector.
Rather than projecting forward, this report analyses long-term impact of energy policy using historical data. This provides an empirical evidence base that demonstrates how energy systems have changed over time, driven by various policy objectives. It assesses economic impact from these changes in terms of competitiveness, growth & jobs, and economic resilience.
The five economies are geographically closely connected and have comparative income levels, but vary in economic composition and energy policy choices.
Specifically PwC looked into the interactions between:
- Political support for policy changes and economic development
- Structural changes in the power system and economic impact
- Electricity prices as a proxy for competitiveness
- Technology trends and employment as a proxy for economic growth
- Energy trading and fuel diversification as a proxy for security of supply.
The PwC analysis shows that structural changes in the economy driven in part by specific energy policies have led these countries to outpace the OECD-average in decarbonisation of the economy. As a consequence, consumer power prices are now above EU-average, but these economies have found ways to remain competitive. Even more the countries with most far-reaching decarbonisation policies have managed to generate new sources of economic growth and create specific low-carbon jobs in the process of decarbonisation.