Ernst & Young analysis finds decarbonisation is winning strategy for energy security and economic recovery

EY (Ernst & Young) analysis finds decarbonisation is winning strategy for energy security and economic recovery

Brussels, 10 June 2014. A new report by EY (Ernst & Young) debunks the myth that business-as-usual is a winning economic strategy for Europe. It concludes that decarbonisation is a powerful tool to reduce Europe’s energy import dependence and would be an effective driver of economic recovery. The report provides EU policy-makers with a fact base to draw on as they form their positions on the bloc’s proposed climate and energy package for 2030 and on the debate on how to improve energy security in light of the continued crisis in Ukraine.

In a new synthesis report titled “Macro-economic impacts of the low-carbon transition”, EY (Ernst & Young) assesses the economic implications of decarbonising for the European economy and compares them to the challenges Europe would face under a business-as-usual (BAU) scenario, drawing on a multitude of recent expert research in the field.

The analysis looks at trends and forecasts of key macro-economic features of four sectors that are particularly relevant in the climate debate in the EU: energy, transport, buildings and industry. Economic features that are being scrutinised include investment costs, energy prices, industrial competitiveness, GDP and employment.

The report finds that, irrespective of the choices made on decarbonisation, the EU is set to face major economic challenges over the coming years. According to the European Commission’s Energy Roadmap 2050, these include the increase in investments needed to maintain and replace the region’s existing energy infrastructure from the current €800 billion per year (2010-2020) to up to €1,000 billion per year from 2040-2050, an increase in the average price of electricity by 40% by 2030, as well as an ever-growing fuel import bill.

Alexis Gazzo, in charge of Cleantech and Sustainability at EY in France, said: “While growing competition from emerging economies is widely accepted as a key risk to European industrial sectors under any scenario, energy prices and costs associated with Europe’s aging energy infrastructure and building stock tend to be considered under a low-carbon trajectory only. This analysis reminds policy-makers that even under a business-as-usual scenario energy prices and pressures to invest in infrastructure would increase significantly.”