We turn next to the question of price and price volatility and its effects. Now I’m conscious of speaking to a distinguished former Chancellor, but the fact is that if we are on a trend towards higher fossil fuel prices, then we can anticipate that there are likely to be quite sharp price volatilities. That seems to argue in favour of reducing our dependence on fossil fuels.
Nigel’s argument rests on the assertion that it will be enormously expensive to mitigate. And I don’t think that assertion is valid. It doesn’t take a very great change in fossil fuel prices to alter the balance between, for example, gas-fired power stations and nuclear plants. It’s not at all clear that moving to an increased dependence on carbon capture coal-fired plants will be economically disadvantageous. By opening up the potential for indigenous coal supply to be used, and attaching to it carbon capture, we may end up with a form of electricity supply which is dependable, cheap and secure. If we turn to transport, the evidence suggests that well judged, not drastic but gradual, incentives to persuade manufacturers to produce more efficient cars are perfectly possible without vast increases in the capital costs of cars.
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