Lukas Hardt, Karen Turner, Paul Brockway, Grant Allan, John Barrett, Peter McGregor, Andrew Ross, Kim Swales, Marco Sakai
Year of publication:
UK Energy Research Centre
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This study investigates how an increase in exports (a key pillar in the UK Industrial Strategy) could impact energy and industrial policy by comparing two types of energy-economy models. Achieving the targets for reducing greenhouse gas emissions set out in the UK Climate Change Act will require a significant transformation in the UK's energy system. At the same time, the government is pursuing a new UK Industrial Strategy, which aims to improve labour productivity, create high-quality jobs and boos exports across the UK. The economic and the energy systems in the UK are tightly linked and so policies adopted in one area will produce spillover effects to the other. To achieve the objectives set out in the two strategies it is therefore vital to understand how the policies in the energy system will affect economic development and vice versa. Our study contributes to this by investigating how an increase in exports (a key pillar in the UK Industrial Strategy) could impact energy and industrial policy. We address this question by systematically comparing the results of two types of energy-economy models of the UK, a computable general equilibrium model (CGE) and a macroeconometric (ME) model. In both models we analyse a stimulus to demand from an increase in exports arising from a successful export strategy as motivated by the UK Industrial Strategy.