The Reference scenario is a baseline against which the extra costs and other consequences of meeting policy goals can be assessed.
It assumes that current social and economic trends and existing energy policy measures continue. Under this reference scenario it is virtually certain that the 80 per cent carbon reduction goal will not be met.
The Low Carbon scenario assumes that new policy measures induce investment in low carbon technologies to reduce energy demand and the carbon intensity of supply technologies. Energy prices rise as a result of taxes and carbon trading and, as a consequence, we reduce our demand for energy services. It also assumes that the UK can meet part of its 80 per cent goal through an international carbon market.
The Resilient scenario assumes that the UK energy system becomes more resistant to external and internal shocks through:
- increasing diversity of supply, in other sectors such as transport as well as electricity;
- reinforcing infrastructure to make it less vulnerable;
- demand side measures such as maintaining fuel stocks and fuel flexibility.
No specific assumptions are made about external shocks: the focus is on "resilience" as an intrinsic quality of the energy system that can enable it to recover more quickly from shocks.
Finally, the Low Carbon Resilient scenario allows us to address how the twin goals of resilience and carbon reduction might work together and whether trade-offs must be considered.