Why isn’t cutting demand at the heart of our energy policy?

intext-blogThis post is by Nick Eyre, director of the Centre for Research into Energy Demand Solutions (CREDS).

The government frequently boasts that the UK has broken the link between carbon emissions and economic growth. Since 1970, the economy has trebled in size, whilst emissions have fallen by about a third.

While this is to celebrated, there is a widespread misunderstanding about how it has been achieved. Most of the change has had nothing to do with the move away from coal, or the ‘dash for gas’, or nuclear energy or even the recent rapid rise in renewables. Changes to energy intensity – the decoupling of energy use from economic activity – have contributed three times as much as all of these factors put together.

Even without much recent government intervention, reduced energy intensity has been the major success story of the UK energy system: our economy produces many more goods and services but with much less energy than it did. Absolute energy demand is now lower than at any time since the mid-1960s.

This has been central to the health of the UK economy; without these changes, the scale of energy imports would have been very much larger, with the possibility of frequent power cuts and major problems with gas supply in cold weather.

Business as usual will not cut it
But resting on our laurels now would not be a good strategy. On the contrary, delivering a zero carbon energy system will mean rapidly increasing the pace of energy system change, especially by vastly upping the rate of energy demand reduction.

Business as usual rates of energy efficiency improvement will not be enough for the scale of the challenge. Green Alliance has just published a new report, Balancing the energy equation, which highlights gaps in the government’s approach. Current policy would only cut about ten per cent of the carbon emissions compared to what’s needed from transport, buildings and industry.

Based on research we’ve carried out at CREDS, the report shows that action on three fronts is needed:

  • Reducing energy use in the first place, through better designed products and systems
  • Improving energy efficiency, by making better use of technologies
  • Flexing demand, better matching energy use with variable renewable energy

People could get behind – and benefit from – a new approach
Energy efficiency itself is politically uncontentious. However, the most effective policy instruments to achieve it, notably regulation, have often been rejected. Since 2012, policies to support energy efficiency in homes, businesses and transport, have become less and less effective. In all cases this has been due to ideological rather than economic reasons. And there is a risk that this will only get worse if product and vehicle regulations, which have been successful at cutting energy use, are abandoned when the UK leaves the single market in December 2020.

Taking action to reduce demand for energy services is often seen as ‘politically difficult’, with fears that it implies a reduction in quality of life. Politicians may worry about intervening in people’s lives, but there is ample evidence to show change is supported where current patterns of consumption are wasteful of energy, and have negative social and environmental impacts.

And there are huge opportunities to address this problem across the economy, in ways that people could get behind and will benefit them: for instance, why are we spending money heating and lighting unused spaces in buildings? Why are we throwing away materials after only a single use when they have required large amounts of energy (and other resources) to produce, with all the cost and environmental harm that means? And why are we producing and using vehicles that weigh a tonne (literally), and are only used two per cent of the time, and then often with only one occupant?

In all these cases, energy use could be avoided completely or delivered more effectively through better systems that also enhance people’s lives. Of course, changes may be opposed by vested interests, but it would be common sense for government to promote better managed buildings, active modes of travel and a circular economy. These policies reduce pollution, improve health and provide sustainable high quality jobs.

Households could earn money by adding flexibility, contributing to ‘system balancing’ to allow for easier use of intermittent renewable electricity. They could provide this via their electric vehicle batteries when idle. This is an energy service only large businesses have been able to offer previously.

This three track approach, of changing what we use energy for, using it more efficiently and increasing flexibility, is not a ‘nice to have’. It should be central to a sustainable energy strategy and to getting the UK to zero carbon emissions. It is also an opportunity for a more democratic energy system with people more involved in the key decisions. It needs government to make all our lives better and lead the way with strong policy.

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