We need to stop wasting energy. So says “Shifting the focus: energy demand in a net-zero carbon UK”, the first report from CREDS, the Centre for Research into Energy Demand Solutions at the University of Oxford’s Environmental Change Institute. It claims that changes to the way that energy is used are critical to the development of a secure, affordable and sustainable energy system. “In recent decades, more than 90% of the progress in breaking the relationship between carbon emissions and economic growth globally has come from reducing the energy intensity of the economy,” it says. “By comparison, reducing the carbon emissions per unit of energy has, to date, been a relatively minor effect.”
That’s quite a bold claim and needs a bit of unpacking. There have certainly been improvements in energy efficiency in many sectors. And, as the report says, “in leading energy-importing countries, energy efficiency improvements have played a major role in reducing dependence on imported fuel”. However, some energy demand reductions have been due to structural changes in the economy, not energy efficiency initiatives as such.
Nevertheless, there has been a degree of decoupling of energy use and economic activity, which the report says “has been reflected in absolute reductions in energy demand. Primary energy demand in the UK has fallen by 20% since 2003. This has confounded official projections made at the beginning of this period, which projected slow but steady energy demand growth. This decoupling has a longer history, with an annual improvement of the GDP/energy ratio averaging 2.5% since 1970, reducing current energy demand to one third of what it would have been with no improvement”.
Decoupling dominates?
“It is difficult to exaggerate the impact of the historical decoupling of energy demand from economic activity,” the report asserts. “It has contributed more to carbon emissions reduction than the combined effects of the UK’s programmes in nuclear, renewable and gas-fired power generation. It has made energy services more affordable to households and businesses. It has improved UK energy security, both by reducing energy imports and enabling peak electricity demand to be met with less generation capacity. Much of this impact has been driven by public policy. It is recognition of this effect across the world that has led to the IEA to call for energy efficiency to be treated as ‘the first fuel’ in energy policy.”
Does the UK need 40 GW of firm capacity?
The CREDS report admits that, in the UK case, some of the demand reduction has been linked to the movement of manufacturing activity out of the UK, in particular to Asia. “This offshoring of economic activity has reduced UK industrial energy demand; its effect has been broadly similar in scale to that of technical improvements in industrial energy efficiency,” it says. “The Clean Growth Strategy aims to halt this trend of offshoring by retaining industrial activity in the UK. This implies that further reductions in industrial energy demand would need to come from technical or process changes that reduce energy demand per unit of material produced, or wider structural changes that reduce the demand for these materials, for example, through a greater focus on resource efficiency.” That is quite an agenda. And the report makes many other recommendations, for initiatives in all sectors.
That said, the prognosis looks quite good. Demand for power in the UK has fallen to 1994 levels. Indeed, as CREDS says, overall UK energy use has also fallen consistently over the last 15 years, despite economic growth continuing, although it may be creeping back up in some sectors. One of the main factors has been that, with prices for energy and many other commodities and services rising, energy is now being used more efficiently, aided by the advent of new technologies and, in some cases, prosumer self-generation. And this trend may be spreading. Although energy use and electricity demand globally has still risen, power demand fell in 18 out of 30 IEA member countries over the period 2010-2017. The IEA says that over 40% of the reduction was due to energy efficiency within industry, some of the rest being due to the spread of more efficient lighting systems and domestic appliances. So there is some hope for continued progress.
Helping renewables
It certainly makes overwhelming sense to avoid energy waste, and there are also valuable synergies between renewable supply and energy saving. If demand is reduced and managed flexibly, it gets easier to meet the residual demand with renewables; flexible demand management is vital to balance variable renewables. As CRED says, “a zero carbon electricity system will only be possible if demand is more flexible. Technologies and services for demand-side flexibility will be major growth areas in electricity markets.”
Energy saving – and use – without end
In addition, if combined, renewables and efficiency can limit the rebound effect. If, instead of being spent of energy-intensive goods and services, so wiping out some of the energy and carbon savings, the money saved through energy efficiency is spent on renewable power, then the carbon savings from efficiency will be fully captured. However, in this context, there may be some conflicts. The increasingly low cost of renewables may undermine the economic attraction of energy saving. In some situations, it may be cheaper (per tonne of carbon avoided) to invest in supply than to invest in energy saving, especially once all the easy, low-cost, energy savings have been achieved. That is debated: some say there will be economies of scale as energy saving techniques develop and are widely adopted.
Otherwise, it’s a win-win package, with both the supply and demand side gaining something. It will be hard for renewables to meet demand unless that is reduced but equally, even if demand is reduced dramatically (Germany is aiming for a 50% cut by 2050), we will still need supply. What’s more, since there are some impacts from using renewables and the renewable supply technologies also have material requirements, it would in any case be foolish, in resource and impact terms, to waste the energy that they can supply and then have to generate more. Green supply has dominated policy in recent years, and it is good to see CREDS trying to rebalance that, but a balance is still needed: both are required for a sustainable energy future.
Cutting growth
That said, whatever the balance, it is also worth noting that not everyone believes that the decoupling effect is as significant as is claimed. Although energy use can be made more efficient and end-use possibly reduced, in a competitive market system based on relentless economic growth, energy demand arguably cannot continue to be constrained indefinitely.
Renewables might allow economic and energy use growth to continue, while avoiding climate impacts, if growth is what we want, but there may be other non-energy limits to economic growth. Some say we need to tame not just energy-use growth and switch to a low or zero growth “sufficiency” approach, but also to extend that to the economy as a whole, aiming for a stable state, sustainable, socio-economic system.
Plenty of big issues there, not least in terms of energy justice and social equity. For many people around the world living at or below subsistence level, growth may be their only hope, but if they do achieve some sort of affluence, then growth may undo us all. Unless it can be decoupled from energy use, and resultant climate impacts. That debate will run and run…
