Shifting the focus: energy demand in a net-zero carbon UK

Editors: Nick Eyre & Gavin Killip

Summary

Our report takes the Government’s most recent statement on energy transition, the Clean Growth Strategy (BEIS, 2017), as a starting point and draws on current knowledge from the UK energy demand research community.

We consider the Strategy’s goal of accelerating the pace of clean growth, and build on the comprehensive, quantitative analysis by the Committee on Climate Change (CCC, 2018). We agree that major improvements in energy productivity in businesses, transport and homes are crucial to achieving this goal.

Our report sets out a broad vision for how this might be achieved, and shows that this requires attention to technical, social and institutional factors that drive energy demand. We argue that a stronger focus on demand will be required to address the greater action implied by a net-zero carbon target (CCC, 2019), and set out recommendations on the changes in policy required to deliver the energy-use related goals of the Clean Growth Strategy.

Summary of recommendations

The complexity of energy demand means there is no ‘silver bullet’ solution or policy: a range of policy instruments is required to meet energy policy goals. These involve many sectors, institutions and stakeholders, with a range of different timescales for action. We list a large number of recommendations in this report, and bring them together in Chapter 9. They can be considered under the following six broad headings:

Prioritise energy demand solutions

Energy demand change can support all the key goals of energy policy – security, affordability and sustainability – with more synergies and fewer trade-offs than supply-side solutions. For this reason, treating demand reduction as ‘the first fuel’ is already the policy of the International Energy Agency (IEA) and the European Union. Demand-side solutions also form a key part of implementing zero carbon sustainable supply, through using zero carbon fuels and enabling greater use of variable renewables. In UK energy policy, there has been a tendency to focus on energy supply options rather than a systemic approach. We recommend that this is reversed, and that demand-side solutions are given at least equal weight.

Consider and promote all the benefits of demand-side solutions

UK policy with respect to energy demand tends to focus on the benefits of lower carbon emissions and lower bills for energy users, often using the latter as an argument for minimal intervention. Reduced demand, improved energy efficiency, greater flexibility and decarbonised fuels have a much wider range of benefits, notably for health and employment. Addressing energy demand is generally more likely to promote sustainable development than increasing energy supply. As importantly, recognising all the benefits is more likely to motivate action. We recommend that all the benefits of demand-side solutions are considered in developing and promoting policy.

Scale up policies that work

UK energy demand policy has featured numerous policy changes in the last decade. In some cases, such as Carbon Emissions Reduction Target, the Carbon Reduction Commitment and the proposed Zero Carbon Homes standard, policy instruments that were well-designed and effective have been modified, or much reduced in scale. This has significantly reduced the effectiveness of UK energy policy. We recommend greater consistency in demand side policymaking and, in particular, scaling up policies that have been shown to work.

Develop long term plans for demand-side innovation

There has been a tendency in policymaking to see the demand side as having the potential to provide quick wins, but not to have a fundamental role in the transition. Our analysis indicates that this is unhelpful. Energy demand reduction, flexibility and decarbonisation will need to play a critical role and this should be recognised in energy innovation policy. We recommend that Government should develop long-term plans for demand-side innovation.

Build effective institutions for delivery of demand-side solutions

Energy using activities are diverse, and therefore the policy agenda set out above involves influencing a wide range of stakeholders, including both specialists and the general public. Doing this effectively will require a major increase in activity in demand-side policy delivery in Government at a range of levels. This will require better coordination across departments, with more capacity and clearer responsibilities for specialist agencies, devolved governments and local government departments. We recommend that Government should reform the existing delivery structures and develop an institutional framework designed for delivering the energy transition.

Involve a wider range of stakeholders to build capacity across society

A transformation in the way that energy is used needs to be led by Government, but cannot be delivered by Government alone. There is some good practice on which to build, but there needs to be a concerted effort to engage, enthuse and empower stakeholders across business and civil society. We recommend that Government should develop a strategy for involving a wider range of stakeholders to build capacity across society.

Report index:

• 1. Introduction: why energy demand is important to a low carbon transition
• 2. Reducing energy demand from buildings
• 3. Industry, materials and products
• 4. Transport & Mobility
• 5. Electricity: making demand more flexible
• 6. Using zero carbon energy
• 7. Policy: delivering further and faster change in energy demand
• 8. Conclusions
• 9. Detailed recommendations
• Appendix 1 (pdf, 20 pages, 963 KB)
• Policies and proposals in the Clean Growth Strategy: Database, sector overview and meta-analysis (xlsx, 193 KB)
• Appendix 2 (pdf, 29 pages, 1.6 MB)

Banner photo credit: Alireza Attari on Unsplash