How do we quickly reduce our energy use in the UK itself, but without damaging the economy?
Meeting the UK’s 2050 net-zero emissions goal will mean using less energy and supplying the remaining demand with renewable energy. While the UK has reduced its energy use since 2000 by 13%, a significant amount of this has been achieved through simply ‘offshoring’ industry and shifting to a less energy intensive, service-based economy.
Both of these are ‘structural changes’ which cannot continue much longer, and therefore the key future challenge is how best to quickly reduce our energy use in the UK itself, but without damaging the economy.
One key area where we could reduce energy use significantly is via building retrofit and new building energy targets. While the energy reduction potential is well established through, for example, better insulation in existing buildings and tighter energy targets for new buildings, the wider socioeconomic impacts on jobs, wages and productivity are less well known.
To address this issue, CREDS researchers at the University of Leeds Sustainability Research Institute have used a novel MAcroeconometric Resource COnsumption (MARCO-UK) model to study both the energy and broader socioeconomic impacts of a programme of retrofit and tighter new building energy standards. The University of Leeds has now published two Working Papers presenting the results of two sets of policies.
The first Working Paper studied the UK Government’s Buildings Mission and the Clean Growth Strategy Building Energy Targets – linking to a goal by 2030 of a £100 billion retrofit of all UK homes to Energy Performance Certificate (EPC) Band C, and for new buildings to use 50% of current energy use.
The second Working Paper was based on an analysis of the Labour Party’s ‘30 by 2030‘ UK Energy Plan proposed for the 2019 UK General Election. The UK Energy Plan proposed an even deeper, £180 billion building fabric retrofit, alongside a £130 billion investment for lower carbon building heating systems.
The results of both analyses show clear common patterns. Both reported significantly lower energy use, not just in the buildings sector but also in the overall economy, of between -5.4% and -11.3% by 2030 in absolute terms and between -12.5% and -18.4% against baseline (both in their ‘best case’ scenario). The largest energy reductions occurred in the Labour analysis, which reflects the deeper retrofit and low carbon heating system investment.
However, what was also particularly interesting were the broader, socioeconomic benefits. The gain in GDP was consistent across both studies, being around 40-50% higher than the overall investment for any given scenario. This can be thought of as a GDP multiplier = 1.4-1.5, and whilst driven largely by the level of overall investment (known as a ‘Keynesian’ or ‘demand-side’ investment), it is also supported by the fact that lower energy use allows households to buy other goods and services, while businesses increased their productivity. Such economic growth generated an additional 70,000-460,000 jobs (depending on scenario) during the 2020-2030 period, raising skills, wages and householder disposable income.
In summary, deep retrofit and new build energy reduction in buildings are immediate, no-brainer policies for this next decade, forming not only an essential stepping stone to meet the UK’s 2050 net-zero target, but also bringing significant, wider socioeconomic benefits.
Banner photo credit: Alexander Tsang on Unsplash