‘The system is interconnected’: How halving UK energy demand could slash the costs of net zero
As the gas price crisis escalates, a comprehensive new study underscores need for ‘changes in the way we live, move, and consume’ to cut energy demand in pursuit of net zero
The UK can more than halve its energy demand by 2050 by taking more concerted and targeted actions to improve energy efficiency, slashing the costs and risks associated with the net zero transition in the process, while improving quality of life for its citizens and insulating itself against the kind of energy price spikes currently afflicting the country.
That is the conclusion of major new analysis put together by a host of leading energy experts, which has been hailed as “the most comprehensive assessment to date” of the vital role cutting energy demand can have in delivering on the UK’s 2050 net zero goal.
The report – published this week by the Centre for Research into Energy Demand Solutions (CREDS) – offers yet more compelling evidence underscoring the huge benefits and importance of enhancing energy efficiency across the economy.
It estimates that reducing energy demand can provide around half the UK emissions cuts required to meet net zero by 2050, while also offering major co-benefits for public health through healthier diets and better air quality, as well as reduced energy bills, green jobs, and improved biodiversity.
Crucially, the report argues that reducing energy demand across transport, buildings, agriculture, industry, and consumer products can also reduce the cost of building more energy generation capacity, and the risks of relying on technical solutions such as CO2 removal systems to curb emissions.
The authors claim an analysis of the potential for lower energy service demands and higher energy efficiency has never been undertaken at a national level, and that it offers “a new way of thinking about the net zero challenge”.
“We have provided the comprehensive assessment on how the UK can reduce its energy demand to meet our short-term carbon budgets and long-term net-zero ambitions,” explained John Barrett, who led the team of authors at CREDS, which is publicly funded by UK Research and Innovation (UKRI).
He warned that without energy demand reduction the UK would not be able to achieve its target to slash emissions by 78 per cent below 1990 levels by 2035, as set out in the Sixth Carbon Budget, nor could the 2050 net zero goal be reached.
At present, however, existing policies are only set to reduce UK energy demand by five per cent by 2050, and without a stronger role for demand reduction the electricity system would need to be four times the size that it is today to deliver on net zero goals, according to the report. That, of course, would require an even greater scaling of renewable energy, nuclear, carbon capture and storage, and grid flexibility capacity in order to achieve the UK’s net zero ambitions, meaning greater costs and complexities.
“The UK government has yet to define how energy demand will contribute to achieving our climate ambitions,” Barrett added. “Given the evidence presented in this report, it is imperative that the UK government outlines a detailed strategy with supporting policies, to enable energy demand reduction to fulfil its necessary role in achieving rapid emissions reductions in the UK.”
The report comes as the green economy awaits a host of crucial net zero policy decisions, which the government has promised to finalise in the coming weeks ahead of the UN COP26 Climate Summit in November. Most pressingly, the long-delayed Heat and Buildings Strategy and the overarching Net Zero Strategy are expected to offer further details on the government’s vision for energy efficiency and the decarbonisation of heating, while green groups are calling on the Treasury to offer new funding for green homes upgrades at the upcoming Spending Review later this month so as to replace the controversially cancelled Green Homes Grant Scheme.
The Department for Business, Energy and Industrial Strategy (BEIS) insisted the government was “absolutely committed” to meeting the UK’s climate commitments through decarbonising energy supply as well as “advancing measures to improve efficiency and reduce overall usage”.
A BEIS spokesperson also confirmed the Heat and Buildings Strategy would be published in October, but declined to offer a precise date. “We will publish a comprehensive Net Zero Strategy ahead of COP26, setting out the government’s vision for transitioning to a net zero economy,” they added.
Meanwhile, energy prices are on the rise and are expected to hit both householders and businesses alike this winter, thanks to a ‘perfect storm’ of global gas supply issues that has further underscored the urgent need to better insulate the millions of draughty homes across the country.
Separate analysis published today by climate think tank E3G estimates that by investing in improving energy efficiency in homes, low and middle incomes could save £500 a year on their energy bills, while also driving down emissions.
At present the government has set a target for all UK homes to reach an Energy Performance Certificate (EPC) rating standard of C or above by 2035, but new policies to help accelerate the push towards this target have yet to emerge. Businesses and campaigners remain adamant that current funding schemes and standards remain badly underpowered and will not deliver on the government’s goals.
With energy prices set to rise in the coming months, E3G calculated that households rated at EPC D or below could be between £373 and £434 a year worse-off than those with a C-rated home. For those on the lowest incomes, the difference between living in a house rated EPC C or better and one rated EPC D of below amounts to 13 per cent of their entire post-housing costs income, the think tank said. At present, however, over 80 per cent of homes rated EPC D or below are ineligible for nationally available government support.
E3G researcher Colm Britchfield said the current gas crisis “makes the case for investing in energy efficiency of our homes clearer than ever”, as he called on the government for ambitious support for green homes upgrades in the Spending Review and Heat and Buildings Strategy.
“Those living in the least efficient homes face a disproportionate blow to their incomes,” he said. “The upcoming Spending Review is a golden opportunity for the government to get on the front foot and invest in energy efficiency at scale.”
Beyond homes and buildings, however, the CREDS report goes further in emphasising the opportunities for boosting energy efficiency throughout the wider economy, and how interventions across transport, agriculture, industry and consumer behaviour can all have a sizeable impact.
“The response to reducing our energy demand does not mean a collection of energy policies alone but aligned policies in all areas,” it states. “The system is interconnected in that demands in certain sectors relate to practices and behaviours in others.”
As such, it recommends an overarching policy plan from government addressed specifically at energy efficiency across the entire economy, covering both the technical and behavioural transformations needed.
The report sets out broad recommendations for different sectors of the economy. For energy, it calls for a national target for reducing demand, in addition to existing targets to increase renewables capacity. In agriculture and food, it argues the promotion of healthy, more plant-based diets is “essential” to reducing overall calorific intake and cutting energy demand, while better resource efficiency and improvements in energy intensity are crucial to slashing demand in heavy industry.
Heat pumps, home retrofits, and “addressing the inefficiency of occupancy rates” would help to cut energy demand in buildings, it adds, while encouraging a wider shift away from private car use towards public transport would also help cut fossil fuel and electricity demand.
“Changes are required in the way we live, move and consume,” the report states. “The majority of changes needed to deliver the UK’s 2035 and 2050 targets will have an impact on both technology and the way the way we live. To reach 2035 targets, early action to deploy both clean technologies and support lower-carbon lifestyles is urgently needed.”
Reducing energy demand while also using that energy we do use more efficiently has long been seen as crucial to meeting climate targets, and the co-benefits in terms of reduced fuel poverty, green job creation, and lower costs for businesses are hard to overstate. The CREDS report adds to a growing library of work that highlights both the holistic impacts of energy efficiency interventions on public health, biodiversity, and climate change, and the raft of potential policies that could deliver significant improvements at minimal costs.
The challenge, as ever, is convincing the Treasury of the merits of seeing energy efficiency as a national infrastructure priority that is deserving of investment. Insulate Britain protestors blocking roads have failed to convince the Chancellor, the hope is that in-depth academic research can grab his attention.
