Decoupling energy use from economic growth

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Courtesy of Energy Institute (EI)

Does energy consumption have to grow relentlessly with economic growth? No - over the last five years, most of the world and certainly the developed West have seen a weakening or flattening of energy demand curves due to the recession. But, recession aside, there are signs that the old-established link between wealth, as measured by gross domestic product (GDP), energy use is weakening.

Newly released data from the Officje for National Statistics (ONS) reveal that average household energy consumption in England and Wales fell by a quarter between 2005 and 2011, although the average figure conceals surprisingly large regional differences. Even without looking at data for the coldest part of the UK (let's assume this is in Scotland) households in the East Midlands use around a third more energy than the average for England and Wales; households in the South West about 20% less.

Quite why people in the East Midlands are so profligate is unclear, but of the 20 local authorities that had the highest consumption in 2011, 16 are in the East Midlands. The data does give a clue - the regions with the highest total household energy consumption also had the highest off-peak Economy 7 tariff electricity consumption. However, the gap between highest and lowest users is slowly closing, adds the ONS.

That's all excellent news. The fall in consumption was no doubt caused by improvements made by householders to the efficiency of their homes (loft and wall insulation etc), as well as their efforts to install more efficient appliances (eg condensing boilers). Energy suppliers have themselves played a major role here, installing insulation and other measures in millions of homes, through a series of government-backed 'obligation' programmes. This work continues with the latest incarnation, the Energy Company Obligation for low income homes, alongside the Green Deal.

It's perhaps more interesting, but difficult, to consider how much of the fall in consumption was caused by rising energy prices. Prices certainly have risen - in 2005 the UK had returned to being a net importer of energy again, as production of oil and gas from the North Sea declined. Consumers then began to face rising prices caused by global pressures. The Head of Warwick Business School's Global Energy Group, Professor David Elmes, suggests that, in a rather longer time period of 2002 and 2012, real prices for domestic energy rose by 92%. That's almost doubling real costs. It's not surprising, then, that the average proportion of total household expenditure spent on fuel rose by half, from 2.9% to 4.6%, between 2004/5 and 2011.

The data from the ONS nevertheless point to a real and substantial reduction in energy used in individual homes, even though the growing number of households in England and Wales lessens the overall reduction. Meanwhile, I have been struck by a blog ( from Chairman of Day One Energy Solutions and occasional contributor to this magazine, Dr Steven Fawkes, which goes much further in its claims for advances in energy efficiency and decoupling. Fawkes suggests that we are (almost) living in what, in 1979, was defined as a 'low energy future'.

Some readers may remember the groundbreaking book: Low Energy Strategy for the UK published in 1979 by Gerald Leach and the International Institute for Environment and Development, in which Leach proposed that the UK could prosper for 50 years while using less primary energy than it did then. Leach argued that GDP and primary energy use could be decoupled by programmes to improve energy efficiency across the economy. He said that government projections of energy use were far too high; and suggested his own low energy figures.

And, more than 30 years on. Leach turned out to be right - or much more right than government forecasts. Taking all data back to a notional value of 100 for 1976, Leach predicted primary energy use for the year 2000 to be between 95 and 103, while the then Department of Energy forecasted a much higher value between 132 and 164. The actual value was 114, despite a huge rise in GDP to 190 - which was within Leach's own estimate range for economic growth. For 2010, Leach predicted primary energy use of between 88 and 102; the actual value was 105. There were no Department of Energy forecasts for 2010.

So, bucking the historical trend, UK primary energy consumption over the last 30 years has been almost flat, and very much less than it would have been if coupled to GDP growth - Leach had called this a low energy future. Does it feel like one?

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