Good policies start with good analysis but . . .

Andrew Warren, chairman of the British Energy Efficiency Federation, has written an excellent article in the April issue of Energy in Buildings & Industry, about how government analysis in the UK has repeatedly (and we are talking decades) failed to understand the dynamics of changes in energy consumption. Yet, it is more important than that because the mistakes lead to serious problems in judgement. EiD would like to draw your attention to Andrew’s last paragraph: “For fifty years, continuous improvements in the energy efficiency of technologies and buildings has led the most successful revolution in improving security and resilience in the entire energy market. So why on earth do our political leaders continue to wilfully pretend it just isn’t happening?” And, we are talking about ‘energy efficiency first’ in our grand policy pronouncements? It’s not obvious.

 

Why do governments always get it wrong?

Going back over the last 50 years successive Governments have assumed that electricity consumption would rise and rise. Statistics from the real world reveal that the truth is very different.

 

For the past fifty years, the UK Government has issued many projections for future energy demand. These have varied greatly, especially regarding the predicted market share of different fuels 15 or 20 years hence.

But one factor each and every official projection has always had in common. Without fail, our Governments always grossly over-estimate the overall amount of energy that will be consumed.

It would be extremely tedious reading to go laboriously through every single past forecast. But here are just a few examples, each of which validates my basic thesis that the official mindset always underestimates the ability of UK consumers, big and small, to seek out opportunities to minimise waste.

In 1976 the then Ministry of Fuel and Power projected that UK annual energy consumption would increase to between 500m and 550m tonnes of coal equivalent (mtce) by the year 2000. In fact actual consumption has never in any subsequent year risen above 280 mtce.* And in practice has been falling every year for the past decade.

Nonetheless, thirty years on, precisely the same mistake was being made. Glance back to the Labour Government’s ‘Energy Challenge’ White Paper of 2006, which promoted the importance of investing in nuclear power rather than energy efficiency.

In that White Paper, you will see that the Government projected that between 2005 and 2015 electricity generation would increase by around 12 per cent. Whereas in reality over the same period overall fuel usage went down 18 per cent, with electricity consumption dropping by 13 per cent.

The Coalition Government of 010-2015 followed precisely the same line of relentless over-estimation. Its first energy National Policy Statement said unequivocally “Department of Energy and Climate Change (DECC) analysis . . . shows that reductions in electricity consumption resulting from improvements in energy efficiency will be far outweighed by increases in electricity demand, potentially leading to a doubling of demand.” (Para 3.3.14) Indeed, senior civil servants, led by the now late chief scientist, Professor David Mackay, were regularly to be heard postulating a tripling of demand by 2050. Upwards of £200bn was urgently needed to build new generation sources.

These errors matter. Because time and again the official line ha remained that demand for energy will inexorably rise, even as the economy grows. Alarmingly, this reflects precisely the same predict-and-provide thinking which led their 20th century predecessors to get their forecasts for new power stations so woefully inflated.

Very different conclusions

Meanwhile, those operating in the real world are reaching very different conclusions. Last month the trade body Energy UK published an important in depth survey of current electricity industry opinion about their likely 2030 marketplace.

Practically nobody expects any serious increases in the market’s size. Almost everybody in the supply industry reckons that demand for electricity will continue to decline overall, or at most remain constant.

In contrast, official DECC forecasts are still blithely assuming a 17 per cent growth in consumption to 2030, effectively returning electricity sales to peak 2005 levels. This considerable discrepancy has led to Energy UK concluding that official policy “overestimates the amount of new large-scale plant to 2050”.

Alas, that hasn’t stopped Energy Minister Andrea Leadsom posting upon her own Departmental website that energy usage in Britain is inexorably on the increase. She began her latest blog with the absolute (and absolutely incorrect) statement that “we need to meet the UK’s rising demand for energy.”

I have yet to see any statement from any Minister in this Government that truly acknowledges that GDP growth and energy growth have completely decoupled. That celebrates the success by and for consumers, that we are now living in a world where truly more wealth means less consumption.

Instead consistently government ignores and underplays the importance of reducing energy consumption; and in their projections, having said a few soothing words about the importance of saving energy, revert to the slogan which a few years ago adorned DECC walls: ” Real Men Build Power Stations.”

Since May, and without explanation, DECC has not just abolished the Energy Efficiency Deployment Office – set up deliberately to encourage consideration of demand management and supply investment on similar criteria. It has also issued a new Single Departmental Plan which overtly excludes energy efficiency from any consideration when delivering the primary policy objective of a ‘secure and resilient energy system.”

Nonetheless, we are now using far less energy than we were half a century ago, despite our Gross Domestic Product being almost three times more valuable.

The government has committed to developing a new “longer term narrative” on energy “with a clear approach to policy”.

For fifty years, continuous improvements in the energy efficiency of technologies and buildings has led the most successful revolution in improving security and resilience in the entire energy market. So why on earth do our political leaders continue to willfully pretend it just isn’t happening?

*(I am grateful to the indefatigable academic commentator, Dr David Toke, of Aberdeen University for unearthing this gem).

 

3 thoughts on “Good policies start with good analysis but . . .

  1. Rod, thank you for reproducing this column of mine. It may interest you to learn that I have already been contacted by citizens of three other European countries regarding my theme.

    Each has made the same point: “You could easily substitute the forecasts from my own government for those from the UK”. It seems everywhere there is still the wholly fallacious belief that Real Men Build Power Stations.

    • Thanks Andrew. There are also big concerns about the quality of the modelling undertaken for the European Commission. I’m glad people have contacted you about similar situations in other countries. Now, how do we get change?

  2. Pingback: Lowering the forecast for electricity because of the expected impact of energy efficiency | Energy in Demand - Sustainable Energy - Rod Janssen

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