Linking energy demand projects and the correct policy approach

Government predictions of future energy use have been shown to be less than accurate. But unless new policies are put into place forecasts of growing energy use will prove correct.  Andrew Warren, chairman of the British Energy Efficiency Federation, gives his views of the current situation in the June issue of Energy in Industry & Buildings.


Don’t let these energy use predictions come true

The official forecasts regarding future energy consumption rates are always important. Effectively they decide just how much political effort needs to be expended, in ensuring that sufficient supplies of fuel will be available.

Without fail, all government forecasters seem always to overestimate future levels of demand. Past projections have long prompted far too many political interventions designed to solve a perceived problem – that actually seldom exists.

Tax breaks galore have been offered up to energy suppliers – contracts for difference, depletion allowances, capacity markets auctions. Each designed to encourage more and more energy supplies. Each minister is urged to back these, fundamentally for fear of being the politician in charge should the proverbial lights go out.

But in the real world, we now use no more fuel than we did fifty years ago. This is despite our population having grown by 40%, and the number of households having gone up by 49%. Our Gross Domestic Product is almost three times higher.

Throughout this century, final energy consumption in the UK has been falling. And falling. And falling. This has been true for every consumption area: industry, services, homes, transport

The only recent exception has been in personal transport, where two-thirds of fuel consumption is oil used in private cars – and where the tax and regulatory system has recently been skewed heavily against more fuel efficient diesel in favour of petrol cars, and (as yet marginally) electric vehicles. A serious case of local ecological concerns trumping the need to combat the threat of climate change.

Consumption keeps falling

Overall UK energy consumption is now almost one-fifth lower than at peak. Largely thanks to deliberate energy saving efforts and programmes.

Each year the energy ministry (now called BEIS) publishes its Updated Energy and Emissions Projections. The latest one has just emerged. Looking at the projections to be found in this, and tellingly its various predecessors during this century, paints a fascinating picture.

Initially there were attempts to peer into a crystal ball half a century ahead. As recently as 2010, the incoming Conservative-led government was officially planning on the basis of a possible “doubling, even tripling” of electricity consumption by 2050. Even then, In practice electricity generation was already falling year on year.

Forecasting exaggeration of over 30 per cent

The 2005 Energy White Paper had reckoned that by 2020 electricity consumption would already have increased by 15%. In reality it has decreased by 16%. That is a forecasting exaggeration of over 30%.

Today’s official forecasters are now working from a far lower initial consumption baseline. Past experience has made the gung-ho a little more chastened. Nowadays primary energy demand is forecast to keep falling, by a further11% to 2025. But after tha , we revert to the bad old ways.  Government forecasters reckon that we shall return to the world as they used to know it. The decline in consumption will suddenly cease, and within ten years it will be back not just to today’s levels, but to a whole 2% more.

Final UK annual consumption in 2035 will apparently go right up again, from 135 to 141 mtoe (million tonnes of oil equivalent) . Incidentally that is still 12% down on the almost 160 mtoe recorded in 2005. But as the official commentary smugly observes (word for word both this year and last)  “a fundamental assumption of this approach is that the historic relationship is valid for the duration of the projections”.

Back to predict-and-provide

How is this “return to normality” justified? Consumption is apparently to start increasing again after 2025 “as the effects of included policies diminish; and macroeconomic drivers continue to increase demand.” In other words, back to business-as-usual, due to no further demand-side policies. And energy growth mirroring GDP growth.

Over the next 15 years, the really big growth sector for energy consumption will apparently be in housing. Its’ usage will increase from 29% of total energy usage, to 34% – when it will be double industry’s (falling) percentage. Transport and the services sector’s proportion will apparently both remain constant (at 40% and 13% respectively).

Why will this happen? Even during the past year, between 2017 and 2018, “reductions in policy savings result in an increase in projected emissions.” It warns that each future Carbon Budget will be damaged by this absence of demand side activity. This lacuna will lose the Third Carbon Budget (2023-2027) potential savings of 24million tonnes of carbon dioxide, the Fourth Carbon Budget (2028-2032) some 25m, and the Fifth Carbon Budget (2033-2037) will lose 28 million tonnes. That is even though a policy like the Carbon Emission Reduction Target, abandoned back in 2012, is still set to be delivering 21 m tonnes worth of savings during the Fourth Carbon Budget.

Energy Saving Programmes being cut

This is serious stuff. Amongst the reasons given for these shortfalls are the switch of the Energy Company Obligation from prioritising carbon/energy saving to be ‘focussed purely on tackling fuel poverty.”. And big cuts in anticipated savings from smart meters. This will be due to “an update to rollout assumptions”- in other words, enormous delays. And significantly “a reduction in the level of residential gas consumption to which smart meter savings are applied.” In other words, because residential gas consumption is already one-third below peak, there is now significantly less gas consumption for smart meters to reduce.

Effectively, what the forecasters are telling Ministers is that past policies introduced to save energy have been rather successful. That is one of the main reasons why demand for new energy supplies is falling.

But, Ministers, you have systematically been removing these policies. Find some new ones that are effective. Otherwise that trend of energy, hence carbon, reductions really will go into reverse. The last thing anyone wants is for the official forecasters at last to be proven accurate.

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