House of Lords: UK Thinking on Energy Efficiency “a Muddle”

15 July 2005

The Science and Technology Committee (STC) of the House of Lords in the UK has issued a report following a year-long investigation into energy efficiency and its potential role in mitigating climate change that is highly critical of the government’s current efforts.

Baroness Perry of Southwark, who chaired the inquiry, said that without immediate reform of the policies and government schemes to promote energy efficiency, targets to reduce greenhouse gas emissions will be missed by a wide margin.

The report, which concludes that a reduction in absolute energy consumption should be the ultimate objective of energy efficiency, proposes a methodology to measure progress towards this goal.

By taking the position of pushing for a reduction in absolute energy consumption, the report also plunges itself headlong into the ongoing economic debate over the linkage between economic growth and energy consumption.

Chapter 3 of the report is dedicated to this topic, and provides a useful overview of the discussion around the “Khazzoom-Brookes postulate”—the proposition that energy efficiency may lead to a reduction in energy use at the microeconomic level, but that at the macroeconomic level it in fact leads to an increase in overall energy use. (Greater detail and testimony is recorded in the “Evidence” volume.)

The UK Energy Research Center (UKERC) is undertaking a study on the Khazzoom-Brookes postulate and the “rebound effect” (savings produced by energy efficiency flow into other expenditures that require energy consumption, hence triggering a rebound in usage).

In this area of economic debate, the STC merely recommends that the Government, while establishing more obust measures for energy efficiency, take full account of the UKERC research into the topic, and factor in the results in developing future policies.

(Separately, a report from the House of Lord’s Economic Affairs Committee, issued a week earlier, cast doubts over the worst-case climate change scenarios outlined by the majority of climate scientists. That report urged focusing more on adaptation rather than mitigation and developing carbon-free energy sources. The authors call on the Government to give the Treasury a more extensive and more rigorous role in examining the costs and benefits of climate change policy and presenting them to the UK public.)

A major omission of the Energy Efficiency report, as the authors admit up front, is that it excluded transportation from its consideration.

While acknowledging [transportation’s] critical importance to the Government’s environmental objectives, we were aware that its inclusion would have hugely extended the scope of our inquiry.

The report points instead to other reports issues over the past several years.

That may indeed have been the pragmatic approach, but the decoupling is unfortunate, especially given the discussion in the current report on behavior, economics, growth and other factors that are also entwined with the transportation sector. Indeed, according to the report itself,

While we have addressed the two largest contributors to United Kingdom greenhouse gas emissions—business and industry (representing almost a third of total emissions) and households (representing almost a quarter)—we have excluded a sector, transport, representing almost another quarter.

We note, moreover, that the projected expansion of air transport, and the continuing increases in road traffic, will mean that transport emissions are projected to grow by some nine percent from 2000– 2010, and that they are likely to continue to grow for the foreseeable future.

International action to address emissions from the transport sector will be essential if emissions are to be kept under control in the long term.

The graph at the top, taken from the report, highlights the forecast growth in energy consumption in the UK transport sector—clearly something that cannot be ignored.

That aside, however, the Energy Efficiency report proposes a number of steps, including the reorganization of government departments, and continually stresses the importance of clear definitions, goals and measurement. A good thing.

Energy efficiency has been drafted into the service of a wide range of policy objectives since the 1970s, but the way it has been understood and measured has been elusive and variable. We have been dismayed in the course of our inquiry by the inconsistency and muddle of much current thinking about energy efficiency.

This muddle is not the sole responsibility of Government, but only Government can resolve it. However, the current attempt to present energy efficiency as “the most cost-effective way to meet all [four] energy policy goals” only adds to the confusion. At the very least, careful oversight will be needed to ensure that the targets set for energy efficiency are defined, that conflict between them is avoided, and that progress is measured. We urge the Government to bring greater clarity and intellectual rigour to its presentation of energy efficiency.

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Energy still figures low on most people’s priorities, and consequently as a nation we are profligate in our waste of energy. Long-term reductions in energy use will only be possible if the millions of users—individuals, businesses, schools and other public-sector bodies—are educated, encouraged, and given access to real-time information on their use of energy and its costs, economic and environmental.

People can only make good decisions if they have access to good information. We need to become a nation of mature, well-informed energy users.

Resources:

• House of Lords, Science & Technology Committee, Report on Energy Efficiency

• Energy Efficiency Report Evidence

• House of Lords, Select Committee on Economic Affairs, The Economics of Climate Change