Energy Demand and Energy Policy, Jim Watson, UKERC


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By Prof Jim Watson, UKERC
Presented at the EUED Centres Gala, on 2-3 July 2014, in Lancaster, UK.

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Energy Demand and Energy Policy, Jim Watson, UKERC

  1. 1. Click to add title Energy demand and energy policy Jim Watson, Research Director UK Energy Research Centre EUED Centres Gala, Lancaster, 2-3 July 2014
  2. 2. Overview 1. Why the energy system exists: trends in demand 2. Energy demand and the energy policy trilemma 3. Ambitious strategies and mixed realities
  3. 3. Why the energy system exists 0 20000 40000 60000 80000 100000 120000 140000 160000 180000 1970 1975 1980 1985 1990 1995 2000 2005 2010 Industry Transport Domes c OtherSource: DECC
  4. 4. Why the energy system exists Source: DECC
  5. 5. Reducing GHG emissions: Good progress? Will it continue? 0 100 200 300 400 500 600 700 800 900 1990 1995 2000 2005 2010 Emissions:mtCO2(equiv) CO2 emissions Other GHGs Total GHGs Source: Department of Energy and Climate Change CO2 emissions are down 19% since 1990 But emissions rose 20% (1990-2009) on a consumption basis
  6. 6. Reducing GHG emissions Source: Committee on Climate
  7. 7. There was good progress in 2012 on adding new wind generation capacity to the system, insulating lofts and cavity walls in residential buildings, and improving the efficiency of new cars. However, there is a risk that progress will not be sustained, particularly as regards wind generation capacity and insulation. Progress was very limited in other areas, notably low-carbon heat, and energy efficiency improvement in commercial and industrial sectors. Committee on Climate Change, 2013 progress report Reducing GHG emissions
  8. 8. 0 100 200 300 400 2000 2002 2004 2006 2008 2010 2012 Index(2000=100) Gas Electricity Gas prices have trebled since 2000 Electricity prices have doubled since 2000 Affordability: Domestic gas & electricity prices Price rises and affordability
  9. 9. Click to add titlePrice rises and fuel poverty Source: Department of Energy and Climate Change
  10. 10. Affordability Impacts of policies to 2020 (DECC)Price rises and affordability
  11. 11. Energy security is high on the agenda for many reasons:  High energy prices since mid 2000s  UK’s shift back to net energy importer  Geopolitics and conflicts  Impacts of extreme weather  Ageing and/or inadequate infrastructure Debates often focus on geopolitics, but many risks closer to home Security of demand matters too – especially to energy suppliers Maintaining energy security
  12. 12. Maintaining energy security? from gas exporter to importer
  13. 13. Maintaining energy security? Fracking has become a national debate in Britain – and it’s one that I’m determined to win. If we don’t back this technology, we will miss a massive opportunity to help families with their bills and make our country more competitive. Without it, we could lose ground in the tough global race David Cameron, August 2013
  14. 14. Maintaining energy security? DECC Energy Security Strategy, Nov 2012
  15. 15. Tensions between policy goals
  16. 16. Tensions between policy goals Security of supply, affordability, and playing our part in combating climate change. And that for me is the order Michael Fallon, Energy Minister 2nd Dec 2013
  17. 17. Energy policies and demand: some radical visions [w]e are looking at how to create a shared incentive between consumers and energy suppliers to reduce energy use. We must look at how [energy suppliers] can change from just selling units of electricity to providing energy services— heating and lighting homes—making it their business to increase energy efficiency and cut demand Alistair Darling, Trade & Industry Secretary, June 2006
  18. 18. Energy policies and demand: some radical visions We cannot afford to be just a provider of units and that a way to differentiate ourselves will be to embark our customers on this journey Vincent de Rivaz, CEO, EDF Energy, January 2007
  19. 19. Energy policies and demand: some radical visions ‘I want Britain to get as close as possible to using only the energy we really need. We could be saving 196TWh in 2020, equivalent to 22 power stations through, socially cost- effective investment in energy efficiency’. Ed Davey, Nov 2012
  20. 20. A mixed reality: supply side bias? We have become so used to ministers doing things like opening new power stations or new gas pipelines or whatever, even new wind farms, always with a nice white hat on their head and stuff like that, but we have never yet seen a minister open a well-insulated loft Andrew Warren Association for the Conservation of Energy January 2007
  21. 21. A mixed reality: supply side bias?
  22. 22. Electricity market reform has been priority for energy policy since 2010:  A missed opportunity to integrate supply and demand?  Most of the focus on large-scale low carbon generation  Energy efficiency feed-in tariffs suggested but not taken up  Capacity mechanism has more space for demand-side measures  Contrast between pilots for demand and full auction for gas-fired capacity A mixed reality: supply side bias?
  23. 23. A mixed reality: models of change Source: DECC Energy efficiency is not just low-hanging fruit; it is fruit that is lying on the ground Stephen Chu, US Energy Secretary
  24. 24. A mixed reality: models of change  High expectations of flagship energy efficiency policies: Green Deal and Energy Company Obligation  Green Deal makes sense in theory: solving the up-front cost problem via loans linked to energy bills  Projections that 130,000 loans would be taken up by the end of 2013; uptake of measures would be much higher  By April 2014, 834,000 measures installed via Green Deal and ECO. Much lower annual rate than previous policy  Green Deal update disappointing: 235,000 assessments and 2,800 loans in place by May 2014  Additional up-front finance offered by government to accelerate uptake
  25. 25. Click to add titleA mixed reality: politics
  26. 26. Click to add title Thanks @UKERCHQ @watsonjim2