The International Energy Agency calculates that 38% of all carbon emissions cuts between now and 2050 must come from rising energy efficiency. Is Britain showing the rest of the world how to do this?

The UK is the only country, where data is available, whose total energy consumption has now fallen below levels in 1965, even while the country’s population has risen by a fifth and its economy trebled in size.

The significance of 1965 is simply that is as far back as BP energy data goes. It is probable that energy consumption has similarly fallen in some former communist states, where BP has no such historical data.

A dramatic drop in the UK could be seized upon by two opposing narratives.

Explanation 1: Most of the drop in energy consumption has been in manufacturing, and so reinforces the idea that Britain is now useless at making stuff, in a continuing trend of de-industrialisation.

Explanation 2: It’s great news! Britain is getting more efficient, generating energy savings, and lower carbon emissions. In time, China could follow Britain’s lead.

Which view is right? As it turns out, it’s complicated.

First, let’s check the data. Britain’s primary energy consumption (i.e. all energy use, including conversion losses in power plants and transmission) peaked in 2005, and has now fallen below 1965 levels (see figure below). Britain’s own energy data confirms the same trend.

UK energy use, time series

Note: Mtoe is million tonnes of oil equivalent.

If we compare Britain with the rest of the world (except some former communist states, where BP has no historical data), it turns out that Britain is the only country whose energy consumption has fallen so far (see table below).

Falling energy consumption_comparison countries

How is this possible? Reasons may include:

1. Falling conversion losses, from switching to more efficient gas-fired power, from coal

2. Milder winters, leading to less gas heating

3. Industrial decline

4. Out-performance in energy efficiency

Taking these in turn, it isn’t about falling conversion losses: a chart of final energy consumption (which excludes such losses) tells the same story (see figure below). This figure is taken from the latest 2014 energy data, from the Department for Energy and Climate Change (DECC).

DECC data_graphic

Milder winters are a small part of the answer. DECC obligingly gives an estimate for temperature-adjusted energy use. As you can see in the figure below, accounting for rising temperatures makes very little difference. But it does make a difference: in this case, present energy consumption is now down to 1985 levels, and a fraction above 1965 levels (198.7 Mtoe, vs 196.8 Mtoe in 1965).

DECC temp adjusted data_graphic

That leaves either industrial decline or rising efficiency.

It turns out that by far the majority of the reductions in energy consumption in Britain is a result of falling energy intensity. Energy intensity is the amount of energy consumed per unit of output, and can be a loose proxy for energy efficiency.

Yes, industrial output has fallen, and that has contributed to lower energy consumption. But double the energy savings (7.5 Mtoe vs 4 Mtoe) are due to falling energy intensity (just to confuse things, here we are comparing 2013 with 2000). Energy consumption is also falling in the domestic sector, despite more homes, and in the services sector, despite rising value added.

DECC - intensity bigger than output

In all, energy intensity in the industrial sector fell 71% between 1970 and 2014, DECC data show, faster than any other sector.

So does this answer the question at the top of this blog? Not quite. Certainly, in the domestic and services sectors, there seems to be evidence that rising energy efficiency is cutting consumption.

Regarding industry, DECC does suggest that energy efficiency is playing a major part in savings. The Department calculates that energy efficiency directly contributed to 4.7 Mtoe cumulative energy savings across industry from 2000 to 2014, compared with total industrial energy consumption in 2014 of 24 Mtoe.

But the drop in energy intensity in industry could also be about a shift away from energy-intensive sectors, like chemicals, steel, aluminum and cement, to light manufacturing, making software and the like. No harm in restructuring your economy to make hi-tech stuff, but importantly, it wouldn’t mean that British industry was becoming more energy efficient, just becoming increasingly biased towards less energy-intensive production. And that matters for global action on climate change; while Britain can outsource the manufacture of energy-intensive goods for its domestic consumption, obviously the whole world can’t do the same.

To answer this question, we need at least to look at industry sub-sectors.

DECC provides such data, which do support the notion that efficiency is playing the biggest role. Breaking out energy consumption by industry sub-sectors shows that in the most energy-intensive sector, chemicals, falling energy intensity rather than output is responsible for all the fall in energy consumption. However, for some reason DECC doesn’t provide such disaggregated data for iron and steel.

Disaggregated industry

What does it all mean? The evidence is that falling UK energy consumption is about rising energy efficiency. That is good news for climate action, but perhaps a concern for producers of energy and especially fossil fuels, as one might expect other countries to follow Britain’s lead.    Send article as PDF   
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