Briefing paper

Unlocking Britain's first fuel: the potential for energy savings in UK housing

6 Sep 2017
Description

UK energy policy is at crossroads. The combination of ambitious carbon targets, aging energy infrastructure and rising fuel poverty warrant bold political decisions to ensure a successful and fair transition to a low-carbon economy. Energy efficiency in homes can play a key role in delivering energy affordability, sustainability and security. In the past, improved energy efficiency has delivered significant benefits to consumers, society, the economy and to the environment. On average, UK households now use around 30 percent less energy than they did in 1970 (BEIS 2016; DECC 2012). The bulk of this decrease has occurred since 2004 and has largely been driven by energy efficiency policy (BEIS 2016; DECC 2012; CEBR 2011; Enerdata 2017) – lowering the average annual energy bill in a dual fuel household by £490 in 2015 (CCC 2017). Total household energy use fell by one fifth (gas use decreased by 27 percent, electricity use by 13 percent) between 2004 and 2015. This is despite a 12 percent increase in the number of households and a 10 percent increase in population. Average household energy use fell by 27 percent over this time, despite a proliferation of household appliances and lamp fittings per household and higher in-home temperatures (BEIS 2016). The bulk of this reduction derives from energy efficiency improvements delivered through public policy, in particular the major insulation programmes funded by successive ‘supplier obligations’ (i.e. ECO, CERT and their predecessors). Also important have been the requirement for condensing boilers within the UK Building Regulations and the progressive tightening of EU standards on the energy efficiency of electrical appliances (CEBR 2011). This demonstrates that market forces alone cannot deliver all cost-effective investment in this sector, owing to multiple and overlapping market barriers. Instead, policy intervention can be used to improve economic efficiency and increase social welfare. Macroeconomic modelling has demonstrated that a 10% improvement in the energy efficiency of all UK households leads to a sustained GDP expansion of around 0.15% (Turner, Figus, and Riddoch 2017). As the UK government prepares its Clean Growth Plan, setting out its strategy for decarbonising the UK energy system, it is important to assess the remaining potential for improved energy efficiency in households. Accurately assessing and unlocking this potential is critical to ensuring the UK follows the most cost-effective path. Underestimating and neglecting this potential could cost the UK billions in wasted energy bills and higher cost energy supply. In the past, multiple studies have demonstrated the large potential for improved energy efficiency in UK households. And this remains the case, despite the substantial improvements over the last 15 years. For example, in its impact assessment for the 5th Carbon Budget, the UK government concluded that ‘the domestic buildings sector has the highest technical potential’ for carbon abatement across the economy (DECC 2016b). Much of this is due to the potential for improved energy efficiency. The government’s analysis is corroborated by the Infrastructure Transitions Research Consortium (ITRC 2016) whose evidence fed into the National Needs Assessment. The National Needs Assessment brought together a coalition including industry, investors, environmental, legal and professional bodies, and politicians and opinion formers to deliver a 35-year view of the changing demands on infrastructure services. However, a more granular assessment is needed to understand exactly where this potential lies and what form it takes. Our analysis fills this gap. It is based on the best available evidence on the remaining potential for energy efficiency improvements within the UK’s residential building stock.

Publication Details
Publication Place: 
London
Published year only: 
2017
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