Dr. Nick Eyre, University of Oxford

1. Demand Reduction, Energy
Efficiency and Policy
Effectiveness: What Works?
Nick Eyre, Edinburgh 13th
December 2013

2. UK energy use trends
Mtoe
Total UK Energy Use 1970-2011
180
160
140
120
100
80
60
40
20
1970
1975
Industry
1980
1985
Transport
1990
1995
Domestic
2000
Other
2005
2010

3. Drivers of UK carbon emissions
Kaya identity values 1971-2008
2.5
2
1.5
C/E
E/GDP
1
GDP/P
P
0.5
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
0
Based on IEA data

4. …and efficiency is likely to make a key
contribution to future decarbonisation
Zero
carbon
supply
Gas in
power
generation
Changes in
energy
demand
IEA ETP, 2010

5. Energy efficiency as a ‘cost reducer’ in
carbon abatement
Taken from IEA, 2010

6. …but in buildings energy efficiency
we are reducing the level of ambition
80
Carbon savings from the principal buildings
energy efficiency policies
Mt CO2 (lifetime) per annum
70
60
CESP
Source: Rosenow
and Eyre (2013)
50
40
30
CERT
20
GD
10
ECO
0
1994-1998
1998-2000
2000-2002
2002-2005
2005-2008
EESoP 1
EESoP 2
EESoP 3
EEC 1
EEC 2
2008-2012
2013-2015
CERT/CESP Green Deal/ECO

7. Energy efficiency as a ‘cost reducer’ in
carbon abatement
Taken from IEA, 2010

8. Barriers to energy efficiency
Deficient
information
Incorrect or insufficient knowledge at the point of
decision-making biases decisions against efficiency
Access to
capital
Constraints on borrowing, including higher interest rates
than justified by the risk of the project
Split
incentives
Investors cannot always appropriate the benefits of
energy efficiency investments (e.g. landlords)
Risk
Perceived technical and financial uncertainties, including
trust in delivery agents.
Bounded
rationality
Energy consumers do not make the choice identified as
optimal by economic analysis
Based on Sorrell et al, 2004
Energy efficiency is economically and environmentally
beneficial, but it still needs strong policy intervention

9. Two key hypotheses for energy
efficiency policy
 It is a socio-technical innovation
problem – so a package of different
policy instruments is needed
 It is a multi-level governance
problem – so policy action is needed
at different levels of government

10. Market penetration
Market transformation:
Innovation stages and polices
Policies
Innovation
stage
R, D and D
support
Research
Incentives and
engagement
Early
adoption
Mass
adoption
Regulation
Late
adoption
Time

11. An example: UK fridge/freezer sales
100%
90%
80%
G
70%
F
E
60%
D
50%
C
40%
B
30%
A
A+
20%
A++
10%
0%
1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-6
Incentives
for B
Minimum
standard C
Incentives
for A only
2006-7 2007-08
Source: EST, 2008

12. 40 years of energy efficiency policy:
What have we learnt?
 Energy prices make a difference
 but pricing policies are constrained by concerns about
competitiveness and equity
 Regulation works well
 but only for ‘mass products’, and where well-signalled
and enforced
 Investment incentives can be very effective
 but they cost money – Government’s or consumers’
 People matter
 but do not trust, or even expect, Government or
energy companies to engage them very effectively
Based on Mallaburn and Eyre, 2013

13. Energy efficiency as a multi-level
governance problem
Governance level
Ability to engage
Governance powers
Global
EU
National
Country/region
Local
govt
Civil society
organisations
Households and
businesses

14. Energy efficiency as a multi-level
governance problem
Governance level
Governance levers
Governance powers
Ability to engage
Global
UNFCCC
EU
Carbon markets; product
standards; RE/EE targets
National
Energy policy; fiscal; spending;
energy market regulation
Country/region
Housing and fuel poverty policy;
building regulations; transport
policy; business support
Local
govt
Civil society
Housing/ transport services;
organisations energy advice; community
projects and engagement
Households and
businesses
Personal action

15. UKERC Contact Details
UK Energy Research Centre
+44 (0)20 7594 1574
www.ukerc.ac.uk
Nick Eyre
+44 (0)1865 285129
http://www.eci.ox.ac.uk/people/eyrenick.php