• Energy Research

The UK has been one of the few countries that has successfully decoupled final energy consumption from economic growth over the past 15 years. This study investigates the drivers of final energy consumption in the UK productive sectors between 1997 and 2013 using a decomposition analysis that incorporates two novel features. Firstly, it investigates to what extent changes in thermodynamic efficiency have contributed to overall changes in sectoral energy intensities. Secondly, it analyses how much of the structural change in the UK economy is driven by the offshoring of energy-intensive production overseas. The results show that energy intensity reductions are the strongest factor reducing energy consumption. However, only a third of the energy savings from energy intensity reductions can be attributed to reductions in thermodynamic efficiency with reductions in the exergy intensity of production making up the reminder. In addition the majority of energy savings from structural change are a result of offshoring, which constitutes the second biggest factor reducing energy consumption. In recent years the contributions of all decomposition factors have been declining with very little change in energy consumption after 2009. This suggests that a return to the strong reductions in energy consumption observed between 2001 and 2009 in the UK productive sectors should not be taken for granted. Given that further reductions in UK final energy consumption are needed to achieve global targets for climate change mitigation, additional policy interventions are needed. Such policies should adopt a holistic approach, taking into account all sectors in the UK economy as well as the relationship between the structural change in the UK and in the global supply chains delivering the goods and service for consumption and investment in the UK.

In order to avoid environmental catastrophe we need to move to a post-growth economy that can deliver rapid reductions in environmental impacts and improve well-being, independent of GDP growth. Such a move will entail considerable structural change in the economy, implying different goals and strategies for different economic sectors. So far there are no systematic approaches for identifying the desired shape of structural change and sectoral goals in terms of output, demand and employment. We present a novel analysis that addresses this gap by classifying economic sectors into groups with similar structural change goals. Our framework for the classification considers sectoral characteristics along three dimensions, which are (a) the final energy intensity, (b) the potential and desirability for labour productivity growth and (c) the relationship between labour productivity and the energy-labour ratio. We present empirical evidence on the three framework dimensions for economic sectors in the UK and Germany and derive structural change goals for the four sector groups representing particular combinations of the sector characteristics. Our analysis allows us to discuss the specific role of different economic sectors in the structural change envisioned in the post-growth transition and the most important challenges they might be facing.

Under many scenarios, fossil fuels are projected to remain the dominant energy source until at least 2050. However, harder-to-reach fossil fuels require more energy to extract and, hence, are coming at an increasing ‘energy cost’. Associated declines in fossil fuel energy-return-on-investment ratios at first appear of little concern, given that published estimates for oil, coal and gas are typically above 25:1. However, such ratios are measured at the primary energy stage and should instead be estimated at the final stage where energy enters the economy (for example, electricity and petrol). Here, we calculate global time series (1995–2011) energy-return-on-investment ratios for fossil fuels at both primary and final energy stages. We concur with common primary-stage estimates (~30:1), but find very low ratios at the final stage: around 6:1 and declining. This implies that fossil fuel energy-return-on-investment ratios may be much closer to those of renewables than previously expected and that they could decline precipitously in the near future.

Increasing attention has been focussed on the use of consumption-based approaches to energy accounting via input-output (IO) methods. Of particular interest is the examination of energy supply chains, given the associated risks from supply-chain issues, including availability shocks, taxes on fossil fuels and fluctuating energy prices. Using a multiregional IO (MRIO) database to calculate energy consumption-based accounts (CBA) allows analysts to both determine the quantity and source of energy embodied in products along the supply chain. However, it is recognised in the literature that there is uncertainty as to the most appropriate type of energy data that should be employed in an IO framework. Questions arise as to whether an energy extension vector should show where the energy was extracted or where it was used (burnt). In order to address this gap, we undertake the first empirical MRIO analysis of an energy CBA using both vectors. Our results show that both the energy-extracted and energy-used vectors produce similar estimates of the overall energy CBA for the UK—notably 45% higher than territorial energy requirements. However, at a more granular level, the results show that the type of vector that should be employed ultimately depends on the research question that is considered. For example, the energy-extracted vector reveals that just 20% of the UK's energy CBA includes energy extracted within the UK, an issue that is upmost importance for energy security policy. At the other end, the energy-used vector allows for the attribution of actual energy use to industry sectors, thereby enabling a better understanding of sectoral efficiency gains. These findings are crucial for users and developers of MRIO databases who undertake energy CBA calculations. Since both vectors appear useful for different energy questions, the construction of robust and consistent energy-used and energy-extracted extension vectors as part of commonly-used MRIO model databases is encouraged.

Datasets for Nature Energy journal article 'Estimation of global final stage energy-return-on-investment for fossil fuels with comparison to renewable energy sources'. The dataset contains the three concordance matrices (A,B,C) in a single Excel File used in the EXIOBASE-based EROI calculations.

Over the past two decades reductions in the final energy consumption of the productive sectors (industry, public administration, commercial services and agriculture), have made important contributions to overall reductions in UK final energy consumption. This study investigates the drivers of the reductions in final energy consumption in the UK productive sectors between 1997 and 2013 using a decomposition analysis that incorporates two novel approaches. Firstly, it uses results from a multi-regional input-output model to investigate how much of the structural change in the economy has been driven by outsourcing production overseas. Secondly, it utilises energy conversion chain analysis to determine how much increases in the conversion efficiency from final energy to useful exergy have contributed to improvements in final energy intensity. In aggregate all energy savings from structural change are attributed to outsourcing. Improvements in the conversion efficiency produced savings of a similar size. However energy savings from both factors have stalled since 2009. Improvements in useful exergy intensity, the useful exergy used per unit of monetary output, provided the biggest share of energy savings, but these savings are concentrated in a few sectors and rarely lead to absolute reductions in final energy use. All of this suggests that a return to the rates of energy reduction seen between 2001 and 2009 should not be taken for granted and that active policy interventions might be required to achieve further reductions.

Post-growth economists propose structural changes towards labour-intensive services, such as care or education, to make our economy more sustainable by providing meaningful work and reducing the environmentally damaging production of material goods. Our study investigates the assumption underlying such proposals. Using a multi-regional input-output model we compare the embodied energy intensity and embodied labour productivity across economic sectors in the UK and Germany between 1995 and 2011. We identify five labour-intensive service sectors, which combine low embodied energy intensity with low growth in embodied labour productivity. However, despite their lower embodied energy intensities, our results indicate that large structural changes towards these sectors would only lead to small reductions in energy footprints. Our results also suggest that labour-intensive service sectors in the UK have been characterised by higher rates of price inflation than other sectors. This supports suggestions from the literature that labour-intensive services face challenges from increasing relative prices and costs. We do not find similar results for Germany, which is the result of low overall growth in embodied labour productivity and prices. This highlights that structural change is closely associated with economic growth, which raises the question of how structural changes can be achieved in a non-growing economy.