UK: £1.7 billion economic boost thanks to energy efficiency savings

New analysis released today shows the productivity of the UK economy rose by £1.7 billion between 2010 and 2015 as a result of industrial, services and domestic sector energy efficiency investments.

The 2016 UK Energy Productivity Audit, published ahead of the launch of the Government’s discussion paper on its Industrial Strategy, outlines a strong case for putting energy productivity at the heart of its review.

The Audit was jointly published by a coalition of nine organisations, including industrial manufacturers and leading environmental groups such as Greenpeace; these organisations united in a shared vision to create a more efficient, competitive, low carbon Britain through a common purpose to cut energy waste.

Led by the Association for Decentralised Energy, the Audit shows that the industrial, services and domestic sectors have saved enough energy to heat 13 million homes and improved productivity to the tune of £1.7 billion between 2010 and 2015.

Yet, despite the UK’s energy bill topping a staggering £140 billion in 2015, the equivalent of 7.6% of the economy, the efficiency of electricity supply has remained broadly unchanged, improving only 2 percentage points in the last 5 years.

Analysis of Government data shows the UK is not on track to meet its 2030 Carbon Budgets. Current renewable energy and energy efficiency policies are only able to take the UK around half way towards the cost effective path to decarbonisation, leaving a significant policy gap.

The Audit also found that the UK lags far behind many of its European peers in terms of progress of energy efficiency policies. According to expert views, Germany, the Netherlands and France have all adopted significantly better policies than the UK since 2011.

The Audit concludes that far more significant energy productivity improvements are needed to deliver our long-term climate goals with lowest ecological risk while also supporting economic growth and competition.

The coalition calls on the Department for Business, Energy and Industry Strategy to address this critical policy gap and use the review to prioritise helping businesses to make additional energy productivity investments and improvements as part of the Government’s new Industrial Strategy.

Commenting on the Audit ADE Director Dr Tim Rotheray said:

“Like labour, energy is a vital input to the UK economy. Improving our energy productivity allows us to use the same or less energy to contribute more.
“Despite limited policy focus, the industrial, services and domestic sectors have made substantial energy efficiency gains yet over 60% of energy in the power sector is lost before it reaches homes and businesses.
“With our commitment to the Paris Agreements and Carbon Budgets, the UK is poised to create a low-carbon, competitive economy, but we must support energy productivity to meet these goals.
“The Industrial Strategy provides a key opportunity to implement the right policies that will not only support business competitiveness, but drive energy productivity in the UK economy and help us meet our carbon goals.”

Greenpeace Chief Scientist Doug Parr said:

“Industrial strategy shouldn’t just be about productivity of the workforce but productivity of the raw materials like energy.
Making more out of the energy we have to use in offices and factories will deliver lower imports and lower carbon. So it ought to be a starting point for new infrastructure, and should be a focus of both the Autumn Statement and expected Industrial Strategy.”

Andrew Large, CPI Director General said:

“We need to be helping industrial energy users to invest in their long-term productivity, allowing them to deliver increased value for the UK economy for many years to come.”
“Instead, energy users are facing ever-increasing costs, as carbon taxes and electricity prices rise. We cannot allow more industry to move to other countries because our energy costs remain uncompetitive.”

Source: The Association for Decentralised Energy