Dear friends, colleagues and followers
Thank you for following Sussex Energy Group. We have switched to our in-house Sussex University WordPress site this month and you can see all our latest posts there. This site will no longer be updated.
Please click on the following link to see our November 2014 posts. Thank you for your support.
by Dr. Steven Sorrell
Improved energy efficiency and reduced energy demand are widely expected to provide the dominant contribution to reduced carbon emissions in the short to medium term – and to do so at little or possibly negative cost.
For example, the IEA’s ‘450 scenario‘ has improved energy efficiency, accounting for 71% of emission reductions (relative to the baseline scenario) in the period to 2020, and 48% in the period to 2035 [1].
However, the link between improved energy efficiency and reduced energy demand (and hence reduced carbon emissions) is not straightforward. The first need not necessarily lead to the second, and both can be interpreted and measured in multiple ways.
Energy efficiency is the ratio of useful outputs to energy inputs for a specified system, be it a motor, an industrial process, a firm, or an entire economy. In all cases, the measure of energy efficiency will depend upon how inputs and outputs are defined and measured. Depending on the system, outputs may be measured in energy terms, such as heat content or physical work; physical terms, such as vehicle kilometres or tonnes of steel; or economic terms such as value-added or GDP.
Different measures may be more or less appropriate in different situations and are unlikely to capture everything of value: for example, vehicle kilometres and passenger kilometres both measure the quantity of mobility, but the former does not capture load factors, the latter does not capture passenger comfort and neither are necessarily correlated with the frequency and ease of access to relevant destinations.
In many cases the most relevant output of a system is an energy service of some form, such as motive power, thermal comfort and accessibility. But energy services are difficult to measure, dependent upon social context and partly subjective, so a different definition, interpretation or understanding of the relevant energy service may lead to a different judgement on the energy efficiency of a particular system.
The measurement of energy inputs also raises issues, especially when different energy carriers are combined. The most common approach is to sum the thermal content of each energy carrier (in joules). But this amounts to summing apples and oranges; energy carriers vary on multiple dimensions (e.g. volumetric and gravimetric energy density, ease of storage and transport, cleanliness) and they are only partially substitutable (try running a truck on battery-stored electricity!).
Higher quality energy carriers receive a higher price since they are more flexible, suitable for a wider range of end uses and produce more economic output per joule. Price-based weighting schemes should therefore be (but rarely are) used to account for the different quality of energy carriers and when this is done aggregate measures of energy efficiency are found to be improving more slowly than is commonly supposed [2]. For example, Kaufmann [3] shows that much of the reduction in US energy intensity between 1950 and 1990 was linked to the shift towards higher quality and hence more productive energy inputs – such as from coal to oil.
Importantly, improvements in one measure of energy efficiency may not be reflected in improvements in a second measure, or in measures appropriate for a different spatial or temporal boundary. Indeed, it is entirely possible for an improvement in one measure to be associated with deterioration in another. For example, an electric heat pump is more energy efficient than a gas boiler when energy inputs are measured at the building level, but may be less energy-efficient when those inputs are measured at the source level (e.g. the fuel into the power station) or on a life cycle basis.
In a similar manner, improvements in energy efficiency (however measured) may not always reduce energy demand and reductions in energy demand may result from something other than improved energy efficiency. To claim ‘energy-savings’ or ‘demand reduction’ it is necessary to specify the reference against which those savings are measured or estimated. That involves specifying the relevant spatial and temporal boundary and unit of measure, as well as invoking ceteris paribus assumptions.
The reference may be historical energy consumption or a counterfactual scenario of what energy consumption ‘would have been’ in the absence of specified changes. But since data on energy consumption is not always available (or accurate), counterfactuals are unobservable and countervailing variables are difficult to control (for), the causal link between specific changes and the resulting ‘energy savings’ can be hard to establish. Most approaches rely upon decomposition or econometric analysis of secondary data at the aggregate level and the results are frequently lacking in resolution and sensitive to model specification.
Experimental or quasi experimental studies can control for confounding variables at the micro level, but these are costly to conduct and comparatively rare. As a result, the literature is replete with unreliable estimates of historical energy savings and questionable claims about future energy savings – both in relation to specific technologies and policies and in relation to the determinants of aggregate trends.
California is often hailed as an energy efficiency success story since per capita electricity consumption has remained fairly constant since the 1970s and is more than 40% below the US average. A careful analysis of the contributory factors, however, finds that California’s ambitious energy efficiency policies account for less than one third of this difference [4].
The link between improved energy efficiency and reduced energy demand is further complicated by the presence of multiple rebound effects. Take fuel-efficient cars: they make travel cheaper as consumers may choose to drive further and/or more often, thereby offsetting some of the energy savings achieved. Drivers may also use the savings on fuel bills to buy other goods and services which necessarily require energy to provide – such as laptops made in China and shipped to the UK. Reductions in fuel demand will translate into lower fuel prices which in turn will encourage increased fuel consumption elsewhere.
Similar mechanisms exist in industry, where cost-effective energy efficiency improvements allow firms to expand output, lower product prices and increase market demand which in turn stimulates economic growth and aggregate energy consumption. In some cases, energy efficient innovations may lead to new, unforeseen energy-using applications, products and industries. The Bessemer process, for instance, greatly improved the energy efficiency of steel-making, but also produced cheaper and higher quality steel suitable for a wider range of uses, thereby increasing demand for both steel and coal.
Rebound is therefore an emergent property of complex economic systems, with the multiple mechanisms and effects being difficult to isolate and measure, especially over the longer term. However, a growing body of evidence suggests that these effects are larger than was previously thought and can frequently offset or even eliminate the energy savings from improved energy efficiency [5,6].
From an engineering perspective, energy demand may be reduced by improving the thermodynamic efficiency of energy conversion devices such as boilers and engines; preserving, heat, light, momentum or materials in passive systems, such as houses, cars and steel bars; or reducing demand for final energy services such as thermal comfort and mobility [7].
Gas use for home heating may be reduced by installing a more efficient boiler, insulating the walls or roof, or accepting lower internal temperatures; petroleum use for car travel may be reduced by improving the efficiency of the engine, reducing the size, weight, rolling resistance and/or air resistance of the vehicle; or simply driving less; and coal use for steel manufacture may be reduced by improving the efficiency of blast furnaces, increasing scrap recovery and product life, or designing buildings and products to use less steel.
Globally, Cullen et al [8,9] estimate that that global average conversion losses could be reduced by a maximum of 89% and passive systems losses by a maximum of 73%, implying that current demand for energy services could be provided with much lower energy consumption. This is a theoretical potential, so the technical and (especially) economic potential is likely to be much less. Also, the rate at which improvements in conversion efficiency or passive systems can be achieved is constrained by the rate of turnover of the relevant capital stock.
Further reductions in energy demand may be achieved by reducing demand for the relevant energy services (‘sufficiency’), but growing incomes create strong pressures in the opposite direction. This is particularly the case for countries at earlier stages of industrial development, but also applies more generally: for example, an analysis of lighting demand over three centuries and six continents finds no evidence of saturation even in the wealthiest countries [11]. Changes in demand for energy services can often occur fairly rapidly, but these too may be constrained by the lifetimes of relevant technologies and infrastructures [12]. For example, the physical characteristics and spatial location of houses, workplaces and other assets can lock-in heating, cooling and mobility needs for decades. More generally, voluntary actions to reduce any form of consumption face multiple obstacles within a growth-based economy [13].
In sum, equating improved energy efficiency with reduced energy demand is misleading, while reducing energy service demand involves swimming against a strong tide. This does not mean that energy demand cannot be reduced, but does imply that it will be more challenging than many analyses, policy documents and political statements suggest.
Dr. Steven Sorrell is a Senior Lecturer in the Science Policy Research Unit (SPRU) at the University of Sussex. He is an energy and climate policy specialist with more than 20 years of experience in academic and consultancy research.
Read Steve’s full argument in his recent SPRU working paper: Reducing energy demand: issues, challenges and approaches
Works Cited:
By Harry Saunders
Allow yourself for a moment to picture a time; say 5, 10, 50 generations in the future. Imagine yourself in a world where everyone is consuming at a level that satisfies them. People need to work only a small fraction of their time, and the need for work diminishes persistently so leisure time is ever-rising. And the economic machine you see working there is automatically and continuously reducing its assaults on natural ecosystems globally.
Impossible, right? As it happens, neoclassical economics says not.
Surprising as this might seem, would it further surprise you to learn this economic machine has all the trappings of a free market, competitive, private-ownership economy, including producers who maximize their profits? And that this very dynamic is what propels and enables this “golden age” for households – and for the environment?
More Good Surprises
Before succumbing to (what must be) your deep suspicion that this all must be dreadfully theoretical and so cannot be trusted to depict reality in any meaningful way, there are other good things to be reported about this economy.
Forces at work in the economy act to limit or erase income inequality. Persistent poverty is disallowed. The economy stabilizes on what is called a “golden age path” where intergenerational equity is automatically assured.
And despite what you may have read, such an economy does not require growth to sustain itself.
Intriguingly, this state of affairs depends not on altruistic behavior but on natural dynamics arising when agents act in their narrow self-interest – it does not presume any rallying cry for people to act with the larger good in mind. It happens by itself, with or without altruism. It is a natural ecosystem, in other words.
Neoclassical Theory and Reality
That’s a lot to swallow, you say.
Once you can envision the commonsense mechanics at work, swallowing will be easier. But to help this along, let’s first attack a root of your concern: theory vs reality.
Because of the care with which generations of brilliant economic minds have assembled it, neoclassical economics points a very reliable finger at powerful economic forces at work in the real world. And while it might not seem so from the abstract-looking mathematics and seemingly arbitrary “assumptions” that infuse it, neoclassical theory today successfully surviving came down to us from economists possessed by a consuming passion for explaining real things about the real world.
All the above conclusions follow from a standard framework stripped to its bare essentials. Its theoretical foundation is undergirded by three massive pillars, each festooned with laurels of the Nobel variety. And actually a fourth pillar that should have been likewise festooned. That is, five of the great economists of past few decades – Kenneth Arrow, Gerard Debreu, Robert Solow, Edmund Phelps, Franco Modigliani (Laureates all) – built the three pillars economists know as general equilibrium theory, neoclassical growth theory, and neoclassical consumption theory. Ronald Shephard created the fourth pillar, called (somewhat obscurely) duality theory. Each of these accomplishments was hard won, and each represents a truly fundamental advance in our economic understanding.
But pedigree aside, what you really want to know is how cautiously you need to treat the disturbing fact that this theoretical foundation is, well, theoretical, and rests on challengeable assumptions. And what may be worse, embodies these assumptions in mathematical equations that seem offputtingly arbitrary.
The equations are neither arbitrary nor arbitrarily constructed. As for the assumptions, these are deeply commonsensical. Were you to read a clear, reader-friendly verbal description of each assumption, without looking at the mathematics, each would make sound sense to you. The mathematics is simply the economist’s way of making these statements perfectly precise. It allows economists to converse among themselves in shorthand, bless their nerdish souls. These conversants require that the assumptions and relationships be stated in a form that brooks no challenge as to their exact meaning.
Schumpeter’s Challenge
Numerous new economic approaches have arisen in recent years, including social network theory, agent-based modeling, etc. Without here explaining why (subject of a future post), none of these is inconsistent with what is pictured here. But Joseph Schumpeter deserves special attention.
The author of “creative destruction,” Schumpeter saw that progress in an economy was actually one that moves in fits and starts, where new developments arise not because returns to capital happen to be at some particular level or the like as traditional neoclassicists might have it, but rather directly out of the innovation of entrepreneurs. New production capacity arises, unpredictably producing new things and destroying old ones, because of Schumpeterian dynamics, not out of neoclassical necessity.
Nonetheless, the larger neoclassical framework encompasses Schumpeter’s idea, in the aggregate. Neoclassical technology trends – having effects identical to those in the Schumpeterian picture – allow accurate portrayal of the economy’s aggregate functioning when responding to innovation’s engine..
And how am I to believe this aggregate picture is the correct picture, you ask? An analogy will make this easier. For those familiar with the discipline of thermodynamics, you’ll know that the behavior of a gas is highly predictable, even though it is behavior arising from gazillions of tiny molecules, moving around randomly and chaotically. Boyle’s law and the “ideal gas law,” for instance, are extremely simple equations delivering simple relations among pressure, volume and temperature that are (for all intents and purposes) perfectly predictive. These laws’ physical validity was proved by the discipline of statistical mechanics to be directly connected to the random behavior of individual molecules. Things in aggregate somehow seem to be smoother and more straightforwardly predictable.
In like fashion, neoclassical laws govern molecular Schumpeterian chaos in the large, extracting visible simplicity out of underlying complexity. New goods, services, and industries – though we cannot know what these will be – will always require households to supply the needed capital and labor, and to consume the products offered.
The Mechanics of it All
Where credibility is best built is by looking at what the theoretical construct is saying in day-to-day language. While brevity of discourse prevents it, a full accounting would describe the natural mechanics of how households drive the entire economic machine via their contributions of labor and capital (savings) to producers; how producers in turn deliver households consumption goods and services; how households own the means of production; how the economy values uncompensated labor such as household operations and child care as equivalent to paid labor; how prices lock to quantities; and how the economy autonomously evolves toward maximizing “economic welfare,” something akin to maximizing the “size of the pie” left over as surplus from this economic machine after it’s fed.
And how all of this results in an economy that does not require growth to sustain itself but where producers get exactly what they need from households to run the machine in zero-growth mode indefinitely. All the subject of a future post, perhaps.
Where the Good Things Come From
But more exciting than how this economy functions is the way it behaves when allowed to unfold in its own way. Here we return to the aforementioned surprises. For instance, in this economy capital owners cannot claim a larger share of the pie than is due them. Natural forces engage to drive the economy always back to a balance wherein wealth derived from capital investments and from wages paid to labor both lock on a level that optimally serves household preferences. Capital and labor claims on wealth resist getting out of balance.
As if this weren’t enough, there is another startling thing about this future economy: persistent poverty is disallowed. Any economy suffering from under-capitalization and/or over-supply of labor (i.e., high unemployment) will automatically move to a condition of full employment and will generate sufficient productive capital stock for itself to match the satisfaction-maximizing consumption of households seen in any other economy. Natural economic forces act to drive toward this state of affairs.
One other, intellectually-arresting thing (last one, I promise): This economy will be on what is called a “golden age path,” so named by Nobel Laureate economist Edmund Phelps who first discovered such behavior. Phelps’ “Golden Rule of Accumulation” – christened thus because it follows the golden rule principle of “do unto others [i.e., future generations] as you would want them to do unto you” – is automatically honored. That is, at each point in time, the choices made by households occur in such a way that the welfare delivered to each succeeding generation will be no less than the welfare of the current one (and, with ongoing technology improvements, will be greater).
The Caveats
For this world to actually exist, it would have to be the case that the declining assault on natural capital is aggressive enough to preserve its health and ongoing viability. And in any case, the economy would have to maintain at a level that adheres to natural capital’s carrying capacity or below.
In this regard, the above portrayal of this economy makes one significant assumption: that the global human population has stabilized at some fixed level (or is rising ever so slightly). Current trends seem to point in this direction, but it is still an assumption. The framework furthermore makes no prediction as to whether any particular population size will be sustainable by way of honoring natural capital’s carrying capacity. It only predicts that under circumstances of a fixed population, consumption can remain steady and calls on natural resources decline. No doubt any particular consumption level will have a powerful bearing on the “Gaia-balancing” equation. The hard work ongoing by ecologists and a throng of others will be needed to determine the hard ecological limits of natural capital that will better enable us to solve this crucial-to-humanity equation.
One other thing: Even though calls on raw resources are declining, this is not the same as saying these come without assaults on natural capital beyond just the potential to exhaust some of them. If these resources generate emissions or other pollutants, they assault natural capital another way that further threatens sustainability.
But be reminded that we are looking generations hence. Is it really that difficult to envision a world generations down the road where means have been found to supply clean, cheap, and abundant energy? And to handle other raw materials in a way that makes them continually recyclable so as not to impinge on natural capital in any way that nature cannot replenish?
That is the story. If your skepticism remains unquenched, you are invited to test your misgivings against a recently-released article in Ecological Economics.
Final Word
The economic future of human civilization may not be quite so miserable as you or others around you might worry. Despite the fulsome challenges directly facing humanity today, there is a highly alluring future painted by good old neoclassical economics that may not in fact be that far beyond our reach; or at least not far beyond the reach of your progeny x generations hence. Pick the value of x for yourself. Then decide the direction you want to travel to help them arrive there.
Harry Saunders is the Managing Director of Decision Processes Incorporated. He has consulted at numerous Fortune 100 companies including Chevron, General Motors and Hewlett Packard. He is also a Senior Fellow at The Breakthrough Institute.
Mari Martiskainen asks whether it is time to have a real debate about moving our focus from energy supply to realising the benefits of energy efficiency.
The International Energy Agency (IEA) reported last week that the energy efficiency market was worth between $310 billion and $360 billion in 2011; thanks to energy efficiency improvements in buildings, transport and appliances, total final energy consumption in IEA countries has reduced by 60% during the last 40 years.
There is clear evidence that energy efficiency works, not only by reducing demand but also by contributing to a transition towards a more sustainable energy system. In the light of this, there is a clear need to have a more open debate about the role of energy efficiency in the UK’s energy policy.
On October 8th, the European Commission approved the UK’s venture of providing state support measures for a new nuclear plant at Hinkley Point. The decision means that developer EDF Energy will receive up to £17.6bn as a guaranteed ‘strike price’ for power output over 35 years, worth £92.50 per megawatt hour- almost double the cost of wholesale electricity in recent months. This decision has not surprisingly angered environmental groups such as Greenpeace, who have argued that nuclear as an established technology should not need subsidies.
To date, there is no new nuclear plant in Europe that would have been built to time and estimated budgets. One such plant is Olkiluoto 3, which began construction in Finland in 2005. The plant has been hit by “repeated delays, soaring costs and disputes”. The original start date was 2009, but it has now been delayed to at least until 2018. Teollisuuden Voima (TVO), the owner of OL3 project, was granted a licence to start constructing a second new plant OL4 in 2006. However, this year TVO asked the Finnish government to extend that licence by another 5 years, which inevitably was turned down by the government this past September.
Similarly, the building of Flamanville 3 plant by EdF in France has been hit by delays and increased costs.
On October 7th, Ed Davey, the Secretary of State for Energy and Climate Change announced an extra £100 million for the Green Deal Home Improvement Fund, aimed at improving the UK’s existing housing stock. Nevertheless, this seems like peanuts compared to the support the government is planning for the nuclear industry.
An important question, however, remains: do we want to keep committing UK’s energy policy to an energy generation technology that would inevitable lock us into uncertainty and economic risks? Instead of investing in technologies that may be operational in ten years’ time we need to look at the role that energy efficiency can have today, in reducing demand, reducing carbon emissions and helping the UK achieve its climate change targets.
Tell us what you think! Join the conversation by leaving a comment below.
———————————————————————————————————-
Mari Martiskainen joined the Sussex Energy Group at SPRU in 2006. Her research has included topics such as community energy, consumer behaviour and debates surrounding new and old energy technologies, such as nuclear power and microgeneration. She is an affiliate PhD Researcher of the Tyndall Centre for Climate Change Research, and currently works for the Centre on Innovation and Energy Demand,
Follow us on Twitter: @martiskainen @SussexNRGGroup
By Mari Martiskainen and Florian Kern, Centre on Innovation and Energy Demand, SPRU
Those familiar with the UK’s energy efficiency policy for buildings are aware that back in 2006 the then Labour government announced that all new domestic buildings would need to be ‘zero carbon’ from 2016 to help meet the government’s energy and climate change ambitions. To support this goal, a Code for sustainable homes was announced at the same time against which new buildings would be rated. At the time of the announcement not many people actually knew what a zero carbon building would mean in practice. As a result, government and industry jointly set up a non-profit organisation called the Zero Carbon Hub in 2008 to work together towards realising zero carbon buildings.
As Andrew Warren, Honorary President of the Association for the Conservation of Energy, writes in his “New hub needed to focus on existing buildings” article for the October issue of Energy in Buildings and Industry , the Zero Carbon Hub “has proved to be the acknowledged entity to which everyone turns – companies and Ministers alike – to consider how best to progress towards ensuring that only the most energy- and carbon-efficient new buildings are constructed”. Warren is now calling for a similar hub to be created to deal with the upgrade of the UK’s 26 million existing buildings, most of which will still be around for the next 40 years. Since the UK has one of the poorest housing stocks in Europe and despite a long history of policies aimed at tackling the energy efficiency of existing buildings, much remains to be done. We at the Centre on Innovation and Energy Demand have been undertaking research analysing the mix of the UK’s policy instruments aimed at building energy efficiency in the past five years. Our initial analysis shows that there is a lot to be learnt from the failure of existing policies such as the Green Deal which addresses the current building stock but has seen a poor uptake. Ed Davey, the Secretary of State for Energy and Climate Change, announced an extra £100 million for the Green Deal Home Improvement Fund on 7th October 2014, but there is still a lack of a long-term strategic solution to improving the UK’s existing housing stock. In terms of new buildings, the zero carbon policy provides an actual regulatory requirement, whereas there is not a similar pressure towards upgrading the existing stock.
As many of our stakeholder interviewees have indicated, there seems to be a lack of coherence in terms of who is dealing with building energy efficiency within government. Having two different government departments, the Department of Energy and Climate Change (DECC) and the Department for Communities and Local Government (DCLG), addressing different parts of building energy efficiency can create unnecessary confusions for those working in the sector. For example DCLG have to deliver under the EU Energy Performance and Buildings Directive, while DECC is responsible for the UK meeting its carbon budgets. Furthermore, there is a call for more joined up thinking in terms of realising the benefits that better integrated policies addressing energy efficiency and renewables could have – such as ensuring that Green Deal assessments are fully required and followed up with upgraded thermal efficiency before the Renewable Heat Incentive or Feed-in-Tariffs are applied for.
We agree with Warren that there is a need for a more coherent voice and centre of expertise to facilitate the upgrading of the UK’s existing building stock. As Warren notes “creating an acknowledged hub for existing buildings would provide a single point of reference for this long-established sector”. However, we argue that such a hub should not just be a joint collaboration between industry and government, but should also include other non-governmental organisations who have long called and campaigned for the upgrade of the existing housing stock. It should also have clear synergies with existing bodies like the Energy Saving Trust, the Carbon Trust and the UK Green Building Council. In addition, such a hub might be particularly effective if linked up with a major programme of the Green Investment Bank (like the ones by the KfW bank in Germany) as both Secretary of State for Energy and Climate Change Ed Davey and Shadow Energy Secretary Caroline Flint now agree that energy efficiency is part of our national infrastructure priorities. To make tackling the existing housing stock a political priority is the first step. The second step then should be to have a broad discussion on what sort of hub would be desirable to help facilitate this major infrastructure programme. Andrew Warren’s suggestion is a good starting point for this debate.
by Mari Martiskainen
“We need to see energy efficiency as part of the nation’s infrastructure programme”.
This was the charge of Ed Davey, Liberal MP and Secretary of State for Energy and Climate Change.
Davey was speaking at an Association for the Conservation of Energy event to say thanks to outgoing director Andrew Warren, often referred to as the cheerleader of the UK’s energy efficiency industry. The event also served as a welcome for new director, Dr Joanne Wade.
The event was held at the House of Commons on September 2nd.
Similar words were heard last week from opposition leader Ed Miliband who announced that Labour would insulate 5 million homes in the next ten years. That is 500,000 homes a year- not an easy task, especially considering that the current government’s ‘flagship’ energy efficiency measure, the Green Deal, has failed to deliver.
The latest statistics released for the Green Deal in September 2014 show that since January 2013 when the programme was introduced, 326,884 Green Deal Assessments have been recorded. However, in August 2014, there were only 4,737 Green Deal Plans in progress, of which 2,092 had a ‘live’ status, i.e. all measures having been installed.
Davey asserted that the journey for maximising the uptake of energy efficiency measures “has not been a smooth one”, and admits that there is much to learn, especially from the Green Deal. He also called for a healthy debate from people who are passionate about the subject and welcomed comments and views especially on energy efficiency regulation.
Given that the UK has included energy efficiency in its energy policy since the 1970s, there has not been a lack of debate to date. As most in the sector would agree, energy efficiency is still the cheapest way to deal with energy related emissions and reduce our reliance on fossil fuels.
But what does having energy efficiency as the nation’s infrastructure programme actually mean or look like? There were no concrete answers from Davey, but more call for discussion and debate. Would it be similar to the 1990s Dash for Gas, so that street-by-street houses would be insulated to the best standards? And more importantly, who would pay for that, given that the government today is more interested in market based loan instruments, such as the Green Deal, while householders themselves are unlikely to want to pay, something that we have witnessed over the years.
Or perhaps, as Davey also suggested, it could mean having a debate about using council tax rebates for those who undertake energy efficiency measures. Miliband, on the other hand, indicated that Labour would give power to communities to insulate homes, while also providing 1 million interest-free loans for energy efficiency measures.
Davey underlined the need for a serious debate about the role of energy efficiency regulation, competition and innovation before the next general election in May 2015. It seems that the Liberal Democrats and Labour have already started that debate.
However, unless the lessons from the flop of the Green Deal are really taken into consideration and we get government at the highest level post-election advocating the importance of energy efficiency, there is a danger that energy efficiency will remain the invisible solution that everyone sort of knows about but no one is really prepared to fly the flag for.
Mari Martiskainen joined the Sussex Energy Group at SPRU in 2006. Her research has included topics such as community energy, consumer behaviour and debates surrounding new and old energy technologies, such as nuclear power and microgeneration. She is an affiliate PhD Researcher of the Tyndall Centre for Climate Change Research, and currently works for the Centre on Innovation and Energy Demand,
Follow us on Twitter: @martiskainen @SussexNRGGroup
It was a great pleasure to present a keynote address at the fifth International Conference on Sustainability Transitions, for two reasons. First, some 15 years ago when John Grin, Jan Rotmans, myself, and many others were putting together the Dutch transition network and were developing a new research agenda, we discussed the need for the emergence of a new interdisciplinary and transdisciplinary field. It is a huge satisfaction to see that this happen, and the International Sustainability Transitions Network is flourishing. Second, as incoming Director of SPRU, one of the institutions that made important contributions to the field, I have a keen interest in bringing the research agenda to a new level.
SPRU is developing a new research programme provisionally entitled: Transformative Change and Innovation (and we are hiring three new professors to work on this). The ambition is that this programme will, on the one hand, deliver new fundamental knowledge on the nature and governance of long term transformative change, and on the other hand, practical ideas, perspectives and solutions for intervening in this long term change process. Transitions research always has been dedicated to do both and I believe rightly so since there is nothing as practical as deep and fundamental theoretical insights.
In my keynote address, I explored a number of important themes for the new agenda. The overarching message is that although transition studies as a field is built upon the notion that transitions are long term processes (with the basic understanding that they take at least fifty years, and encompass entire societies and economies), many studies focus on the short term and individual subsystems, such as mobility, energy, food provision systems. This is also true for the transition theory I am involved in developing: Multi-level Perspective (MLP).
There are sound theoretical and practical reasons for a focus on individual subsystems, yet it is also true that a sustainability transition ultimately does not need a change in one system, but a much broader change in many systems. I propose we refer to this change of multiple systems as a Big Transition. A main question then becomes how can we characterize and conceptualize a Big Transition? Here we can learn from work of Freeman and Perez. Their work moves beyond the level of individual innovations or systems and takes a genuine long term historical perspective. Based on their work, I would like to propose the following hypotheses:
In this last phase we also enter the period in which the Second Big Transition begins, which entails a struggle between various forms of capitalism, from more brutal to more inclusive ones. If we were to drift towards the latter option, the Second Big Transition will be built around new rule sets and practices that are fundamentally different from the ones of the First Big Transition. This next transition is likely to be shaped by concepts and characteristics such as diversity, durability, recycling, circular economies, participation, and sharing.
Innovation is not only a crucial site for enabling the Second Big Transition, I expect that the innovation process itself will be transformed. In particular, the idea that innovation should be stimulated and its undesirable impacts on people, nature, and society should be regulated through the state will be questioned and rightly so.
We need new institutions that are able to give this Big Transition direction. The next question is how and which institutions do we need? This, and the entire theme of transformative change, will be an important agenda for SPRU over the next few years and will be the focus of the next conference of the International Sustainability Transitions Conference to be organized by SPRU next year. Come and join us!
Twitter hash tag: #IST2014
Sussex Energy Group at SPRU 
Didcot power station is yet another power station out of action, but what does this mean for UK security of supply this winter?
The fire last week at Didcot power station has led once again to cries of “the lights are going to go out this winter”. But people who ask whether or not the lights will go out are asking the wrong question. It is politically inconceivable to allow non-consensual power cuts to happen in the UK this winter; therefore the question we should be asking is, “how much is it going to cost us to keep the lights on, and are there ways of reducing the cost?”
When the Didcot B gas-fired plant unit caught fire, the UK electricity system lost around 680 Megawatts of power generation. There is as yet no indication of how long it will take to get the unit up and running again, but it could be out of action for the rest of the winter.[i] To put this in context, UK peak demand for electricity is usually just under 60 Gigawatts, meaning that the fire cost the UK around 1% of total peak electricity consumption.
The system is designed to deal with problems such as this; fires and faults at power stations are not so rare, and the UK has a spare capacity margin – a capacity cushion designed to deal with unexpected incidents such as fires – which ensures that the lights stay on even when power stations break.
However, what makes this event unusual is that it is the most recent in a chain of problems with big power stations. In February, a unit at Ironbridge was closed after a fire, and in July two units at Ferrybridge were also closed. Moreover, two nuclear reactors have been temporarily closed due to safety problems. So does this mean the lights are going to go out?
There is little doubt that the UK capacity margin is declining, and will continue to do so over the next few years.[ii] Yet a recent report showed that there is actually rather little agreement over what impact this will have on the security of UK electricity supply.[iii]
However, the debate around capacity margins tends to skate over the crucial issue of politics. Power cuts would be utterly unacceptable to the British public. In the 1970s, the ongoing capacity crisis caused by the miners’ strike was one of the key factors which eventually brought about a change of government, and no current government is going to risk their political legitimacy on this issue, especially not shortly before a general election.
Moreover, power cuts send a signal to businesses that a government is struggling to manage its infrastructure, which could deter investment. This means that the ‘chances of the lights going out’ is a misguided debate; instead, the question we should be asking is: how much is it going to cost to keep the lights on?
The new capacity market [iv] is currently getting a lot of attention in policy and academic circles. No-one is suggesting that procuring new capacity is going to be cheap; in fact, there are arguments to suggest that it may prove far more expensive than necessary. [v]
However, simultaneously Ofgem has revealed plans for a new package of contingency measures, including the National Grid’s new Supplemental Balancing Reserve, which for the first time includes plans for demand-side management to reduce peaks in energy demand and to allow our electricity system to work more efficiently.[vi] The media has framed these supplemental balancing mechanisms in highly negative terms, calling them ‘emergency measures’. But this is misleading; in fact, if we get it right, these demand-side measures could provide a much cheaper means of meeting the peaks in electricity demand.
Therefore, the fire at Didcot B power station provides an opportunity as well as a challenge. For the first time, the UK will get to find out how well its electricity system performs over winter with a slightly lower spare capacity margin. We can see how resilient our electricity system is to unexpected events such as fires. And more importantly, we get to find this out before we truly get into a problematic situation; after all, we still have most of our old coal and nuclear capacity up and running. For a long time, people have talked about focusing on the demand-side as well as the supply-side; well, this winter is our chance to do exactly that.
Emily Cox, Sussex Energy Group
Emily Cox is a PhD researcher with the Sussex Energy Group, focusing on electricity security in the context of a low-carbon transition. Her main research interests are energy security, UK electricity markets, stakeholder engagement and energy behaviour. She has recently worked as a researcher for the Royal Academy of Engineering, E.ON Technologies at the Ratcliffe-on-Soar power station, and the Oxford University Centre for the Environment. She has also worked for a variety of NGOs, including as a regional network coordinator for Greenpeace. Emily currently tutors an MSc course in Energy Policy for Sustainability at the University of Sussex.
Works Cited:
[i] McKenna, J. (2014) “Fire halves Didcot capacity”. Process Engineering, 20 October 2014
[ii] Ofgem (2014) Electricity capacity assessment report 2014. Ofgem, London
[iii] Royal Academy of Engineering (2013) GB electricity capacity margin: a report by the Royal Academy of Engineering for the Council for Science and Technology. Royal Academy of Engineering, London
[iv] DECC (2014) Electricity Market Reform – Capacity market: detailed design proposals. Department of energy and Climate Change, London
[v] Newbery, D. and Grubb, M. (2014) The Final Hurdle?: Security of supply, the Capacity Mechanism and the role of interconnectors. EPRG Working Paper 1412 / Cambridge Working Paper in Economics 1433
[vi] Ofgem (2013) National Grid’s proposed new balancing services: draft impact assessment. Ofgem, London