Appraisal of the UK’s energy policy

1 September 2024

Andrew Warren takes a look at a new report from the IEA which highlights the need for the UK to address the energy efficiency of existing buildings.

Every five years, the Paris-based International Energy Agency completes an official in-depth assessment of the veracity and effectiveness of each member government’s energy policies. Late last month, the Agency published its detailed verdict on how well the UK is doing.

The main conclusions will mostly have warmed the hearts of the new Labour government (who will have negotiated with the Agency on details of the final text). Overall it states that: “The United Kingdom is a global leader in decarbonisation: it has set ambitious targets regarding current emissions reductions and carbon budgets”.

In particular, the IEA is impressed by how fast the generation of electricity has been decarbonised since 2000. Simultaneously, energy intensity – measuring wealth generation against energy consumption – has improved by 59%. It notes with approbation that electricity consumption per person has  already fallen by 29% during this century.

But electricity is still just 21% of total energy consumption. Oil remains the fuel for 95% of transport. While passenger transport energy intensity was consistently improving, at least up until 2018 when the trend reversed, it is now 1%  worse than in 2000. One explanation may be the extra tax imposed on the more energy efficient diesel option. A case of health policy trumping climate policy?

Building sector

But there is no question that the policy area that most concerns the IEA is the building sector. It is responsible for 41% of energy consumption. Natural gas still accounts for 65% of residential energy usage, electricity just 25%.

In the commercial and public sector, the breakdown is rather different – electricity has 44% market share, gas 39%, and (rather surprisingly) ‘oil products’ some 13.3% of the total. Again, positive trends have slowed down recently. For instance, oil burning has leapt from 46.726 terrajoules in 2015 to 88,871 TJ now.

Overall, space heating efficiency improvements across the building stock reached 29% between 2000 and 2015, but efficiency trends have flatlined throughout the building sector (both residential and non- residential) since then.

The IEA urges the government to keep a “sustained focus on energy efficiency upgrades of the existing building stock” as “priority areas that can show fast results.”

It continues: “Ambitious targets will need significantly more policy focus to be achieved, and the government should avoid frequently changing timelines and targets and strive for maximum ambition.” 

This echoes constant concerns about overnight abandonment of Green Deals, Green Homes Grants, and last year’s high level Task Group on energy efficiency.

The IEA pulls no punches: “The UK should avoid an outsized focus on long-term technology development at the expense of near-term emissions reduction gains from actions such as energy efficiency improvements in buildings.

“The UK can build off existing programmes to expand their reach, especially considering the relatively quick pay-off from energy efficiency improvements in buildings compared to other, longer term technological solutions in other sectors. A more holistic approach to policy support for buildings would help towards this end.”

The report states: “The government should avoid frequent changes to timelines and targets, and strive for maximum ambition, especially in areas where technologies already exist and where upfront costs can easily be recovered through energy savings.”

The government could “make greater efforts to ensure that low-cost recommendations for efficiency improvements as part of the Energy Performance Certificates process are implemented, including offering targeted financial support where feasible and cost-effective. In addition, the government should seek to increase the coverage of the building stock with EPCs, including by leveraging information from smart meters to develop dynamic energy performance certificates.

The IEA also commends the government on its effort to develop a regulatory standard for social housing, and urges more urgent action to target energy savings (and consequently lower energy bills) to low-income households.

“The UK government should give due consideration to increasing the uptake of energy efficient appliances as well as mitigating the impact that increased space cooling will have on energy demand and emissions.”

Policy recommendations

At the close of the report, the IEA summarises five specific policy recommendations. All five of these directly relate to the building stock:

● Prioritise energy efficiency measures in existing buildings, both through buildings standards and renovation incentives

● Consider a mandated phase-out date for fossil boilers to jump start investments in manufacturing, skills and supply chains

● Rebalance the policy costs associated with electricity relative to natural gas to increase incentives for electrification

● Expedite a decision on the technology-neutral approach to household heating before 2026; prioritise electrification as a more economic and ready-to-deploy solution compared to hydrogen

● Ramp up public awareness campaigns around the broader energy transition as well as targeted campaigns on household energy savings to drive more rapid emissions reductions through behavioural changes.

The IEA has provided the new government with an objective and authoritative blueprint for action during this decade. It will be 2029 when the next nationwide energy report is issued. Let us hope that assessment will be able to conclude that all these 2024 recommendations have been implemented effectively. ■

Andrew Warren chairs the British Energy Efficiency Federation