Can nuclear power play a large part in getting to net zero?

Nuclear cooling tower in countryside

In late 2020, there was a flurry of announcements about climate change and energy – first a ten-point plan for a ‘Green Industrial Revolution’[i] followed a few weeks later by a much–delayed energy White Paper[ii]. Nuclear power figures prominently in both narratives, with three possible ways forward. In this blog, Professor MacKerron, CESI Associate Director and Professor of Science and Technology Policy at the Science Policy and Research Unit (SPRU) at the University of Sussex discusses these routes.

Three possible ways forward

First, there is a long-term hope that a UK-only commercial fusion design will be ready by 2040. This is frankly wishful thinking and, even if it could be achieved, involves a new type of compact design that would have no impact on 2050 zero-carbon objectives. This is because it would be a small prototype 100MW machine with a current price tag of £2bn[iii] – three times more expensive per unit of output than the already very expensive twin reactors being built at Hinkley C. 400m has been ‘already committed’ to this endeavour by Government,[iv] a sum that could have been spent instead on projects that could genuinely contribute to net zero. 

The second possibility is a push (‘aim’) to have one more large nuclear plant brought to final investment decision by 2024, following the almost-decade-late Hinkley C. As Government makes clear, achieving this will depend on a radically new funding structure.[v] This could be a regulated asset base model, in which consumers would take on most construction risk, allowing investors a more or less guaranteed rate of return, and/or  Government putting up some taxpayer cash. Since the White Paper, it has become clear that developments at two of the only three plausible big-reactor sites – Wylfa (abandoned by Hitachi) and Bradwell (paused for a year by EDF/China General Nuclear) – are now effectively no longer in contention. Only a further Hinkley replica at Sizewell seems at all possible, and large institutional investors have recently made clear they will not put up any of their own money for this. Significantly, and credibly, Government makes no mention of any further ventures along the large-nuclear path.

What’s wrong with option 1 or 2?

The problems in these two nuclear avenues inevitably throw a lot of weight on to the third strand, the development of so-called modular reactors, both ‘small’ (SMRs) and ‘advanced’ (AMRs). The relatively near-term part of this involves Government spending up to £215m to help develop a domestic SMR design by the early 2030s.[vi] The attraction of SMRs is that they could offer the possibility of relatively rapid factory manufacture of components, followed by fairly simple on-site construction. Their main drawback is that they will be based on cut-down versions of existing light water reactor designs, in the process losing the economies of large-scale current nuclear plants. In practice the only credible SMR involves a consortium already built up over several years by Rolls Royce, using its technical know-how as designer and manufacturer of small reactors for UK nuclear-powered submarines. To be at all competitive many SMRs would need to be built, thus achieving economies of scale in production to offset the loss of economies of large reactor size. In this pursuit, Rolls Royce want to build up to 16 of these SMRs at a cost currently estimated by them[vii] (and therefore probably optimistic) of just short of £29bn.  This is a highly inflexible proposition, risking very large sums of public money.

Rolls Royce have also suggested that such reactors might generate at around £60/MWh initially, falling to £40/MWh for later plants.[viii] By contrast, in terms of real projects, as opposed to very early and potentially optimistic expectations, offshore wind is already committing to deliver in the near-term at auction prices of around £40/MWh.[ix] According to the White Paper, the global market for modular and advanced reactors might (as ‘estimated by some’ – actually the National Nuclear Laboratory) be worth £250bn to £400bn by 2035. This is at best heroic, given that the current global market is zero. In any case, the idea that the UK might win a large share of such a market (if it did exist) is made hopelessly implausible by the fact that the UK is well behind several other countries’ SMR development. These include Russia, the USA, Japan and China, with the Rolls Royce planned design only one among over 70 SMR designs currently being pursued around the world.[x]

The second leg of the modular reactor story involves ‘Advanced’ reactors.  The ambition here is to have a demonstrator ready by the early 2030s ‘at the latest’. For this, the Government may be willing to spend a further £170 m. Here we are in highly speculative territory. As the White Paper very briefly explains, AMRs would be reactors that use ’novel cooling systems or fuels and may offer new functionalities (such as industrial process heat).’[xi] Such designs would most likely involve high temperature gas cooling; many such designs have been developed in the past 50 years, none of them proving commercially viable. It is not clear why work in these challenging technological areas can be expected to do much better in the future. Even if such technologies eventually prove more commercially tractable, having a demonstrator built by the early 2030s is extremely hopeful. 

Reasons for optimism?

The optimism displayed in these plans includes the up-front claim that ‘the UK continues to be a leader in the development of nuclear technologies’[xii] – a proposition, when applied to commercial reactors, that has no basis in fact whatever. However, Government does qualify its enthusiasm by making clear that its plans, including expenditure, remain conditional. For a large reactor, bringing a project to fruition depends on ‘clear value for money for both consumers and taxpayers’[xiii] and the £385 m apparently to be spent on SMRs and AMRs reactors is ‘subject to future HMT [Treasury] Spending Reviews’.[xiv] But even if all nuclear plans worked out as the White Paper hopes – in terms of developing new low-carbon capacity on the predicted time-scale – it is far from clear that this would be achieved at anywhere near competitive cost. Even if nuclear power does well, large reactors will play, at best, a very small part in the move to net-zero carbon by 2050. While modular reactors could do more, there is huge uncertainty, probable extended timelines and no guarantee of any kind of success.


[i] HM Government (2020) The Ten Point Plan for a Green Industrial Revolution November

[ii]  HM Government (2020) The Energy White Paper. Powering our Net Zero Future December CP337

[iii]  ‘UK takes step towards world’s first nuclear fusion power station’ New Scientist, 2 December 2020.  Numbers are quoted from the UKAEA, the fusion R&D proponent

[iv]  The Energy White Paper, p. 51.

[v]  Ibid., p. 49

[vi] ibid. p. 50

[vii] World Nuclear News ‘Rolls Royce on track for 2030 delivery of UK SMR’ 11 February 2021

[viii]  ibid.

[ix]  https://www.greentechmedia.com/articles/read/prices-tumble-as-u-k-awards-5-5gw-of-offshore-wind

[x] IAEA Advances in SMR technology development 2020 September 2020, in which 72 designs are listed

[xi] The Energy White Paper, p. 51

[xii] ibid. P.50

[xiii] ibid. p.49.

[xiv] ibid. p.50

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Counting the deaths prevented by decarbonisation: A historical analysis

Introduction

While there is general consensus that renewable energy technologies can make great positive contributions towards achieving the 2015 Paris Agreement, there are associated externalities that follow the adoption of low-carbon technologies (i.e. nuclear, hydro, solar, wind, geothermal and biomass) in the transition from a fossil fuel dominated energy system. Very few works exist, if any, that comprehensively assess the positive benefits and associated externalities (i.e. mortality and emissions) of such a transition. Our recent paper, The positive externalities of decarbonization: Quantifying the avoided deaths and displaced greenhouse gas emissions from renewable energy and nuclear power, takes a historical view of two associated externalities of energy systems – deaths and emissions between 2000 – 2020  – and uses the results to analyse 10 possible future pathways (see Figure 1) between 2021 – 2040.

Figure 1 presents an overview of 10 possible future pathways that involve varying combinations and suggested possible constitution of the existing energy systems involving single or multiple regime change. For instance, scenario 1 (Sce-1) depicts oil, gas and coal being replaced with nuclear with renewables and hydro remaining business as usual (BAU). Similarly, scenario 10 (Sce-10) depicts oil, gas and coal remaining BAU with nuclear replacing renewables and hydro. These options will offer varying mortality and emissions contributions and can help planners and policy makers determine how best decarbonisation on a global scale can be achieved in an equitable and just manner.

As the world gets set for another committee of parties (COP) meeting – COP 26 in November 2021, our results emphasise the need for urgency amongst planners, policy makers and governments at all levels towards accelerating efforts that can catalyse the proliferation and uptake of renewables in diversifying our fossil dominated energy system.

Historical quantification of externalities – two decades of avoidable casualties

Between the US, China, India and the EU, we computed over 42.2 million deaths and 1,120 GtCO2 of GHG emissions as the associated externalities from 2000 – 2020 based on -existing energy systems. The share of each case study of the computed deaths/emissions is as follows: US (7 million/340 GtCO2), China (27.8 million/440 GtCO2), India (2.5 million/99.1 GtCO2) and EU (4.9 million/242 GtCO2). Disaggregating the associated deaths by sources showed that coal, oil and gas contributed 99.7% of the associated deaths and were responsible for 99.3% of GHG emissions during this period.

While this period may have been lost in terms of potential contribution to reductions in GHG emissions and avoided deaths, two results from our scenario analysis stand out. First, we computed that barring installation and operations costs, about 42 million deaths and 1,098 GtCO2 of GHG emissions could have been avoided had all fossil-based sources (coal, natural gas and oil) been replaced with hydropower.

Figure 1: Scenarios, substitutes and replacement description

Though past, our results evidence that the majority of associated mortalities associated with the pre-existing energy systems may have been avoidable. It might perhaps be useful to understand at what monetary cost to national and regional governments (in terms of capital and operational expenditure) these deaths may have occurred.

Future quantification of externalities – two decades too small

Following from the historical analysis of avoidable deaths and emissions, and the multiplicity of climate change events and accords world over – all in attempts at halting the pace of environmental degradation and mortalities associated with our energy-intense clime – one may perhaps be justified believing that lessons are indeed being learnt.

Unfortunately, when we analyse current energy systems and compute the corresponding mortalities and GHG emissions, worsening results are being projected if business-as-usual (BAU) configurations are maintained. In our paper, we compute that cumulative BAU deaths and emissions are projected to reach 47.3 million and 1,318 GtCO2 of GHG respectively between 2021 – 2040.

When we disaggregate this result by country, we observe that while significant reductions are being obtained in the US (24%) and the EU (31%), these savings in avoided mortalities are being eroded by increases in China (14%) and India (177%). In similar vein, emissions savings in the US (13%) and the EU (27%) are being lost to increases from China (31%) and India (173%).

What does this imply?

Taking a technological perspective of the projected results, two things immediately stand out. First, the dominant primary energy sources (coal, natural gas and oil) still maintain and even increase their share of associated mortalities. Specifically, while oil and coal increase their associated mortalities by 11.7% and 8.2% respectively, natural gas increases its by 62.5%. Overall, these three (oil, coal and gas) are projected under BAU to be responsible for 97.8% of mortalities.  Second, low-carbon technologies can cause deaths (represented by mortality factor in Table 1 of the paper) and are projected to cause even more deaths owing to their increasing share in the energy mix of case study regions.

Conclusion – positively looking ahead

As we conclude, we must highlight some startling truths. First, existing BAU scenarios are at the worst-case scenarios. This means that historical efforts at diversifying our energy mixes have only been helpful in preventing exacerbated issues of mortalities and emissions that would have exceeded worst-case scenarios. Second, we observe that low-carbon technologies generate deaths and emissions and at varying rates. This implies the need for pragmatism and optimal system design when diversifying energy mixes. Third, until there is a global strategy for sustainably energising the global south, savings made across the global north in avoidable deaths and emissions will continue to be eroded by the global south.

Recommendation

Agreements and words have little meaning if not backed with consistent actions. As the world attempts recovery on a global scale, it has become imperative to do so on the backbone of a green recovery mandate. This will involve bold decisions and ambitious targets to proposed emissions cuts. Furthermore, considering that it may be infeasible to exhaustively determine unintended consequences of such actions, just and equitable measures must be adopted to ensure countries in the global south can sustainably develop resilient energy systems that guarantee energy sufficiency.

Note on correction factor and procedure

Our computations all through the paper does not include any correction factor to compensate for variation in processes and any improvements among others that may limit GHG emissions. Values computed and used assume direct conversion. A correction factor will bring them in line with existing values and also help with averaging.

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Low carbon energy and national security: why incoherent policy risks delaying energy transition in Europe

An offshore rig

Energy transitions are progressing at increasing speed, stimulated by more ambitious climate policies in Europe and beyond. However, these positive gains are under constant threat from conflict and governance failures, heightened by the global geopolitical and economic importance of energy.

In a new article published in Energy Research & Social Science, we analyse the degree of policy coherence and integration between low carbon energy policies and security policies in three European countries, and find that incoherent policy risks delaying the energy transition in each.

Instead of seeking a balanced approach, national security is too often prioritised over energy transition, while a focus on securing fossil fuel resources fails to reflect the increasing importance of renewable energy in energy security. Meanwhile, the new and different security threats faced by renewable energy sources too often go unrecognised.

We argue that, to reduce barriers for speedy emissions reductions and to increase the future resilience of societies, we must acknowledge two things: that traditional security policy may be hindering energy system change and that the energy transition is changing the security implications of energy systems.

Connection and conflict

Energy and security are connected in many ways. Connections include the need to safeguard energy supply and to defend critical energy infrastructures against attacks and environmental disasters. At a global level, energy resources influence the balance of power between states and relate to other security risks because of their climate change effects.

There is a functional overlap between energy and security policies, but conflicts arise as low carbon energy transitions require new ways of safeguarding energy supply. These conflicts are shaped by countries’ energy profiles and attitudes towards the energy transition.

It is therefore likely that policy strategy addressing low carbon energy transitions on the one hand, and national security on the other, may not be coherent. This is problematic for several reasons: incoherence is likely to create conflicting policies, it reduces the efficiency of public spending, and it may slow down the energy transition.

Overhead power lines at sunset

Out of line? Policy coherence and integration in Finland, Estonia and Scotland

Our study examines both policy coherence and integration. Policy coherence implies attempts to reduce conflicts and promote synergies between different policy areas. Policy integration, a related concept, means that specific policy aims – such as climate change mitigation – are integrated across policy areas.

Looking at Finland, Estonia and Scotland, we reviewed 72 policy strategy documents published between 2006 and 2020.

Although Scotland’s security and energy policies are administered in Whitehall, Scotland’s independence efforts brought an interesting angle to the analysis. Unlike UK energy policy, Scottish energy policy has opposed new nuclear power due to security risks caused by radiation and terrorist attacks. Our security policy analysis mainly drew on UK National Security Strategies, apart from Scotland’s focus on cyber resilience.

Our analysis of the policy strategy documents from these countries identified key themes and findings across all three, the wider implications of which are summarised below.

First, sufficient policy coherence and integration between low carbon energy policy and national security policy is lacking in all the studied countries.

Policy strategies contain conflicting statements regarding fossil fuels, renewable energy, energy security and carbon emissions. For example, UK security policy has contained objectives to safeguard oil platforms in its territorial waters and abroad, while aiming for low carbon transition in the economy. National security is generally prioritised and there is no balanced consideration of low carbon energy transitions and national security. Traditional energy security thinking still dominates.

Second, the advancing energy transition combined with various global developments has led to an increasingly complex landscape for climate and energy policy. There is increasing global competition for energy. Climate change is creating new risks, including disruptions to energy supply, and tensions and conflicts which may cascade elsewhere. Electrified energy systems are at risk of cyberattacks. Russia’s use of energy for geopolitical means in international relations has not diminished. Melting ice in the Arctic has given access to new oil and gas reserves, which only risks worsening climate change in the future.

In this policy landscape, pursuing coherence between energy and security policy is harder than before. Thus, policymakers will need to undertake more careful and detailed assessments of how policy coherence can be advanced in an environmentally and socially sustainable way.

Third, while the energy transition is advancing, we were surprised by how little attention the policy documents paid to the potential security implications of renewable energy and other new sustainable energy developments.

Renewable energy was seen to increase security of supply, but the policy documents addressed few of the security issues identified in academic literature. Issues ignored include the availability and supply of critical materials and rare earth minerals for renewable energy, the impacts of renewable energy on peace and conflict, and potential reactions of the far-right to climate policy and renewable energy.

To improve future policy coherence and societal resilience, both the positive and negative security implications of the energy transition must be openly acknowledged and prepared for.

It is therefore vital policymakers pay more explicit attention to the security implications of new low carbon technologies and smart energy systems in their official strategies. Furthermore, it should be noted that security risks are not similar across different energy niches and in different countries and, thus, require more specific analysis beyond the scope of this study.

New ways of thinking about energy and security policy

Our analysis highlights a significant risk; that by giving stakeholders conflicting signals and neglecting the security implications of renewable energy, the current national security framing that prioritises fossil fuels is likely to delay the energy transition. An increasingly complex policy landscape serves to heighten this risk and the challenge it presents, and increases the need for careful consideration of policy coherence.

To meet emissions targets and address the climate emergency as well as improve future resilience, new ways of thinking about energy in national security and security in energy policy are urgently needed.

This blog is based on the article Interplay between low-carbon energy transitions and national security: An analysis of policy integration and coherence in Estonia, Finland and Scotland – Energy Research & Social Science, Paula Kivimaa and Marja H. Sivonen.

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Make Renovation in Housing a Green Deal Priority (Repost)

Wooden Toy Houses and trees and chart

This is the first blog in the Green New Deal Blog Series, first published on the Transformative Innovation Policy Consortium website, discussing the TIP perspective on the green new deals that are happening worldwide. 

The editors of this blog series are Fred Steward, Emeritus Professor, School of Architecture and Cities, University of Westminster, London; and Jon Bloomfield, Systems Innovation Policy Advisor, Climate Innovation Ecosystems, the European Institute of Technology’s Climate Knowledge & Innovation Community (EIT Climate-KIC).

“It is clear that a top down commitment to substantial investment in a green deal renovate programme is only the start . It must be accompanied by an effective transformative model of implementation, in order to enable a successful transition.  A systemic place-based approach, which engages local stakeholders and citizens is essential.”

The renovation of the housing system for sustainability figures in the post-Covid recovery programmes being developed across Europe. They promise to ‘build back better and greener’. System transitions to sustainability need a new type of transformative policy and politics. This is quite different to the austerity- led, market-oriented innovation policies of recent decades. It needs renewed ‘hands-on’ public purpose with new coalitions of individuals and communities as well as business.

The emerging programmes show a welcome focus on near-term exploitation of what we know in order to address two major short-term challenges: substantial emission reductions before 2030 for the climate emergency; and massive job creation from 2021 to repair the Covid crisis. Green Deal style decade long programmes can meet these twin challenges. Renovating our built environment is a programme, which a raft of recent expert studies have shown, can deliver both desperately needed targets.

All the advantages of focusing on building refurbishment are clearly laid out in the latest European Commission document A Renovation Wave for Europe – greening our buildings, creating jobs, improving lives.’ Renovation works are labour-intensive, create jobs and the investments are rooted in local supply chains. They help local economies since this is a sector where more than 90% of the operators are small companies. The design, installation and operation of low-carbon solutions often require good levels of technical knowledge, thereby offering new skilled jobs within local economies. This offers apprenticeships, and other forms of work-based learning like day release, to help young people into the labour market with green, vocational training courses geared to the renovation agenda.

Most informed policy experts agree that this is needed, though there are significant differences between them as to its priority.  Bill Gates’ ‘Green Manifesto’ places much more emphasis on the search for technologically driven solutions for the ‘hard to decarbonise’ energy intensive sectors, such as steel and concrete.  There is no doubt that the future promise of such solutions, like ‘green hydrogen’  deserve policy investment and attention. However, they fall in the comfort zone of traditional, supply-side industrial and innovation policy. A serious ‘new deal’ style of buildings renovation programme does not fit this space.  It is user oriented, addresses energy efficiency, and transforms a place-based system not an industrial sector. There remains a political argument to be won about the centrality of such programmes. While EU Commissioner Frans Timmermanns, who leads on Green Deal policy and implementation recognises its crucial importance, many politicians and policy-makers give it a lower priority.  Furthermore, a close look reveals disturbing policy confusion as to how speedy refurbishment and renovation programme can be achieved.  The patchwork in pace and the variability of progress in the built environment transition is deeply troubling given its crucial importance.

The contracted out, top down, individualistic ‘householder as consumer’ model has a poor record. The UK government is irredeemably attached to this approach. At the start of the last decade, the Cameron coalition government’s flagship scheme, the grossly misnamed ‘Green Deal‘ aspired to be  ‘Europe’s most innovative and transformational energy efficiency programme’[1]  Its annual target of 2 million retrofitted homes only struggled to reach 6,000 (<1%). Its model of private loans through an independent finance company did not deliver. The Green Homes Grant scheme launched in Boris Johnson’s 10 point ‘Green Industrial Revolution’ plan was contracted out to the US global consulting firm ICF.  Of the £1.5billion promised in its first year, only £71million (<5%) was spent. In contrast, the far more successful German buildings transition, with its  large refurbishment and retrofit programmes involves  a coalition of actors representing building workers, city authorities, community and tenants’ organisations, banks and supply companies.[2] Recent discussions on the recovery programme in France seek to combine the merits of a ‘one-stop shop’ access to funds with innovations in ‘territorial platforms’ and ‘energy information spaces’.

There is a crucial policy lesson here. Centralised, top-down methods are not the answer to tackling a great societal challenge like climate change. Central to green recovery should be transition programmes which set national sustainability targets but where budgets are devolved to enable localities to design initiatives appropriate to their needs, in partnership with local stakeholders. That means looking to develop neighbourhood schemes so that entire streets are renovated together, rather than sole reliance on individual owner-occupiers to apply for a single grant for their own household. A community approach would bring economies of scale; permit accredited programmes with approved contractors; enable retrofit to be undertaken along with boiler replacements and renewable energy installations; introduce smart, digital appliances; and on-street vehicle charging infrastructure.

It is clear that a top down commitment to substantial investment in a green deal renovation programme is only the start. It must be accompanied by an effective transformative model of implementation, in order to enable a successful transition. A systemic place-based approach, which engages local stakeholders and citizens, is essential. This is necessary to achieve full takeup, the minimal goal of any programme. It also offers the prospect of local innovation and experimentation  to deliver the community and employment co-benefits central to the green deal policy paradigm.

Fred Steward, Jon Bloomfield

[1] Greg Barker. 20 June 2011;  Domestic Green Deal and Energy Company Obligation in Great Britain, Monthly report. Department of Energy and Climate Change; Jan Rosenow & Nick Eyre A post mortem of the Green Deal: Austerity, energy efficiency, and failure in British energy policy Energy Research & Social Science 21 (2016) 141–144

[2] Federal Ministry for Economic Affairs and Energy, Energy Efficiency Strategy for Buildings 2015; Fred Steward Action oriented perspectives on system innovation and transitions, EEA Report 25/2017 Perspectives on Transitions to Sustainability European Environment Agency ISSN 1977-8449 Ch 5 pp96-118 (2018)

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Why ‘rebound effects’ may cut energy savings in half

Earth from space, showing clusters of electric lighting

This blog was originally published by Carbon Brief as a guest post from Dr Paul Brockway and Prof Steve Sorrell.

Improving the energy efficiency of everything from the lights in people’s homes to the cars they drive is a key component of global climate action.

Such efficiency gains, which are included in many influential computer models, can lower energy use and, therefore, make it easier to decarbonise the global economy. 

At the same time, they can improve quality of life, boost productivity, increase competitiveness and contribute to growing the economy.  

However, counterintuitively, gains in energy efficiency can also encourage behavioural change towards more energy use, meaning some of the anticipated energy savings may be “taken back”. This is known as the “rebound effect”.

In a new paper, published in Renewable and Sustainable Energy Reviews, we examine the economy-wide impact of these effects and find they may erode more than half of the potential energy savings from improved energy efficiency.

We also find that these rebound effects are not adequately included in the global energy and climate models used by organisations, such as the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA), which means they may underestimate the future growth of global energy demand.

As a result, there is a risk that global climate action relies too heavily on energy savings that may not materialise.

Climate scenarios require unprecedented decoupling

Historically, GDP and energy use have been closely linked. Evidence suggests that energy demand typically increases as economies grow, while restricted access to energy can limit economic growth.

Between 1971 and 2015, global GDP rose by an annual average of 3.1% as global primary energy use rose by 2.1% each year. This is known as “relative decoupling”, where both variables increase but GDP increases faster than energy use. 

Organisations such as the IPCC use “integrated assessment models” (IAMs) to answer questions about climate change and changes in the future energy system. Similar models have been developed by the IEA and other organisations.

Most of these scenarios project little or no growth in global energy use over the next few decades, due to a combination of structural change, such as deindustrialisation and improved energy efficiency throughout the global economy.  

Several of these scenarios anticipate near-term “absolute decoupling”, where GDP rises while energy use falls. This is despite the need for large-scale investment in energy-intensive infrastructure and heavy industry in developing countries.  

This greater level of decoupling can be seen in the chart below, which shows GDP plotted against the world’s final energy demand – that is to say, the total energy consumed by end users. Energy demand falls in some of these scenarios while GDP increases, indicating absolute decoupling.

However, there is no historical precedent for absolute decoupling at the global level – and only limited experience at a national level. 

Historical trends and future scenarios for global final energy use and GDP from 1971 to 2050. Scenarios are divided into four groups: International Energy Agency models (orange), green 1.5C integrated assessment models (IAMs – green), 2C IAMs (purple) and other models (blue). SSPs are “shared socioeconomic pathways”, which are used by modellers to examine how global society, demographics and economics might change over the next century. The Shell 2018 Sky scenario sets a pathway to meet the “well-below 2C” goal of the Paris Agreement. Source: Brockway, P.E. et al. (2021).

Growing evidence of large rebound effects

A possible reason for the close links between energy use and GDP in the past is the presence of large “rebound effects” – a variety of economic shifts that offset some of the energy savings from improved energy efficiency.

For example, energy efficient lighting saves energy, but also makes lighting cheaper, which, in turn, encourages people to light up larger areas to higher levels over longer periods of time.  

Widespread adoption of energy-efficient lighting may also bring down the price of electricity, which could further encourage increased consumption.  

Another example, namely a more fuel-efficient car, is illustrated in the figure below, with examples of the direct and indirect pathways that can lead to increased energy use.

Illustration of rebound effects resulting from a more fuel-efficient car. Source: Sorrell, S. et al. (2018).

The economy-wide rebound effect is the net result of multiple adjustments of this type throughout a nation or the world. 

It is usually expressed as the percentage of the energy savings that would be achieved if none of those adjustments occurred. A 0% rebound means that all of the potential energy savings are achieved, while a 100% rebound means that all of these savings are “taken back”. 

Economy-wide rebound effects are extremely difficult to measure, but the evidence has grown substantially over the past decade. 

In our paper, we reviewed 21 studies that used ‘computable general equilibrium‘ (CGE) models to estimate the size of these effects from a variety of energy-efficiency improvements in different countries and sectors.  

These CGE model studies gave a mean estimate of 58% rebound, with a median estimate of 55%, implying that more than half of the potential energy savings from the modelled efficiency improvements were not achieved.  

We also surveyed 12 studies that used a variety of other methods to estimate economy-wide rebound effects and found a mean estimate of 71% rebound.  

In total, more than two-thirds of the studies found rebound effects larger than 50%. Six found rebound effects of 100% or more, implying that in some instances the energy savings may be eliminated altogether.

The studies varied widely in terms of methods used and types of improvement investigated, and their results were often sensitive to uncertain assumptions.  

Nevertheless, taken as a whole, they provide a consistent message of economy-wide rebound effects eroding more than half of the potential energy savings from improved energy efficiency.

Examining models

A key question is whether these rebound effects are properly factored into global energy models. 

To explore this, we examined four of the IAMs used by the IPCC, together with the models used by BPShell, the IEA and the US Energy Information Administration (EIA).  

We found that most of these models relied upon external assumptions for key variables and were unable to capture many of the mechanisms contributing to rebound effects. 

Two of the models (REMIND and MESSAGE-GLOBIOM) included more detailed modelling of the macro-economy, but did so in a simplified manner that left out important mechanisms such as changes in the relative size of different sectors.

Moreover, several of the models calibrated the magnitude of energy-efficiency improvements to an assumed outcome for energy consumption, rather than modelling the impact those improvements actually had on consumption. This precludes the investigation of rebound effects.  

We conclude that these models could result in global energy scenarios overestimating the potential for energy savings and underestimating future global energy demand.

Implications for climate action

We do not question the importance of improved energy efficiency, since it can deliver multiple economic benefits alongside real energy savings. 

However, we do have concerns about the current realism of key global climate scenarios.  

If efficiency-based energy savings are smaller than anticipated, the world may need to rely more heavily upon a low-carbon energy supply, carbon capture and storage and negative emission technologies to meet its climate goals. 

Energy sufficiency and economic degrowth are also strategies that could come more sharply into focus.   

Additionally, there is scope for using economy-wide carbon pricing to mitigate rebound effects and to increase energy savings, alongside spending the revenues on low-carbon investments.  

It may also be possible to target energy-efficiency policy at sectors and technologies that offer the potential for larger economic benefits alongside smaller rebounds.  

Most importantly, our research highlights the urgent need for the modelling community to take rebound effects more seriously, and to find ways of incorporating the full range of rebound mechanisms into their global energy models.  

Without this, the plausibility of global energy scenarios – and particularly those with absolute decoupling – is open to question.

This blog is based on the paper Energy efficiency and economy-wide rebound effects: A review of the evidence and its implications – Renewable and Sustainable Energy Reviews by Paul E.Brockway, Steve Sorrell, Gregor Semieniuk, Matthew Kuperus Heun and Victor Court.

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