Long Run Trends in ICT Demand and its Impact on Energy Consumption

Phone screen being held in one hand

This article was written by Dr Roger Fouquet, Associate Professorial Research Fellow at the Grantham Research Institute on Climate Change and the Environment, on his CREDS Digital Society project.

Understanding ICT Long Run Trends

Social distancing rules associated with Covid-19 have led many in the UK and across the world to work and meet remotely, as well as shop online. In other words, there was an acceleration of the digitalisation of society that has already been underway for several decades. The purpose of the CREDS Digital Society project led by Dr Roger Fouquet at the London School of Economics and Political Science (LSE)’s Grantham Research Institute on Climate Change and the Environment is to place the digitalisation of society within a longer run perspective of information and communication technology (ICT) demand and its impact on energy consumption, with a view to anticipating future trends.

The project collected data on the price and consumption of communication for the UK. Figure 1 shows the dramatic increase in communication in the UK over the last 150 years, as new technologies appeared on the market and diffused across the population. One of the key factors driving this rise in consumption was the reductions in the cost of sending a letter or making a telephone call (see Figure 2). Indeed, today, email and app mobile phone calls are effectively free for many people.  

The Benefits to Users from New Communication Technologies

Despite the upward long-run trend in communication since the mid-nineteenth century, Figure 1 shows the acceleration in communication use from the beginning of the twenty-first century. The first task of the project was to use the data to estimate how communication consumption changed with variations in income and communication prices. One of the main results is that as people became richer and communicated more, they were less responsive to changes in income and prices – a similar observation was found in relation to energy services, such as heating, transport and lighting (Fouquet 2018).

This information on consumer responsiveness then enabled the estimation of the net benefits (i.e., consumer surplus) of different communication technologies, using a method developed in Fouquet (2018). This method uses historical information about how much people in the past were willing to pay for communication (e.g., to send one letter or make one phone call) and, taking account of changes in income, extrapolates this forward towards the present to construct a full demand curve for communication. The net benefits (i.e., consumer surplus) are calculated as the difference between the benefits (measured by the willingness-to-pay) and the costs (measured by the price).

Figure 3 reveals the increases in net benefits to consumers from new and diffusing communication technologies. This started with the reduction in the price of postal services due to the railways in the 1840s (seen in Figure 2). Then, with the democratisation of telephones in second-half of the twentieth century and the liberalisation of telecommunication services leading to lower prices in the 1980s, benefits increased again. Figure 3 also highlights that some of the benefits are simple substitutions of fixed telephones for mobile phones and letters for emails. Nevertheless, the digitalisation of communication has helped increase consumer surplus even more, especially because they are so cheap to use.

Taking Account of the Environment

An important angle for future research is to understand how this digitalisation of communication and information and its acceleration due to Covid-19 will impact society and the environment. Indeed, on the one hand, teleworking, virtual meetings and online shopping have reduced energy use and emissions (Hook et al. 2020). On the other hand, digitalisation, especially associated with data centres, is responsible for increasing energy use (Koomey et al. 2013). Thus, a crucial question to be explored further will be to compare the benefits to the consumer with the costs to the environment, and understand when consumers benefit more than the cost to the environment, and when policies should discourage ICT use because the costs dominate.


Figure 1. The Consumption of Communication in the UK, 1800-2015
Figure 2. The Price of Communication in the UK, 1700-2015
Figure 3. Consumer Surplus from Communication Technologies and Services in the UK, 1830-2010

References

Fouquet, R. (2018) ‘Consumer surplus from energy transitions.’ The Energy Journal 39(3) 167-88.

Fouquet, R. and Hippe, R. (2019) ‘The Transition from a Fossil-Fuel Economy to a Knowledge Economy’ in Fouquet, R. (ed.) Handbook on Green Growth. Edward Elgar Publications. Cheltenham, UK, and Northampton, MA, USA.

Fouquet, R. and Hippe, R. (2021) The Twin Transition: Energy and Communication in the Structural Transformation of European Economies.

Hook, A., Court, V., Sovacool, B.K. and Sorrell, S. (2020) ‘systematic review of the energy and climate impacts of teleworking.’ IFP School-IFPEN Working Paper. No 133.

Koomey, J.G., Matthews, H.S. and Williams, E. (2013) ‘Smart Everything: Will Intelligent Systems Reduce Resource Use?’ Annual Review of Environment and Resources 38: 311–43.

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Letter: New nuclear plants would be hopelessly problematic

Nuclear cooling towers at sunset

This letter was originally published in The Financial Times on 21/06/2021.

By failing to consider alternatives in a balanced way, Admiral Lord West of Spithead (“Investment in UK nuclear power is long overdue”, Letters, June 18), treats UK energy policy as an arena for asserting individual partisan affections for nuclear power. Yet the challenge is not about parading obscurely driven personal enthusiasms, but rigorously comparing how to achieve environmental targets as rapidly, securely and cost-effectively as possible.

Here, even government assessments have quietly long been clear that new nuclear power is hopelessly costly, slow and otherwise problematic. The comparative performance gap with renewables is growing rapidly. The National Grid has for many years abandoned notions of “base load” as “outdated”.

So why should nuclear still command such intense attachments, as if it were an end in itself? That it is a Navy man who urges this, might be a clue? Parliamentary evidence documents how a major hidden driver of official UK nuclear commitments are pressures to launder consumer electricity bills into supporting a wider national nuclear skills, education and research industrial base, without which nuclear-propelled submarines become unaffordable, if not unbuildable.

Governments of other countries like France and the US are open about these motives. It is time for some candour about the real interests driving expensive nuclear support in the UK.

If not, it will not just be carbon targets and energy futures that are undermined, but British democracy.

Professor Andy Stirling
Sussex University

Dr Paul Dorfman
Energy Institute, University College London

Dr Phil Johnstone
Sussex University

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Heat pump users in Finland and the UK: How low-emission technologies can grow from enthusiast projects to a mainstream industry

Technician installing heating system

The International Energy Agency (IEA) recently reported that gas boiler sales should stop by 2025 to meet emission reduction goals. Heat pumps, which operate by extracting warmth from the ground, air or water, are often regarded as one of the viable alternatives to heat homes without relying on fossil fuels.

Some countries have already made substantial progress in phasing out fossil fuel based heating technologies such as gas or oil boilers. Finland is one example which has seen a widespread transition to heat pumps: in a country of just over three million households, an estimated 1,030,000 heat pumps have been sold to date. Meanwhile less than 200,000 heat pumps have been sold for the UK’s 27.6 million households since 2000.

A recent study from SEG researchers explains why home heating developments have taken very different paths over the last 45 years in these two countries, comparing in particular the role of different user types (explained in the following section) in the different phases of these developments. What led to heat pumps in Finland becoming “the normal and rational choice for a heating system” (Hyysalo et al., 2018, p.880) when they remain a rare sighting in the UK?

The Finnish heat pump transition

Off-the-shelf heat pump options available in Finland. Photo of a heat pump installer’s office in Finland (by Mari Martiskainen)

The successful heat pump transition in Finland can be outlined under the following three phases:

The start-up phase (1975-1985) featured pilots with ground source heat pumps (GSHPs), largely in response to the global oil crises of the mid 1970s. There were a handful of small manufacturers developing GSHPs and user producers progressive enough to experiment with geothermal heat. However, uncertainty over the technology’s reliability, negative media narratives, and bankruptcies among GHSP suppliers due to falling oil prices in the 80s meant that just 10,000 heat pumps were installed over this decade.

The acceleration phase (1995-2015) saw user-producers continue to advocate heat pump technology at trade fairs. Improvements in technology, the introduction of air source heat pumps (ASHPs) and positive examples from neighbouring Sweden supported expansion. Crucially, in 1999 the Finnish Heat Pump Association (SULPU) was formed with a vision that by 2020, a million heat pumps would be installed in Finland. SULPU, which took a key user-legitimator role, worked together with Motiva, the Finnish energy efficiency agency, to raise awareness, develop standards and train installers. The market was also encouraged via Government policies phasing out fossil fuel based heating and incentivising low-carbon heating options. The emergence of user-intermediaries on independent websites and forums, who shared their user experiences, also helped. These factors led to total sales exceeding 600,000 by 2014.

And finally, during the stabilisation phase (2015-present) the established industry offered off-the-shelf products, giving all users affordable, low-maintenance heating options that meet the demands of the Finnish climate. Total heat pump sales reached 1 million in 2020 and heat pumps have become an established heating choice for many households.

The type of users and the activities they may perform in an energy transition. The researchers found not all types may be needed in a successful transition. Source: Martiskainen et al. 2021, p.127

The British heat pump non-transition

In the UK, heat pumps are used in barely 1% of households, meaning the technology has been stuck in the start-up phase since the 1970s. The UK and Finland’s enthusiastic user-producers shared the same early challenges: lack of awareness, technological difficulties, and opposition from the incumbent fossil fuel industry.

UK policy efforts to address low-carbon heating options in the 2000s included VAT reductions and grant programmes to support uptake. But heat pump field trials underperformed similar ones in Europe: users frequently reported difficulties operating their new heat pumps, indicating lack of knowledge and support by installers and peers, in contrast to the widespread expertise and informal guidance available to owners of the ever-present gas boilers.

Building a heat pump constituency

One key difference between the UK and Finland has been that British heat pump enthusiasts lacked the policy support and networking opportunities to enable an acceleration phase of the transition. In contrast, Finland’s successful uptake for heat pumps benefited from the presence of SULPU and their active awareness raising, networking and lobbying. Finnish actors could also access Swedish expertise, their neighbouring country having faced also heating challenges and sharing similar climatic and cultural preferences.

While the UK now has established heat pump organisations, their voices have not been as unified or loudly heard as SULPU was in Finland. As a result, the UK’s fragmented organisations have not had enough political impact (yet) to expand the heat pump niche into a flourishing industry. Lacking a prominent vision for the sector, the UK has taken longer to overcome the broad lack of awareness among consumers, architects, installers and housing developers.

In contrast, with the help of Motiva, the early user-producers who formed SULPU cultivated a broad constituency behind Finland’s developing heat pump tradition, contributing to a successful transition. Even outside of SULPU, user producers in Finland shared a strong history of cooperation. Users for example attended housing fairs and organised “heat pump days” showcasing different options, and run dedicated online user forums, blogs and websites providing practical advice and a visible demonstration of the technology’s value for Finnish homes. These efforts were reflected in the broader distribution of motives given by Finnish heat pump users, compared to more concentrated UK motives operating within a niche and responding to more specific demands. The interview subjects also illustrated how financial and comfort motivations in Finland compare to environmental motivations in the UK.

“Gas mafia”, regime resistance, and how users can help overcome them

Gas boilers in the UK are popular and supported by advantaged incumbent gas networks. Source: Martiskainen et al. 2021, p.136.

As well as lacking these key factors which encouraged heat pumps uptake in Finland, some UK-specific challenges impede the widespread adoption of heat pumps. The incumbent gas networks are powerful in terms of their lobbying reach, along with competitive supply prices which appeals to consumers. Attempts to encourage renewable alternatives such as the Renewable Heat Incentive left heat pumps competing with solar and biomass options, resulting in comparatively little money allocated for heat pump installation.

The example of Finland’s active users offers potential paths forward for the UK’s stalled heat pump transition. Strong actors, like SULPU in Finland who had a clear vision for the sector and its policy needs, have the potential to challenge the gas network’s influence. Meanwhile, active peer-to-peer learning and networking can further raise awareness and build trust of the technology amongst user-consumers. Over time, this can legitimise unfamiliar technologies like heat pumps, and encourage the replacement of gas boilers with low-carbon heating systems. This requires that positive stories and examples of renewable heating options like heat pumps move from niche trade press to the mainstream media. In addition, policy should aim to support the development of strong communities of user-producers, avoiding the comparatively passive user roles found in the start-up stage of the British heat pump transition. Subsidies and education should be paired with the sustained, deep involvement of user-groups throughout the transition process to benefit from their capacity to accelerate transitions and overcome market uncertainty.

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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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