UK government could unlock billions by addressing energy wastage
The British government could unlock hundreds of billions of efficiency savings by changing the way that energy is used – but it must lead by example, says SDCL Group CEO Jonathan Maxwell
In his Autumn Statement, the UK Chancellor Jeremy Hunt rightly called out energy efficiency and energy independence as of national importance. Indeed, it set a new national ambition to reduce energy consumption in buildings and industry by 15% by 2030. Doing so, it stated, could save £28bn, or £450 for every household. However, the UK needs to go much further and faster, and the government’s own energy use is the best place to start.
The UK energy system is hugely inefficient, wasting billions and adding to energy security problems. On average, we are losing some 60-70% of primary energy before it even gets to where it is needed.
More energy still is lost at the point of use, for instance if lighting hasn’t been updated to LED, or if heating, ventilation, and air conditioning systems are inadequate or are not properly tuned.
Households are often blamed for energy use but the public sector is wasting more energy than the wider public could reasonably save at home.
Over 60% of energy in the UK is used in the nondomestic sectors. Yet most government buildings leak enormous amounts of energy. For example, some 40% of public sector energy is used by the NHS. But around two-thirds of its lights are inefficient and only 33% have been replaced for LEDs.
Meanwhile, around half of the central government’s greenhouse gas emissions (mostly energy) relates to the Ministry of Defence.
Only 38% of the department’s new buildings or major refurbishment projects undertaken since 2016 have had low or zero carbon (read “energy”) technologies included in the design.
Around the same amount of greenhouse gas (or energy use) comes from Transport for London (TfL), which is also one of the largest (if not the largest) single users of electricity in the UK.
This energy is almost entirely sourced directly from the National Grid. There is a major opportunity for TfL to use its position as one of the UK’s largest landowners to generate energy (both electricity and heat) efficiently at or close to the point of use.
The theme goes on, through universities, schools, local authorities, and other government buildings. It is illustrative of the wider problem, that 70% of energy is used in buildings, industry, and transport, and that over 70% is wasted getting to where it is needed.
The UK government should and must be standing at the front of the pack and setting an example.
If the government takes real leadership, it would be delivering on one of the largest opportunities for cost as well as carbon emission reductions.
ABOUT THE AUTHOR
Jonathan Maxwell is founder and CEO of Sustainable Development Capital LLP, the London-based investment manager of the SDCL Energy Efficiency Income Trust plc (SEIT.LN), listed on the premium segment of the main market of the London Stock Exchange and a member of the FTSE 250 index. He is also the author of forthcoming book, ‘The Edge: How competition for resources is pushing the world, and its climate, to the brink – and what we can do about it’. ‘The Edge’ is a timely and trenchant investigation of the global energy crisis, and how this threat can be resolved before it’s too late.