Overview

In 2015, UK final energy consumption was around 130 Mtoe, 15% below its level in 2000. Transport is the largest energy consuming sector and makes up almost 40% of the total, followed by the residential sector (28%), industry (18%), the tertiary sector (13%) and finally agriculture (1%). Final energy consumption is below 2000 levels in all sectors: industry -36%, transport -2%, residential -15%, agriculture -11%, and tertiary and others -10%.

Figure 1: Final energy consumption by sector (normal climate)

Source: ODYSSEE

Energy efficiency for final consumers, as measured by the ODEX, has improved by circa 26% between 2000 and 2015, which is equivalent to an average of 1.7%/year. The improvements have been made year-on-year across all four sectors. Residential, services and industry sectors have improved with little variability over the period, averaging 2.3%, 2.2% and 2.2% respectively per year; transport has followed a slightly shallower trajectory with the improvement in ODEX averaging circa 0.9% per year. The financial crisis and resulting recession affected the UK between 2007-09 but does not appear to have had much if any impact on the ODEX efficiency index trend lines given in Figure 2.

Figure 2: Technical Energy Efficiency Index

Source: ODYSSEE

Under Article 3 of the Energy Efficiency Directive, the UK’s 2020 energy efficiency target was set at the level of 129.2 million tonnes of oil equivalent (mtoe) for final energy consumption on a net calorific value basis. This represents an 18% reduction in final energy consumption, relative to the 2007 business-as-usual projection. In 2012, the UK Government launched its Energy Efficiency Strategy (updated in 2013), which identified the barriers to energy efficiency take up and the socially cost-effective energy efficiency potential that remains in the UK economy. In the household sector a succession of Energy Efficiency Obligations from 1994 delivered most of the retrofitted insulation measures and promoted energy efficient heating systems and appliances. Most recently the Energy Company Obligation has run since 2013. The EU Emissions Trading Scheme (EU ETS) is a key EU measure driving energy efficiency improvements in the industry sector. In addition, companies in certain energy intensive sectors can adopt a Climate Change Agreement (CCA) and large consuming but non-energy intensive businesses fall within CRC Energy Efficiency Scheme and/or Energy Savings Opportunity Scheme. In the transport sector, the UK Government focus on supporting the early market for ultra-low emission vehicles (ULEV).

Table 1: Sample of cross-cutting measures

MeasuresNEEAP measuresDescriptionExpected savings, impact evaluationMore information available
Supplier Obligations - Energy Company Obligation (ECO)yesThe Energy Company Obligation (ECO) is an energy efficiency obligation. The basic concept of ECO is that central government imposes lifetime carbon savings target on large energy suppliers (gas and electricity) that has to be achieved at the customer end (domestic sector only). The target relates to carbon emissions and bill savings. HighLink
Energy Savings Opportunity Scheme (ESOS)yesThe Energy Savings Opportunity Scheme (ESOS) is the UK policy for implementing Article 8 of the Energy Efficiency Directive. It is a mandatory programme that requires energy audits for ‘large enterprises’. These audits are of the energy used by buildings, industrial processes and transport to identify cost effective energy saving measures.HighLink
Source: MURE

Buildings

In 2015 space heating accounted for 69% of the sector’s consumption, followed by electrical appliances 16%, water heating 12% and cooking 2%. Residential energy usage has decreased by circa 24 % since 2000, with space heating consumption (Figure 3) 11% lower in 2015 relative to 2000. Over the period 2000 to 2015 energy consumption for water heating (Figure 4) decreased by 49 %, cooking by 43% and electrical appliances by 13%. The reduction for electrical appliances is despite an increase in ownership ratios across all categories. These improvements are due to improved insulation, heating system upgrades, and more efficient electrical and gas appliances.

Figure 3: Energy consumption of space heating per m2 (normal climate)

Source: ODYSSEE

Figure 4: Energy consumption by end-use per dwelling

Source: ODYSSEE

Final energy consumption for UK residential buildings decreased by around 7 Mtoe in 2015 compared to 2000. Two factors contributed to an increase in energy demand: an increase in the number of dwellings (the housing stock increased by 16% since 2000), lifestyle improvements (e.g. more appliances per dwelling and a shift to larger homes (average 9% increase in floor area). However, the residential sector achieved an energy saving of 18 Mtoe over the period.

Figure 5: Main drivers of the energy consumption variation in households

Source: ODYSSEE

There was a 30% reduction in total energy consumed per employee since 2000. For electricity, the decrease is less significant (14% since 2000). This may be explained by the increased uptake of building control and management systems in offices, and more efficient heating and lighting technologies and electrical appliances.

Figure 6: Energy and electricity consumption per employee (normal climate)

Source: ODYSSEE

The UK has a number of policies aimed at improving energy efficiency in buildings (refer below for examples). Historically, the UK has relied on building regulation, Supplier Obligations and EU product standards to deliver energy savings in buildings sector. The UK Building Regulations have provided a means of driving energy efficiency improvements and energy savings in homes and non-domestic buildings since first building regulations were introduced for these in 1972 and 1974 respectively. Energy Efficiency Obligations have been operational from 1994 (refer to overview section) and require domestic energy suppliers carbon and notional bill savings by promoting and installing energy efficiency measures in domestic homes. Most recently, the obligations were extended by 18 months to September 2018, with a greater focus on fuel poverty. The Government is due to consult on a new, cheaper obligation until 2022. The government policy has however so far been concentrated on easy to treat building measures, and there remains a significant untapped potential in the sector (in particular non-domestic sector).

Table 2: Sample of policies and measures implemented in the building sector

MeasuresDescriptionExpected savings, impact evaluationMore information available
Building Regulations 2016 The building regulations apply to extensions, conversions, renovation of the building envelope and replacement boilers and windows. These require new buildings to meet a minimum standard for thermal transmittance for walls, roofs, windows and doors, together with efficient heating systems. Existing buildings must meet similar standards, when extensions are planned together with standards for replacement heating systems. HighLink
Smart metering and Billing (for households and SMEs) The Department for Business, Energy and Industrial Strategy (BEIS) is leading a rollout of smart meters with support from the industry regulator, Ofgem. The Smart Metering Programme is being delivered in two phases. The first phase was the Foundation Stage, during which the Government engaged with the energy industry, consumer groups and other stakeholders to put commercial and regulatory frameworks in place to support smart metering. The second phase is the main roll-out stage. HighLink
Source: MURE

Transport

In 2015 cars accounted for 47% of the UK transport sector’s energy consumption and road freight transport (trucks and light vehicles) for 24%. Air transport was 24% of the total. The remainder is split among rail (2%) and bus (2.5%), whilst energy consumed by other modes of transport was negligible.

Figure 7: Split of the transport energy consumption by mode

Source: ODYSSEE

The dominant mode of UK passenger traffic (pkm) in 2015 is private car, accounting for 85% of the total (2000, 87%). Over the same period public transport traffic increased by 3% to 15% in 2015; a slight fall in bus traffic was counter-balanced by growth in rail traffic of 0.24%/year.

Figure 8: Share of transport in passenger traffic

Source: ODYSSEE

In comparison to passenger traffic, the modal split for UK freight traffic (tkm) has remained largely the same between 2000 to 2015. Road freight traffic accounts for circa 90% of tkms and rail 10%. Other modes such as water (river) are negligible (<0.1%) by comparison.

Figure 9: Share of modes in freight traffic

Source: ODYSSEE

Final energy consumption in transport (excluding air transport) has decreased by circa 2.3 Mtoe in 2015 relative to 2000. Increasing traffic (measured in passenger-km and tonne-kilometres for freight) contributed to an increase in energy consumption by 5 Mtoe over the period. Energy savings (7 Mtoe) and a modal shift (i.e. from car and bus to rail, or from trucks to rail and water) balanced this growth effect.

Figure 10: Main drivers of the energy consumption variation in transport

Source: ODYSSEE

Complementing EU Vehicle emission performance standards, there are a number of national policy measures aimed at increasing energy efficiency in the transport sector. Great focus has been placed on supporting the growing ultra low emission vehicle (ULEV) market. For this customer grants are provided for purchase of ultra low emission vehicles, also installation of charging points. In addition to grant schemes, the tax system, including Vehicle Excise Duty, company car tax and enhanced capital allowances is also used to further promote the use of low emission vehicles and support infrastructure development. In public transport, further schemes and associated funding for the electrification of parts of the existing rail network will bring energy efficiency benefits. 

Table 3: Policies and measures into force in the transport sector

MeasuresDescriptionExpected savings, impact evaluationMore information available
Low Emission Vehicle policies (Plug-in car and van grants) The Plug-In Car Grant commenced in January 2011 to help both private consumers and businesses purchase an electric, plug in hybrid or hydrogen fuelled car. Motorists purchasing a qualifying ultra-low emission car are currently able to receive a grant of 35% of the vehicle price, up to a value of £4,500 depending on the model. For vans, grants are available for 20% of the cost of a van, up to a maximum of £8,000. MediumLink
Renewable Transport Fuels Obligation (RTFO)The Renewable Transport Fuel Obligation places an obligation on fuel suppliers to ensure that either a certain amount of biofuel is supplied or that a substitute amount of money is paid. This obligation is assessed according to who owns the fuel when it crosses the duty point (the point when a fuel becomes chargeable for duty). Only those organisations that supply 450,000 litres or more of any road transport or non-road mobile machinery fuel for use in the UK during the course of a given year are obligated.MediumLink
Source: MURE

Industry

During the period 2000-2015 final energy consumption of industry decreased by circa 2.2%/year. Around 52% of energy consumption is concentrated in five energy-intensive sectors comprising chemicals, non-ferrous metals, non-metallic minerals, paper and steel. Other important energy-intensive industry sectors include food and drink, ceramics etc.

Figure 11: Final energy consumption by branch

Source: ODYSSEE

The financial crisis 2007-2009 had a negative effect on production in cement (-21%), steel (-22%) and paper (-29%) sectors. This resulted in the loss of efficiency gains made in cement between 2000 and 2007, although as the sector recovers this is improving. In contrast unit consumption in steel and paper remained broadly similar 2008-2015, suggesting the loss of some types of production overseas.

Figure 12: Unit consumption of energy‐intensive products (toe/t)

Source: ODYSSEE

Final energy consumption in industry decreased by 11.2 Mtoe in 2015 compared to 2000. Energy savings resulted from improvements in energy efficiency (-11 Mtoe) as well as structural effects towards more intensive industries (11 Mtoe) contributed to a decrease in energy consumption since 2000. The increase in some industrial activity tends to increase the consumption.

Figure 13: Main drivers of the energy consumption variation in industry

Source: ODYSSEE

The key policies targeting energy efficiency within the UK industry sector include a mix of market based instruments, and fiscal incentive and co-operative measures. These measures include Climate Change Agreements (CCA), Climate Change Levy (CCL) and Enhanced Capital Allowances (ECA), which operate alongside the EU Emissions Trading Scheme to improve energy efficiency and reduce carbon emissions. 

Table 4: Policies and measures into force in industry

MeasuresDescriptionExpected savings, impact evaluationMore information available
Climate Change LevyThe Climate Change levy (CCL) is a tax on the use of energy in the industry, commerce and the public sector. The revenue from the levy is recycled back to business through cuts in employers' National Insurance Contributions (NICs) and additional support for energy efficiency schemes and low carbon technologies.HighLink
Climate Change AgreementsThe Climate Change Agreements (CCAs) allow a part exemption from the Climate Change Levy for businesses within certain energy intensive sectors. A discount from the levy is provided for those sectors that agree to challenging targets for improving their energy efficiency or reducing CO2 emissions under their CCA. HighLink
Source: MURE