Overview

In 2017, UK final energy consumption was around 137 Mtoe, 19% below its level in 2000. Transport is the largest energy consuming sector and makes up almost 39% of the total, followed by the residential sector (29%), industry (16%), the services (including non-specified sector) (15%) and finally agriculture (1%). 

Final energy consumption is below 2000 levels in industry (-36%) and residential (-23%). However, final energy consumption has risen in transport (+3%), agriculture (+29%) and services 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 25% between 2000 and 2017, which is equivalent to an average of 1.6% year. The improvements have been made year-on-year across all four sectors. Industry and residential sectors have improved with little variability over the period, averaging 2.1% and  2.0% respectively per year. Transport and services sectors followed a slightly shallower trajectory with the improvement in ODEX averaging circa 1% and 1.2%  per year, respectively. 

The financial crisis and resulting recession affected the UK between 2007-09 but did not appear to have had a significant 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 Mtoe for final energy consumption. This represents an 18% reduction in final energy consumption, relative to the 2007 business-as-usual projection.

In 2018, the Clean Growth Strategy (CGS) was launched setting out policies and proposals to reduce emissions and promote clean growth, including proposals for improving energy efficiency of business, industry and UK homes.

In the household sector, a succession of Energy Efficiency Obligations (first implemented in 1994) have delivered retrofitting insulation measures and promoted energy efficient heating systems and appliances. The Energy Company Obligation has run since 2013 and underwent significant amendments in recent years (see table below).

The EU Emissions Trading Scheme (EU-ETS) is a key 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 may fall under the Energy Savings Opportunity Scheme (ESOS). 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 an obligation on large energy suppliers (gas and electricity) to deliver energy efficiency (for example; solid wall insulation, loft insulation) and heating measures to domestic households in Great Britain. The new ECO3 scheme came into force on 2018 and will run until March 2022. The new scheme focuses on providing support to low income, vulnerable and fuel poor households. As part of this change, the carbon focused Carbon Emissions Reduction Obligation (CERO) has been removed. The scheme's target now relates to energy efficiency, fuel poverty 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

Residential energy usage has decreased by circa 22% since 2000 (excluding space heating consumption) (Figure 3) 26% lower in 2017 relative to 2000. Over the period 2000 to 2017 energy consumed by water heating (Figure 4) decreased by 32%, cooking by 30% and electrical appliances by 8%. Note that there has been an overall increase in all three end-uses compared to consumption in 2015. The overall downward trend is 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 per dwelling by end-use (except space heating)

Source: ODYSSEE

Final energy consumption for UK residential buildings was 36.9 Mtoe in 2017, which represents a decrease of circa 6.5 Mtoe in 2017 relative to 2000. Decomposition analysis attributes decreased consumption to both energy savings from improved efficiency (-17.1 Mtoe), and to climatic conditions (-6.5 Mtoe) over this period, counter-balanced by additional demands of 6.8 Mtoe from an increase in the number of dwellings, 4 Mtoe from a shift to larger homes, 3.7 Mtoe due to an increase in the number of electrical appliances, and 2.6 Mtoe attributed to other factors such as lifestyle changes.  


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

Source: ODYSSEE

There was a 16.9% reduction in total electricity consumed per employee in 2017 compared to 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. Historically, the UK has relied on building regulations, 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 building regulations were introduced in the 1970s. Energy Efficiency Obligations have been operational from 1994 (see overview section) and require domestic energy suppliers to promote and install domestic energy efficiency measures. Most recently, the obligations were extended by 18 months to September 2018, with a greater focus on fuel poverty. The CGS aims for homes to be EPC B and C by 2035. To support this, a Call for Evidence on Building a Market for Energy efficiency on additional measures to encourage efficiency improvements was issued. The Green Deal, through which consumers can take out loans for energy efficiency property improvements via repayments on their energy bills, is also undergoing a consultation and review.

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 2017 cars accounted for 46% of the UK transport sector’s energy consumption. The next highest energy consumption in transport originates from road freight transport (trucks/light vehicles) (25%) then air transport (24%). The remaining energy consumption is split among rail (2%) and bus (2%). Energy consumed by other modes was negligible.


Figure 7: Split of the transport energy consumption by mode

Source: ODYSSEE

Passenger traffic in 2017 was dominated by private cars, which accounted for 85% of passenger-kilometers (pkm) (2000 in 87%). The share of public transport in total traffic increased from 13% in 2000 to 15% in 2017; resulting from a 59% increase in rail transport pkm, counter-balanced by a reduction in bus traffic of around 25%.

Figure 8: Share of transport modes in passenger traffic

Source: ODYSSEE

In comparison to passenger traffic, the modal split for UK freight traffic tonne-kilometre (tkm) has remained largely the same between 2000 to 2017. Road freight traffic accounts for circa 90% of tkms and rail 10%. Other modes such as water (river) are negligible by comparison.

Figure 9: Share of modes in freight traffic

Source: ODYSSEE

Final energy consumption in transport (including air transport) has increased by circa 1.4 Mtoe in 2017 relative to 2000.

Decomposition analysis in Figure 10 shows that while there have been energy savings from improved transport efficiency (-10 Mtoe), and a minor contribution of modal shift of -1 Mtoe (i.e. from car and bus to rail), there was growth of 5.9 Mtoe due to higher volume of passenger traffic, and 6.4 Mtoe from 'other' effects.


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 measures aimed at increasing energy efficiency in the transport sector. Focus has been placed on supporting the growing ultra low emission vehicle (ULEV) market. For example, customer grants are provided to encourage ULEVs purchases and installations of charging points. 

In addition, taxes, including Vehicle Excise Duty, company car tax and enhanced capital allowances have further promoted the use of LEVs and further supported 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. In freight, measures support modal shift from road to rail and to support zero emission last mile deliveries. 

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. The Renewable Transport Fuels Obligation (RTFO) was increased from 4.75% by volume to 9.75% for 2020, rising to 12.4% in 2032.MediumLink
Source: MURE

Industry

During the period 2000 to 2017, final energy consumption of industry decreased by circa 21 Mtoe. Nearly 50% of energy consumption is concentrated in five energy-intensive sectors comprising steel, chemicals, non-ferrous metals, non-metallic minerals and paper. Important energy-intensive industry sectors captured in 'Other branches' include food and drink and ceramics.

Figure 11: Final energy consumption by branch

Source: ODYSSEE, steel including blast furnaces

The financial crisis 2007-2009 had a negative effect on this sector, which resulted in the loss of previous efficiency gains made in cement. Although there have been improvements since. Unit consumption in cement, steel and paper remained stable over 2008-2013, and then dropped from 2016-2017 suggesting utilisation of higher capacity in industrial growth (rebound effect).

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

Source: ODYSSEE

Final energy consumption in industry decreased by 11.8 Mtoe in 2017 relative to 2000. Decomposition analysis has attributed this to, in equal measure, changing industry structure (-12.9 Mtoe) – such as the loss of some types of energy intensive production overseas – and energy savings resulting from improvements in energy efficiency (-10.5 Mtoe). The reduction in energy consumption from these two factors has been partly offset by other causes including an increase in some industrial activity over this period. 

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

Source: ODYSSEE

Policies targeting energy efficiency within the UK industry include a mix of market-based instruments, fiscal incentive and co-operative measures. Measures targeting energy efficiency and carbon emissions of industry include The Energy Savings Opportunity Scheme (ESOS, see overview section), Climate Change Agreements (CCA), Climate Change Levy (CCL) and Enhanced Capital Allowances (ECA), and the EU ETS.

Meeting UK’s 2050 target for deep decarbonisation of industry will require innovative policies beyond energy efficiency (e.g. Carbon Capture, Usage and Storage (CCUS)). 


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 ambitious targets for improving their energy efficiency or reducing CO2 emissions under their CCA. HighLink
Source: MURE