How plummeting energy consumption points to Britain's economic disaster

Soothsayers warn Britain is heading back to the bad old days of the 1970s — but for one reason we're already there.

The country's energy consumption has fallen to its lowest level since Edward Heath's three-day week, according to official figures.

In 2022, excluding the 2020 Covid lockdown, the country used less energy than in any other year since at least 1970. The figure includes energy produced from all sources, including coal, gas and renewables.

The government attributes this to «a variety of reasons, including unseasonably warm weather.» and further improvements in energy efficiency.»

Officials add that energy consumption is expected to fall from net zero «as we move toward more efficient energy use through electrification.»

However, experts say these numbers indicate an economic slowdown, not energy efficiency. improvements.

“Electricity consumption is not an independent variable. This is because we are not prepared to maintain living standards,” says Gordon Hughes, a former senior adviser at the World Bank.

Hughes, who is also a former professor of economics at the University of Edinburgh, believes the British economy is in a state similar to the dark years of the 1970s, when dysfunction forced the country to seek an IMF bailout.

Domestic capacity is weakening , and the country is increasingly reliant on foreign exchange injections. Energy consumption declines as factories and businesses close and as families become poorer, not because of efficiency gains.

In 2005, the UK used enough energy to power 155 million homes for a year. By 2022, the equivalent figure had fallen to 128 million — a decline of 17% in less than 20 years.

Historically, there has been a strong correlation between higher energy consumption and faster economic growth, says Ben McWilliams, a Bruegel fellow. think tank in Brussels.

“It goes back to the Industrial Revolution,” says McWilliams. “Since then, we have generally seen a link between high energy consumption and higher GDP.”

The connection will eventually break as energy efficiency increases. But that's not what's happening now, he says.

There were exceptional circumstances in 2022 that should be taken into account. The massive surge in energy prices following Russia's full-scale invasion of Ukraine led to a reduction in consumption as people and businesses simply could not afford as much energy.

Warmer weather has also reduced demand for heating or energy-intensive indoor entertainment activities. such as watching TV.

Domestic energy consumption fell 14% from last year to a record low.

«People may be using less energy over the last two or three years, but that's not because their homes have become more efficient, it's simply because they've become more expensive,» says Jess Ralston of Energy & Climate Intelligence Division

“As we get closer to net zero, everything will become more energy efficient. But is this already happening as a result of things like insulating houses? No.”

Government support for homeowners to improve insulation is at its lowest level since 2012, she notes: “Energy efficiency is not going well.”

Paradoxically, falling energy use also jeopardizes our net-zero emissions targets, economists warn. Britain and the rest of the world must spend heavily on building new infrastructure to provide more electricity and reduce the use of oil and gas. This investment activity will be energy intensive.

European countries need to double their electricity consumption over the next 20 years to reach net zero, says McWilliams.

“This is a consequence of the fact that for most sectors the low carbon solution is electricity, whether it is electric vehicles, heat pumps or industrial processes.”

But in Britain, electricity consumption, which accounts for only a fraction of total energy consumption, in 2022 reached its lowest level since 1989. peak before the financial crisis.

“The path to net zero involves significant electrification,” says Katherine Wolfram, a professor of energy economics at the Massachusetts Institute of Technology. “We expect [electricity consumption] to increase.”

A government spokesman said: “Growth in the UK has risen faster than France, Japan, Italy and Germany since 2010, with the OBR forecasting growth at every country.» over the next five years.

«We expect overall energy demand to continue to fall as we shift to more efficient energy use through electrification, helping us achieve net-zero emissions by 2050.»< /p>