Energy Demographics: the role of demographic data in understanding UK's demand for energy

It is important for the Government to be able to predict the future energy needs of UK industries, homes and transport to ensure sufficient supply. At the same time, the UK needs to plan to reduce energy use in order to meet climate change reduction targets. At the moment the UK Government uses an Energy Demand Model which makes future energy predictions based on estimates of economic growth, the price of fuel and the number of households there will be in the future. This technique for predicting future energy needs is deficient, because it fails to take account of the fact that household demand for goods and services is the major driver of the economic performance of industry, and that the way households spend today is likely to be very different in the future.

My fellowship takes a 'whole systems' approach to understanding the UK's demand for energy. The link between household spends and industrial energy use can be determined by quantifying the total energy required in the supply chain of producing a product. It is also possible to capture the energy that is embedded in goods exported abroad and goods imported to the UK from other countries with very different energy efficiency standards in their factories. I will develop a new indicator of energy demand: 'the UK's Energy Footprint' which shows the full amount of energy associated with products bought by UK consumers between 2005 and 2015. I have met with the Department for Business, Energy and Industrial Strategy (BEIS) to ensure that this new indicator will be reported alongside the Carbon Footprint.

Instead of simply looking at the changing goods and services bought by an average household, this fellowship will consider the differing expenditure profile of up to 60 different household types between 2005 and 2015. For this, I will use geodemographic expenditure profiles developed by CallCredit, a credit reference company. The main user of geodemographic data is the business sector understanding their consumers, so it is important that the data is current and constantly kept up-to-date. Producers of this type of data do not keep previous years' profiles as a readily available product. This means that their data has never been used to understand the changing geodemographic profile in the UK or elsewhere. I have made an agreement with CallCredit to exclusively acquire a decade's worth of expenditure data from their archive. This means that it will be possible for the first time to determine whether the energy needs of the UK have altered due to households buying different types of products or whether the change is due to the mix of households in the UK changing.

I will use mathematical analyses to calculate the drivers of the change in UK energy demand. The research will be able to determine what effect the recession had on the energy demand of different households. I will then focus on using predictions of the changing household types and predictions on how lifestyles may change in the future to estimate what the UK's demand for energy will be in 2030. There is uncertainty as to how the UK's infrastructure might have to change in order to cope with an aging population or the trend for homeworking. This fellowship will address this by determining the energy requirements of these futures by forming scenarios which calculate the UK's energy needs when there are greater proportions of these types of household present in the UK's demography. Outputs from this research will also be used to verify the BEIS's future energy demand scenarios and provide new inputs to their Energy Demand Model. This work therefore has great importance in ensuring the UK can meet the energy needs of its businesses and people, and become more sustainable, now and in the future.

This fellowship will address several key societal challenges facing the UK. Firstly, for the first time, the UK Government will have a record of the complete energy needs of UK society. Within year one of the project, I will generate a new Energy Footprint dataset for the UK to be reported by either the UK Government's Department for Business, Energy and Industrial Strategy (BEIS) or Department for Environment, Farming and Rural Affairs (Defra).

I already calculate the UK's Carbon Footprint, which is used by organisations such as the Green Construction Board in assessing the full impacts of construction and WWF in their online footprint calculator. The Energy Footprint will have similar outreach and use. The dataset will trace energy extraction, through intermediate use by industry, to the energy embedded in products bought by households and government. The Energy Footprint dataset shows the portion of the UK's energy consumption-based account that is sourced from energy extracted abroad. This will help UK energy resilience and assist BEIS and UK Energy Companies to face energy scarcity and security challenges. In addition this contributes to the EPSRC 'Resilient Nation' prosperity outcome.

The household expenditure dataset used by this fellowship covers the period 2005-2015. This means that the research can quantify the effect of the recession on spending patterns by household type. By year two of the fellowship, I will start to discover whether some households buy less of certain products when disposable income is scarce, and whether in some households spend is unaffected. In the future, increases in energy prices may be passed to the consumer. The recession analysis work will help to predict how price increases may affect spending behaviour because I will have discovered how different households respond to budgeting. I will have produced further evidence to help achieve energy resilience and this will be of interest to poverty action groups such as National Energy Action, New Economics Foundation and Joseph Rowntree Foundation who will use the findings as evidence in their lobbying work.

The 2008 Climate Change Act commits the UK to reducing greenhouse gas (GHG) emissions by 80% by 2050 based on 1990 levels. Since the burning of fossil fuel is the largest source of GHG emissions, understanding and managing the UK's changing demand for energy is important. This fellowship will use data on the future spending patterns of households and the forecasted numbers of households of different types to predict future energy demand for the UK. This will help to verify the scenarios of future energy demand which are currently calculated using BEIS' Energy Demand Model. The research will aid BEIS' modelling capacity. It will also help the Committee on Climate Change in its role providing advice to the UK Government on whether the UK needs to do more to meet its Climate Change targets. In producing future scenarios of the energy needs of the UK, This fellowship will explore how future populations can live well for less. This is one of the ambitions of the 'Productive Nation' prosperity outcome.

Finally, this research is the first to explore the use of geodemographic datasets over a long timeframe. In the long term, this investigation may help CallCredit, the providers of the dataset used in this fellowship to increase their product portfolio to include consumer trend data. Other credit reference agencies such as Experian will also show interest in this application. By using novel mathematical and statistical techniques with big data analytics to explore trends in consumption behaviour and lifestyles, this fellowship will deliver a product of both academic and commercial value, and help business deliver a 'Connected Nation' - a further EPSRC prosperity outcome.