Powering Productivity: Mapping the Role of Energy Infrastructure in UK Labour Productivity using Expert Elicitation and a Thematic Literature Review

Energy is likely to be an important element of UK productivity (defined as the amount of output generated per hour worked). One way that energy might impact UK productivity is through cost. The price of energy is an important part of the cost of production for UK firms and affects their investment decisions. Another way that energy is important is through transport. Traffic congestion affects the productivity of cities, and attempts to reduce congestion are affected by energy infrastructure and supply, both of which are currently changing. If energy is important for productivity, then it is important to try understand how changes in UK energy infrastructure might affect UK productivity growth.

Renewable energy has a growing share of the UK energy supply. It is harder to extract energy from renewable sources than from conventional oil, coal and gas. This means that it requires greater energy in to get the same amount of energy out. As a result, using more renewable energy might mean that the UK has to use more and more energy to support the same amount of economic activity. Energy (and energy infrastructure) is not free, so the country might have to spend more of its finances producing the same amount of output. However, renewable energies are relatively cheap, and getting cheaper. This could be good news for productivity because it might increase investment in new technologies, for example. In turn this might make renewables more efficient, and investment in renewable energy could be used as a way to boost productivity growth. So, whether renewable energy is good or bad for productivity growth depends on how these and other factors interact. This project aims to summarise the existing evidence base in order to try answer this kind of question.

Our research will review the existing body of work that explores the relationship between energy and productivity. Using bibliographic and computer-assisted qualitative data analysis software we will construct and analyse a database of research literature. This will be complemented by engagement with experts from business, government and academia. Experts will help us to identify the key relationships between energy and productivity in the UK, and help us navigate the evidence base. Expert views will be gathered by a questionnaire and then by a series of mapping workshops. The workshops will produce several diagrams that show the links between parts of the evidence base ('knowledge maps'). These maps will be used to identify and organise the most important pieces of evidence in the debates around energy and productivity in the UK. In this way, the experts will focus our review of the research literature.

This research project will deliver innovative visualisations and a written report. These deliverables will summarise existing knowledge on the relationship between energy and UK productivity. Initial knowledge maps, produced in the workshops, will be developed by professional designers into infographics. These infographics will be produced in two forms, one suitable for offline use and one for online use. The latter will be interactive and updateable. In addition, we will produce an open access database of the literature, and a written report summarising key lessons from the evidence base on energy and UK productivity. These outputs will be hosted on the website of the Centre for the Understanding of Sustainable Prosperity, and will be promoted with blogposts and a social media campaign.

It is hoped that this project will enhance discussions on UK productivity and build and increase capacities for policymakers, researchers and private sector actors.

The industrial strategy intends to increase productivity at a time when the sources of energy supply are changing with implications for the entire economy. There is an existing resource of research on these topics, but it is diffuse and not well integrated into commercial thinking or policy design. Gathering and structuring the existing evidence base literature will provide pathways to drive productivity, as well as highlighting the practicability and potential effectiveness of interventions.

Possible emerging gaps in the literature regarding energy and UK productivity which are important for policymaking could foster further engagements and knowledge sharing between industrial, academic and policymaking actors. Outcomes of such interactions could eventually bring significant value addition to UK industrial strategy and how it pursues its goal of increasing productivity. Possible outcomes of a thematic literature review could shape planning of the UK energy resources and investment in energy infrastructure at the micro and macro levels as the interactions of the factors that drive productivity becomes clearer in the UK context.

It is hoped that at the end of the research, investor behaviour and its linkages to the energy-productivity relationship will be contextualised and made more comprehensible to support investment decision making in the UK.

All the above possible outcomes of the research could significantly inform the industrial strategy of the UK and its expected outcomes on the entire UK economy.