Applying thermodynamic laws to the energy-GDP decoupling problem

Rising greenhouse gas (GHG) emissions are creating a serious threat to our planet, through their key impact of increasing temperatures. The 2015 Paris climate agreement, signed by 195 countries under the United Nations Framework Convention on Climate Change (UNFCCC), pledges to hold global average temperature increases to 2 'C above pre-industrial levels (c.1750). For context, in 2015, we passed the 1'C rise mark, and most climate models forecast a 2-4'C temperature rise by 2100, unless real actions are taken to reduce GHG emissions. In short, the situation is serious, and the window for staying within the 2'C target is closing.
To reduce GHG emissions, a key part of government policy is to reduce the amount of energy we use. This is because most of our energy come from fossil fuels (i.e. oil, coal, gas), and burning them causes around 75% of the world's GHG emissions. The main policy for reducing energy use has been introducing energy efficient technologies, i.e. more efficient cars, lighting and heating systems. However, a key problem exists: to date energy efficiency has not reduced total energy consumption: in fact energy use globally is still rising, slightly behind economic output (Gross Domestic Product, GDP). Thus energy use and GDP have remained linked, or 'coupled' together. So a key question for the UK (and globally) is to work out exactly how to decouple energy-GDP: i.e. reduce energy use but allow economic growth.
Studying the energy-GDP decoupling problem is the key aim of my research. Given the short time to reduce GHG emissions, we need to look at this problem from as many different angles as possible. This is where my research fits in: I work in an area of research that provides a different approach to looking at this problem compared to the mainstream (i.e. most common) methods. My research uses 'exergy analysis' to study the thermodynamic efficiency of energy use in a whole economy. Exergy is energy that is 'available for work'. Taking an example to illustrate exergy: though water in a hydroelectric dam has 'potential energy', it only becomes 'available for work' if there is a difference in water level between the two sides of the dam. If one side is 150m higher than the other, then physical 'work' (in this case hydroelectricity) can be extracted, but not if both water levels are 150m high. By studying how much energy is available for work as 'exergy' in an economy (for end uses such as transport, industrial machines, heating, cooling, lighting), we can calculate how (thermodynamically) energy efficient the whole economy is.
This thermodynamic measure of energy efficiency (called exergy efficiency) can give us new insights into how much energy we are actually saving, versus how much we think we are going to save. This difference also tells us how much energy 'rebound' we have, i.e. the energy that is taken back by the economy. A better understanding of the size and role of these two factors - energy efficiency and energy rebound - holds the key to unpicking the energy-GDP decoupling puzzle. This is what my research sets out to achieve.
The research is a five year project, based at the University of Leeds, where I will work with a 4 year PhD researcher and 3 year postdoctoral researcher, and other researchers who will contribute part time expertise. Our research in planned in three parts, 1. we will develop national exergy datasets into a global database, which 2. we will use to identify new insights and links of the key factors (energy efficiency and energy rebound) in the energy-GDP relationship, which lastly 3. will be used to test policies for achieving energy-GDP decoupling. We have several project partners outside of the University of Leeds, who we will work together with on sub-projects: The Bank of England; the UK Department for Business, Energy and Industrial Strategy (BEIS); Calvin College (USA) and Instituto Superior Técnico (Portugal). A steering group will provide advice during the project.

This project aims to conduct world-class research - applying a rigorous thermodynamic approach to the study of decoupling energy use from economic output (GDP). This section describes the non-academic beneficiaries (readers if they have access should read in conjunction with the Pathways to Impact section - which sets out how impact for these beneficiaries will be achieved).

The first non-academic beneficiary is the modelling community, in two parts:
1. Project partners: Work Package 2 (WP2) contains sub-projects with the UK Government Department for Business, Energy and Industrial Strategy (BEIS) and the Bank of England. The sub-project with BEIS is to improve the useful energy components of their Energy Demand Model (EDM). The Bank of England sub-project is to harness their finance/debt expertise to improve the MARCO-UK model, and then present to them our results, thereby improving their awareness of our macroeconometric model which account for useful exergy.
2. Mainstream energy-economy models: Current work in the UKERC project I work on has identified the key UK models that inform energy policy, which include E3ME (Cambridge Econometrics) and MARKAL (UCL) - in addition to EDM (BEIS). We have good contacts with Cambridge Econometrics and UCL modellers, for example we are already collaborating with Cambridge Econometrics on the building of the MARCO-UK model. We would use these connections to discuss and identify how their models could be revised to include useful exergy and exergy efficiency into their model structure.

Second, the findings of the project will be of key benefit to UK energy and economic policy makers: i.e. new insights into the level of energy-GDP decoupling that may be achievable, and how this may translate into policy. We will showcase our results through our good links with BEIS and other agencies - e.g. the Committee for Climate Change. We will also produce a series of policy briefs tackling key energy-economy questions and policy responses. For example, the research may identify more clearly a large scale of UK energy rebound (from energy efficiency improvements being 'taken back' by the economy via increased energy use). Suggested policies (which will be tested in the modelling analysis) might include greater levels of energy taxation, to limit rebound. Our approach will be flexible, for example we may alternatively focus on how the project insights are relevant for current Government strategy: for example the desire to increase energy productivity - where our long term projections of energy efficiency trends will be highly relevant.

Thirdly, our research insights are intended to yield both UK and globally relevant insights. Key global non-academic beneficiaries are identified as 1. overseas government departments (for example the project team has connections in France and Portugal), and 2. intergovernmental agencies, for example the Intergovernmental Panel on Climate Change (IPCC), the International Energy Agency (IEA), and Eurostat. We have good connections at the University of Leeds (UoL) with both the IPCC (steering group member Professor John Barrett has worked as IPCC co-author) and the IEA (Professor Peter Taylor is also on the steering group and used to lead the IEA's Technology Perspective's team and remains well connected). We will utilise these contacts to present our results, highlighting the benefits of adopting an exergy-based approach and the implications for energy and emissions policy.