A demand reduction strategy is considered in the context of the UK and in the light of the UK Government's 2006 Energy Review. This paper discusses how a mechanism—a Demand Reduction Obligation (DRO)—can be established to achieve radical energy demand reduction targets in electricity and gas use in the industrial, commercial and public administration sectors. A DRO would require energy suppliers to invest in energy-saving measures so as to reduce energy demand in these sectors. The investment for this activity would be funded by energy suppliers who would increase prices in order to cover the cost of achieving the carbon reductions. Public opinion surveys suggest that a large proportion of the public would prefer to support demand reduction measures compared to other energy options. It may be practical to deliver carbon emission reductions equivalent to around 30% of emissions from the UK electricity sector over a 15-year period through a broad-based demand reduction strategy. Demand reduction is considered in the context of an assessment of costs and resources available from other low carbon options including renewable energy and nuclear power.
- demand reduction
- investment gap