1. Stuff stuff and long car trips! Application of the 4see socio-economic-energy model to the UK and designing future scenarios Simon Roberts Foresight Group Arup (London) Seminar to: The Design Group The Open University (Milton Keynes) 13 th January 2010

2. 13Jan10, Simon Roberts © Arup 2010 2 Problems! We’ve all heard about climate change… But COP15 at Copenhagen only reached an accord. Climate change has slipped from the “finite pool of worry” (fatigue) –In 2008 and 2009, climate change fell to the bottom of people’s list of concerns as anxiety about the economy rose. Then there’s “peak oil”… And what about just plain sustainable development (recall Report of the Brundtland Commission 1987)? What are we actually going to do? www.cred.columbia.edu/guide/

3. 13Jan10, Simon Roberts © Arup 2010 3 Stuff stuff and long car trips! Policy 1 – stuff stuff reduce consumer consumption of goods Policy 2 – stuff long car trips get a grip on the growth of personal transport by car

4. 13Jan10, Simon Roberts © Arup 2010 4 Policy 1 - Stuff stuff 1.“Goods Tax” of 15% (say) Note: services have no extra tax 2.Non-consumers get rebate so only consumers are hit Note: very similar to VAT except targeted specifically on goods and hypothecated (as follows) 3.This Goods Tax (less non-consumer rebate) goes into “REEF”, the Renewables and Energy Efficiency Fund 4.REEF used by national and local government for major investment programme into: large- and small-scale renewables energy efficiency improvement for all properties (homes, industry, offices, etc)

5. 13Jan10, Simon Roberts © Arup 2010 5 Policy 2 - stuff long car trips 1.Transport has carrot-and-stick to reducing long car journeys Details given later…

6. 13Jan10, Simon Roberts © Arup 2010 6 Typical household expenditure on goods is £218/hh/wk ONS ONS “Family Spending 2008”

7. 13Jan10, Simon Roberts © Arup 2010 7 Typical household expenditure on services is £162/hh/wk ONS “Family Spending 2008”

8. 13Jan10, Simon Roberts © Arup 2010 8 15% Goods Tax on household expenditure of £380/hh/wk

9. 13Jan10, Simon Roberts © Arup 2010 9 Expand to national view services goods services goods

10. 13Jan10, Simon Roberts © Arup 2010 10 INDUSTRY Transport equipment Electrical & optical equipment Chemicals, chemical products & man-made fibres Rubber & plastic products Wood & wood products Food, beverages & tobacco Construction Pulp, paper & paper products Publishing & printing Basic metals Fabricated metal products Mineral products Coke, petroleum products & nuclear fuel Leather & leather products Textile & textile products SERVICES Real estate Health & social work Transport, storage and communication Education Public admin. & defence Financial intermediation Social & personal services Wholesale & retail trade Hotels & restaurants Providers of goods and services in national economy

11. 13Jan10, Simon Roberts © Arup 2010 11 Economic growth GDP services goods services goods

12. 13Jan10, Simon Roberts © Arup 2010 12 Effect of Goods Tax is a shift to investment in economy 15% of household goods 50% of investment in economy

13. 13Jan10, Simon Roberts © Arup 2010 13 jobsenergy securitybalance of paymentswelfareCO 2 Policy effectiveness of Stuff stuff and long car trips!

14. 13Jan10, Simon Roberts © Arup 2010 14 4see, holistic model of an economy covering energy, goods, services, capital stocks (assets), working population and balance of payments industry service sector UK energy domestic transport

15. 13Jan10, Simon Roberts © Arup 2010 15 4see, energy industry service sector UK energy domestic transport

16. 13Jan10, Simon Roberts © Arup 2010 16 consump- tion 4see, goods and asset growth industry service sector UK energy domestic transport

17. 13Jan10, Simon Roberts © Arup 2010 17 Metric for capital of “embodied energy” from raw energy via industry "Energy Analysis: its utility and limits" Slesser (1978)

18. 13Jan10, Simon Roberts © Arup 2010 18 consump- tion 4see, services industry service sector UK energy domestic transport

19. 13Jan10, Simon Roberts © Arup 2010 19 What does 4see ignore? Includes all fundamentals stocks of: –energy –industry –service sector –transport –domestic flows of: –energy –goods –services –labour flows of: –income –rent –pensions “stocks” of: –property values –equities –debt –loans –savings Lubricant Divvy-up-the-spoils Promises industry service sector UK energy domestic transport “The Economic Growth Engine” Ayres & Warr (2009)

20. 13Jan10, Simon Roberts © Arup 2010 20 4see, across UK boundary trade in energy, goods & services balance of payments energy service sector industry domestic liabilities foreign assets

21. 13Jan10, Simon Roberts © Arup 2010 21 consump- tion 4see, full system dynamics industry service sector UK energy domestic transport

22. 13Jan10, Simon Roberts © Arup 2010 22 Applying 4see 1.Use as a window onto historical data (since 1990) 2.Derive indices from historical period to give insight 3.For future scenarios (to 2025) extrapolate insight indices implement policies

23. 13Jan10, Simon Roberts © Arup 2010 23 Historical period: sector sizes (capital stocks)

24. 13Jan10, Simon Roberts © Arup 2010 24 Historical period: direct energy use

25. 13Jan10, Simon Roberts © Arup 2010 25 Historical period: total output of goods consump- tion

26. 13Jan10, Simon Roberts © Arup 2010 26 Historical period: investment in the economy

27. 13Jan10, Simon Roberts © Arup 2010 27 Historical period: service demand consump- tion

28. 13Jan10, Simon Roberts © Arup 2010 28 Historical period: employment

29. 13Jan10, Simon Roberts © Arup 2010 29 Choice of embodied energy as metric for capital stocks 1.Metric is stable (unlike house prices, for instance) 2.As denominator in indices to give insight 3.When capital stocks are increased, energy implications are immediately evident

30. 13Jan10, Simon Roberts © Arup 2010 30 Historical period: indices energy jobs service demand ÷

31. 13Jan10, Simon Roberts © Arup 2010 31 energy use ÷ sector size = energy efficacy

32. 13Jan10, Simon Roberts © Arup 2010 32 jobs ÷ sector size = employability

33. 13Jan10, Simon Roberts © Arup 2010 33 consump- tion service demand ÷ sector size = service demand indices

34. 13Jan10, Simon Roberts © Arup 2010 34 4see framework is… is an extensive (complete?) picture of economy is a socio + economic + energy model has a full physical basis sets maximum physical envelope for physical growth handles opportunity costs of investment options handles “how quickly can we…?” sets its own rate of growth industry service sector UK energy domestic transport

35. 13Jan10, Simon Roberts © Arup 2010 35 About economic growth Growth is spurred by need to provide employment....against a background of declining need for labour (labour is a declining factor of production) 2 views: “…This prospect of investment falling and creating widespread unemployment terrifies governments so much that they work very closely with their business sectors to ensure that their economies continue to grow almost regardless of any social or environmental damage the growth process may be causing.” “The Economic Challenge of Sustainability” Douthwaite & Siochrú (2006) “a country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.” “The Age of Diminished Expectations” Paul Krugman (1994)

36. 13Jan10, Simon Roberts © Arup 2010 36 Proactive scenario of Stuff stuff and long car trips! To do a scenario: 1.extrapolate employability 2.extrapolate service demand indices 3.set sector investments 4.implement Policy 1: shift of goods from consumption to investment in economy (the “Goods Tax”) 5.implement Policy 2: restraint of personal car transport

37. 13Jan10, Simon Roberts © Arup 2010 37 Proactive scenario, setting: employability

38. 13Jan10, Simon Roberts © Arup 2010 38 Proactive scenario, setting: sector investments

39. 13Jan10, Simon Roberts © Arup 2010 39 Proactive scenario, observation: GDP

40. 13Jan10, Simon Roberts © Arup 2010 40 Proactive scenario, observation: employment

41. 13Jan10, Simon Roberts © Arup 2010 41 Proactive scenario, observation: energy efficacy

42. 13Jan10, Simon Roberts © Arup 2010 42 Proactive scenario, observation: energy types

43. 13Jan10, Simon Roberts © Arup 2010 43 Proactive scenario, observation: primary fuel

44. 13Jan10, Simon Roberts © Arup 2010 44 Proactive scenario, observation: balance of payments

45. 13Jan10, Simon Roberts © Arup 2010 45 Proactive scenario, observation: CO 2 emissions

46. 13Jan10, Simon Roberts © Arup 2010 46 Policy 2 - stuff long car trips Commuter and business travel account for ~40% of distance driven. Transport presents a problem for legislators! 1.Package of measures to deliver behavioural change and secure modal shift. 2.Redress the balance of the relative cost/convenience of different transport modes. 3.Allocation of road space based on most fuel and carbon efficient modes. 4.More integration of sustainable transport policies with land use planning. 5.Encourage car clubs and home working and similar. (Electric cars will take long to penetrate and only offset short trips)

47. 13Jan10, Simon Roberts © Arup 2010 47 Vision of 2025 under Stuff stuff and long car trips You’ve got a job! Shop prices are up (a little) Long car trips are expensive More home and local working Its easier and less costly to use trains and coaches, and travel is in comfortable stock Increase in recreation and leisure services Care services for the aged have increased

48. 13Jan10, Simon Roberts © Arup 2010 48 What if we don’t Stuff stuff and long car trips! The reactive scenario

49. 13Jan10, Simon Roberts © Arup 2010 49 Reactive scenario, setting: sector investments

50. 13Jan10, Simon Roberts © Arup 2010 50 Reactive scenario, observation: GDP

51. 13Jan10, Simon Roberts © Arup 2010 51 Reactive scenario, setting: primary fuel

52. 13Jan10, Simon Roberts © Arup 2010 52 Reactive scenario, setting: balance of payments

53. 13Jan10, Simon Roberts © Arup 2010 53 Reactive scenario, setting: CO 2 emissions

54. 13Jan10, Simon Roberts © Arup 2010 54 jobsenergy securitybalance of paymentswelfareCO 2 Policy effectiveness of reactive scenario

55. 13Jan10, Simon Roberts © Arup 2010 55 Wrap up 1.Some consumer consumption of goods could be diverted to ambitious investment programmes for RE and EE. 2.Economic growth and low unemployment would be maintained. 3.Constraints on personal mobility by car are essential to reduce oil imports. 4.Decline of North Sea suggests UK should be taking these steps unilaterally; if nothing else to benefit balance-of-payments… 5.…and the UK can shout about its climate change leadership! 6.The 4see framework enables diverse components of the economy to be examined and their interaction modelled.

56. 13Jan10, Simon Roberts © Arup 2010 56 Video (June 2009) www.driversofchange.com/projects

57. 13Jan10, Simon Roberts © Arup 2010 57 Epilogue But CO 2 is down only 40% by 2025... …and there is still growth of stuff. Need a fundamental review of employment. Hint from Denmark on enlightened employment policies in 1990s. More research needed. Anyone got any ideas on this?

58. 13Jan10, Simon Roberts © Arup 2010 58 Thank you © just means “You’re welcome to but please tell me if you plan to use the material” simon.roberts@arup.com