Executive Summary

Key message is that there are short and long term benefits to being proactive in increasing energy productivity, regardless of the rate at which energy prices rise. Aim is to get people to ask themselves questions about what the future will be like and what we should do in a more informed way, rather than say what we think and invite them to shoot us down. To this end, we will avoid the use of "we need to..." and other prescriptive terms which quickly translates to "I think you should...".

Introduction

What we were commissioned to do and how we did it.

Why energy prices are likely to rise in relation to labour

This chapter could start with historic price trends, showing how the cost of energy has fallen in terms of the number of minutes of work required to earn a kWh or a litre of petrol. How other prices (in minutes) have fallen in step with the price of fuel. Why we might have just passed a historic turning point and be seeing the beginnings of a reversal of this trend. How high the price of energy might go relative to labour. The short-term factors that could disguise the rising trend (e.g., a global depression brought about by central bank action to dampen-down energy-price induced inflation).

Also need to show that other scenarios are still possible and what would be required for them to come about - in particular why business as usual is unlikely. Stimulates better discussion (???) if we make the case for other scenarios being unlikely rather than focusing on why this one is likely.

Using scenarios to explore responses to restricted fossil energy supplies

This would set out the case for using scenarios and stress how they highlight the benefits of adopting the right national and international policies.

Since the start of the project, the case for ongoing higher energy prices has become much stronger, so for the body of the report we are going to focus on two scenarios. Both will assume higher energy prices with one looking at a proactive approach and the other a reactive.

The use of the ECCO model to assess the scenarios

This would explain what the ECCO model does and how its predictions are based on an input-output model of the Irish economy. It would add that as higher energy prices would change the way firms etc operated, the input-output model would have to be changed too to reflect that.

The effects of much higher energy prices on sectors of the Irish economy

This chapter will built on the previous one by exploring how the following sectors of the economy might change as energy prices rose.

This chapter will built on the previous one explore how the following sectors might change with increasing energy prices in both a proactive and reactive scenario.

The format will be as follows:

Sector

Reactive Scenario
- short description
- benefits
- problems

Proactive Scenario
- short description
- benefits
- problems

Text below fits into proactive scenario.

It will open by pointing out that higher energy prices mean that capital equipment will cost more in relation to labour, too, and that, as a result, there will be a tendency for businesses to become less capital-intensive. This might be the place for a discussion of the effects of higher energy prices on economic growth.

Energy services

The development of renewable energy sources. The move away from the generation of electricity in a few locations to distributed generation because of the need to use heat which is currently wasted and to avoid line losses. The effects of this on the grid and on the location of energy-intensive activities. Retrofitting of CHP plants in urban areas. Awareness of need not to use high-grade energy for low-grade tasks.

Transport, distribution and tourism

After energy, this will be the sector most profoundly affected by the higher energy costs. The end of just-in-time delivery systems, weekend break holidays, two-car households. The growth of new types of collective delivery service. Stepping down to a less energy-intensive transport mode. (i.e., shift from plane to train, car to bus, bus to bike). Widespread ownership of small electric/compressed air cars for short journeys. Use of hired or car-club vehicles for exceptional, longer trips.

Manufacturing

Not only will machinery cost more, but materials will do too. Firms will tend to move away from the IKEA model which makes large quantities of a very few products on automated equipment and then ships them around the world to much less capital-intensive but more flexible production which makes smaller quantities of a greater range of products in each factory. The need for higher levels of skill.

The construction sector

The end of road and airport construction. Greatly reduced demand for new buildings, but compensating interest in conversions and improving energy efficiency of existing buildings. The few new buildings will shift away from energy-intensive materials to low energy ones.

Agriculture

Significantly higher prices for food enables more labour to be employed. New opportunities from energy crops and biogas digesters and also from the replacement of imported produce with flowers and vegetables grown in local glasshouses using heat from CHP plants. Partial shift to low-external input systems selling locally. Irish milk products and meat produced at lower cost than elsewhere in EU because no need for imported feed.

Retailing and state services

Many more smaller local schools and cottage hospitals. Return of the travelling shop, which also acts as a parcels delivery and collection vehicle. Packaging becomes very much simpler. Local bottling plants with returnable bottles re-established. Micro breweries spread.

Effects of these changes on the projections from the ECCO model

Effects of the changes on the consumer

Consumers will find that they are paying much more of their incomes for their food, fuel, clothing and durables. This will leave them with much less to spend on discretionary items such as holidays, restaurants, travel to work and for leisure. They will want to live close to their work and to have access to a garden or allotment on which to grow food. They will want to repair things rather than replace them. The most noticeable change will be in house prices. These will drop steadily as people find that they cannot afford to support the size of mortgage people typically take on at present. Some houses – those in rural areas without land, for example – might be abandoned altogether, just as many were in the midlands as a result of emigration.

From Nicola In the section on 'effects on the consumer' I would make explicit the idea of a tendency toward ruralisation: it follows logically from the idea that business would scatter outward from urban centres as proximity becomes crucial with rising transport costs and as more people choose to live in a place where they can have an allotment. Result: a more even distribution of population across the country with small-scale local hubs/clusters rather than cities/conurbations. This would also bring changes in patterns of cultural life and the leisure industry, a further effect on consumers/citizens and on the economy.

(Of course this also necessitates a change in representation, perceptions and education: for a transition to ruralisation and scaling down to occur smoothly and to any degree pre-emptively, these things need to be explained, (re)defined, valorised - in other words, a continuous concerted governmental campaign backed by sustainable enterprise. That is maybe not strictly within the remit of the report but could be included in the conclusions when the report is drafted in full.)

Conclusions

Appendices

The scenarios in detail

The ECCO model in detail

Including the improvements made to it during the project.

Output from the workshops

Especially energy policy characteristics