Proposed structure of the Energy Futures report to the EPA

Executive Summary: This will emphasise that there are short- and long-term benefits to proactively increasing energy productivity regardless of the rate at which energy prices rise.

Characteristics of Current Paradigm

• human energy is expensive, non-human energy is cheap
• fossil fuel energy is cheap, renewable energy is expensive
• growth is tied to availability of energy
• global economy is possible because transport is cheap
• economic activity moves to sources of cheap labour

Possible Characteristics of the New Paradigm

• human energy is cheaper
• fossil fuel energy is costly
• economic success is no longer tied to growth
• some renewables sources of energy are cheaper
• it is no longer economic to transport some types of goods
• economic activity moves to sources of cheap energy
• Energy purchases will take a larger proportion of peoples income.

What the new Paradigm might be like

• huge potential for innovation, but rapid growth in some sectors only balances rapid decline in others.

Paradigm shift - how we did it and why

1. Introduction: What we were commissioned to do and how we did it.

2. Why energy prices are likely to rise in relation to labour. This chapter will 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).

3. Using scenarios to explore responses to restricted fossil energy supplies. This will set out the case for using scenarios and stress how they show the importance of adopting the right national and international policies. However, to simplify matters, the report will concentrate on just two, one proactive, the other reactive, and look at how each would fare at whatever time the world oil supply did actually start to contract. We will explain that other scenarios are possible but that the business as usual one is unlikely. We will set out what would be required for each to come about.

4. The use of the ECCO model to assess the scenarios. This will explain what the ECCO model does and how its predictions are based on an input-output model of the Irish economy. It will add that as higher energy prices change the way firms etc operate, the input-output model has to be changed to reflect that. 5. The effects of much higher energy prices on sectors of the Irish economy. This chapter will open with a discussion of the effects of higher energy prices on economic growth. It will point out that higher energy prices mean that capital equipment will cost more in relation to labour and that, as a result, there will be a tendency for businesses to become less capital-intensive.It will then build on the previous chapter by exploring how the following sectors of the economy might change as energy prices rise under the two scenarious. The discussion under the proactive scenario will cover:

a) 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.

b) 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.

c) 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.

d) 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.

e) 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.

f) 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.

7. Effects of these changes on the projections from the ECCO model.

8. 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. The likelihood of a trend towards ruralisation, producing 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.

9. Conclusions

10. Appendices:

A) The scenarios in detail.

B) The ECCO model in more technical detail, including the improvements made to it during the project and the policy options that we fed into it.

C) Results from the workshops

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We will not make forecasts and avoid using phrases like "we need to..." and other prescriptive terms which quickly translate to "We think you should..." Instead, the report will aim is to get its readers to think for themselves, to weigh up the possibilities and to make their own decisions about what the future will be like and what they should do as families, employers and citizens.

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