Digitalisation, Dematerialisation and Decarbonisation of the Global Economy in Historical Perspective: The Relationship Between Energy and Information, 1850-2019

To better understand the processes of digitalisation, dematerialisation and decarbonisation, this paper examines the relationship between energy and information for the global economy since 1850. It presents the long run trends in energy intensity and communication intensity, as a proxy for total information intensity. The evidence suggests that, relative to GDP, global economic production has been reducing energy and increasing information use since 1913. The analysis indicates that it initially required little information to replace energy in production and that the ability to substitute away from energy and towards information has been declining. The result implies that the global economy is now reducing energy and increasing information at a substitution rate of 0.2 kB per kWh of conserved energy or 0.8 GB per tonne of carbon dioxide mitigated. As the price ratio of energy to information is currently higher than this marginal rate of substitution, there are incentives to further substitute information for energy. However, one conclusion is that (without the long run escalation of carbon prices) substitution away from energy and towards information is likely to cease within the next few decades and, beyond that, digitalisation will play a declining role in the decarbonisation process.

This proposal responds to a call from the Research Councils for a national Centre on energy demand research, building on the work of the existing six End Use Energy Demand Centres, for which funding ends in April 2018. Energy demand reduction is a UK success story, with a 15% fall in final energy consumption since 2004. Major further reductions are possible and will be needed, as part of a transformation of the energy system to low carbon, to deliver the goals of the Paris Agreement and the UK carbon budgets. Moreover, a low carbon energy system will be increasingly reliant upon inflexible and variable electricity generation, and therefore demand will also need to become more flexible. In short, changes in energy demand reduction will need to go further and faster, and demand will need to become more flexible. These challenges have far-reaching implications for technology, business models, social practices and policy. Our vision is for energy demand research in the UK to rise to these challenges. The Centre's ambition is to lead whole systems work on energy demand in the UK, collaborating with a wider community both at home and internationally. We aim to deliver globally leading research on energy demand, to secure much greater impact for energy demand research and to champion the importance of energy demand for delivering environmental, social and economic goals. Our research programme is inter-disciplinary, recognising that technical and social change are inter-dependent and co-evolve. It is organised into six Themes. Three of these address specific issues in the major sectors of energy use, namely: buildings, transport and industry. The remaining three address more cross-cutting issues that drive changing patterns of demand, namely the potential for increased flexibility, the impact of digital technologies, and energy policy and governance. Each Theme has a research programme that has been developed with key stakeholders and will provide the capacity for the Centre to inform debate, deliver impact and share knowledge in its specific area of work. The Themes will also undertake collaborative work, with our first joint task being to assess the role of energy demand in delivering the objectives of the UK Government's Clean Growth Plan. The Centre will also include Challenges that respond to cross-thematic questions for UK energy demand. These will mostly be developed in consultation over the early years of the Centre, and therefore only one is included in the initial plan: on the decarbonisation of heat. The Centre will function as a national focus for inter-disciplinary research on energy demand. In doing this it will need to respond to a rapidly evolving energy landscape. It will therefore retain 25% of its funds to allocate during the lifetime of the Centre through a transparent governance process. These funds will support further challenges and a 'Flexible Fund', which will be used to support research on emerging research questions, in particular through support for early career researchers. We are working closely with key stakeholders in business and policy to design our research programme and we plan detailed knowledge exchange activities to ensure that the work of the UK energy demand research community has broader societal impact.