Drivers of UK household energy expenditure: Promoting efficiency and curbing emissions

Abstract

Energy use at the country level is largely influenced by residential energy use, and therefore, understanding household behaviour can contribute towards improving energy efficiency. With the UK target of net-zero emissions by 2050, an understanding of the factors that can reduce residential energy use may help policymakers design policies reducing carbon emissions. Therefore, we analyse the determinants of UK energy expenditure in 2011–2020, by examining the impacts of household factors, dwelling characteristics, and energy prices on household electricity and gas expenditure, separately for owner-occupied homes and rented accommodations. Our results suggest that renters are more sensitive to changes in electricity and gas prices than homeowners, by about 23% and 7% respectively. However, changes in income affect homeowners more than renters. Overall, the results suggest that the key drivers of electricity and gas expenditure are household size, number of rooms, and urban location, with homeowners generally being more sensitive. As renters are more price sensitive, we recommend that policymakers offer monetary or legislative incentives to landlords to make energy efficiency improvements in their rented properties, such as double glazing or solar panels. The government should also use our results to give households recommendations on energy conservation, promoting environmentally conscious behaviour.