Modelling the economy: 7see and low-carbon scenarios

Working within Arup University, I’ve been developing a model with collaborators in academia to explain how economics, energy and the built environment all impact on each other. As nations try to meet the carbon emissions reductions agreed at COP21 in December 2015, it seemed timely to announce 7see, an economic model that sheds new light on the complex relationship between economic activity, growth and emissions. 

Today 86% of the power generated in the UK is derived from burning fossil fuels, so meeting the COP21 emissions target involves a massive structural change. A big challenge for governments and industry alike is how to make the transition from existing carbon-producing energy production, in order to keep the average global temperature rise below two degrees above pre-industrial levels. Understanding how, what and when to change will be key to success.

7see uses an evidence-based approach to make projections about the nature of economic activity in the near future. In short, it reveals the engineering of our economy.

Using a collection of official UK statistics dating back to 1990 on economic output, infrastructure costs (including their replacement costs), energy use, generation capacity, jobs, population, housing and transportation, the 7see model uncovers how the interlocking parts of our economy use energy, and makes clear how and where employment and wealth are generated. This is vital as policy makers need to understand how a working population affects carbon emissions in detail if transitional policies are to be both effective, sustainable and not damaging to economic growth and employment. 

Graphic of a low-carbon economy Graphic of a low-carbon economy

Where 7see can be useful is in demonstrating how all seven sectors of the economy contribute to GDP, create employment and generate emissions. 7see mines the wealth of national account data in new ways, to help researchers identify plausible scenarios in which people remain employed and productive while the country makes the careful transition to renewable energy.

The 7see model uncovers an interesting and hopeful observation about the UK economy: that with a majority of employees now working in service industries, and decreasing carbon emissions from those service industries (compared to manufacturing), perhaps the transition to a low-carbon future is achievable. 

7see also reveals that final consumption of goods has remained flat since 2002 while consumption of services has increased continuously (barring a pause in the economic crisis of 2008-9) since the early 1990s. In other words our standard of living is increasingly constituted in a consumption of services, ones that can more easily be produced with lower carbon dependencies. You can read a more detailed article about the 7see model and the scenarios it builds, here.

7see brings together many disparate data sources to illuminate the workings of an economy. In 2012 we applied an earlier version of the model to the Taiwanese economy to help government bodies to start to think about their approach to decarbonisation. Hopefully the expanded 7see version will prove useful for anyone with an interest in understanding the difficult road ahead.