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Energy Efficiency Policies
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Energy Efficiency Policies are policies adopted by a central or regional government to promote energy efficiency programs. Energy efficiency is often touted as the quickest and cheapest way to achieve carbon emission reductions.
Energy efficiency has been identified by IEA and McKinsey as the lowest cost option for reducing GHG emissions. Furthermore, IEA identified energy efficiency as the largest single potential source of GHG emission reduction in developing countries. Despite the fact that energy efficiency has been identified as a "negative cost" (the benefits are estimated to exceed costs) it generally doesn't happen because of barriers, among them: information sharing; high transaction costs; and the principal-agent problem. Unless these barriers are addressed, energy efficiency investments will continue to languish. Experience has shown that these barriers need to be addressed by both top-down actions (policy reform support) and bottom-up actions (identification of specific investments and programs as well as financial support).
Top-down actions
There are a number of interesting cases of countries that have succeeded in reducing energy intensity:
- Sweden increased GDP by 50% from while keeping energy use flat
- Belarus decreased its energy intesity by 50% from 1997-2008
- China
- California
- Denmark
- Germany
- UK
- Japan
The lessons learned from these best cases:
- Get energy pricing right to reflect their full cost
- Good governance matters - get the institutions in place, make sure they have the resources to do their job well, clarify responsibility and accountability for results
- China, Belarus and California have demonstrated that it takes much more than "market forces" to get energy efficiency to become effective.
Bottom-up actions
Identification of investments:
- Building envelope improvements to reduce energy losses, including insulation in the external roof, walls and floors; window replacement using energy efficient technologies; door replacement; temperature controls.
- Reduction or elimination of standby power use by elecronics like: televisions; DVRs; DVDs; stereos.
- Use of efficient lighting like CFLs and/or LEDS.
- Energy efficient motors and motor controls.
Targeted financial support such as subsidies or tax relief.
What do you do "Monday morning"?
- Establish a reasonable energy efficiency target drawing on lessons learned from other countries
- Use a "Socoloe Wedge" construct to determine if the target is reasonable, testing specific interventions against realistic market penetration opportunities.
- Establish institutional and policy support for implementation.
- Determinie specific responsibilities and accountability for results.
- Ensure that the resources - people with the skill set needed, budget to cover costs - are in place for success, drawing on examples undertaken elsewhere.
Resources
- In February 2008, the IEA recommended a "set of 25 priorities across seven areas: cross-sectoral activity, buildings, appliances, lighting, transport, industry and power utilities" in the following Energy Efficiency Policy reports. "The IEA estimates that if implemented globally without delay, the proposed actions could save around 8.2 GtCO2/yr by 2030. This is equivalent to one fifth of the global reference scenario energy-related CO2 emissions in 2030."
- Index of relevant energy efficiency IEA policy documents
- This shorter document, Energy Efficiency Policy Recommendations, provides a useful overview of key policy recommendations
- Energy Efficiency Policy Recommendations: In support of the G8 Plan of Action, 2008 expands on these policy points
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