EU Energy Efficiency Policy Achievements and Outlook

Transcription

1 EU Energy Efficiency Policy Achievements and Outlook Matthias Altmann, Ludwig-Bölkow-Systemtechnik Anthony Brenninkmeijer, Hinicio Noriko Fujiwara, Centre for European Policy Studies CEPS European Parliament, ITRE Committee, Brussels, 16 September 2010

2 Content 1. Energy Savings 2. The role of ESCOs : the energy services sector 3. The role of electricity and gas companies 4. Lessons from around the globe 5. EU Policy options 6. Preliminary Recommendations

3 Energy Savings Why Energy Savings matter Energy Savings Past and Potentials Barriers to Increased Energy Savings Energy Services Directive

4 Why Energy Savings matter Essential to achieve Climate Policy Goals Improve Energy Security Save Costs, Improve Competitiveness Decelerate Energy Price Increases Increase economic sustainability of our social welfare economies Efficient productivity Resource efficiency

5 Energy Savings since 1971 Improvement of energy intensity (energy per GDP)

6 Annual Energy Efficiency Improvements of Households by Country ( )

7 Energy Savings Potentials LPI HPI Technical LPI HPI Technical Industry 6.7% 7.6% 9.4% 9.4% 10.4% 13.3% Transportation 14.4% 19.2% 22.9% 15.3% 24.3% 30.2% Households 7.2% 18.6% 28.9% 17.5% 42.3% 66.0% Tertiary 13.7% 16.7% 24.9% 21.8% 28.7% 36.8% At oil prices of 61$ 2005 in 2020 and 63$ 2005 in 2030 (real prices) Source: Study on the Energy Savings Potentials in EU Member States, Candidate Countries and EEA Countries, 2009,

8 Energy Savings Potentials The EU s 20% Energy Savings Target can be met largely through Cost-Effective Measures Source: Energy Savings 2020, 2010

9 Energy Savings Gap to 20% EU Target European Commission (2008): The current level of implementation of measures will only achieve energy savings of about 13% by Source: Energy Savings 2020, 2010 European Commission, Energy efficiency: delivering the 20% target, (COM(2008) 772 final), 2008

10 Barriers to Increased Energy Savings The Euro Condom project: How to protect yourself from stupid rules!

11 Barriers to Increased Energy Savings Energy Prices Low energy prices make energy efficiency a low priority for consumers Standard business model of utilities Revenue / profit maximization by energy sales Information failure Lack of information, lack of awareness Institutional and legal Deficits in implementation of EEAP initiatives in Member States Technical Deficits in the educational system Financial Capital market failures, high capital requirements, expected high rates of return, investor-beneficiary-dilemma

12 Energy Services Directive The first National Energy Efficiency Action Plan (NEEAP) was due on 30th June 2007 and should include the following elements: an overall national indicative energy savings target of 9% for the ninth year of application of this Directive calculated in accordance with the provisions and methodology set out in Annex I (as specified by Art. 4.1), an intermediate national indicative energy savings target for the third year of application of this Directive (as specified by Art. 4.2), provisions on the exemplary role of the public sector using at least two measures listed in the Annex VI (as specified by Art. 5.1) and provision of information and advice to final customers (as specified by Art. 7.1).

13 Belgium is the only Member State without a national target Most Member States set a national target of 9% or more Eight Member States did not provide any intermediate savings target or the calculation of the target was not clear or contradictory Most Member States set a comparatively low intermediate of 2% and more The Czech Republic is the only Members State without provisions on the exemplary role of the public sector Most Member States have an adequate approach Provision of information and advice to final customers is provided in all NEEAPs The scope in 9 NEEAPs is incomplete as they do not go into detail about the information to final customers.

14 Overview of the type of measures Measures adopted under the NEEAPs by sector: Most instruments reported in the NEEAPs are related either to the residential or transport or industry sector Less attention has been paid to the tertiary sector Almost no attention has been paid to the agriculture sector

15 Potential Impact and Efficiency Increase by Sector Impact: Major impact of the residential and transport sectors Minor impact of tertiary and industry sector Efficiency Increase: Short-term: highest efficiency increases in the residential and transport sector (<15%) Long-term: major efficiency increases in the residential sector (<60%), tertiary sector (<40%)

16 Expected Savings Potential and Specific Costs Measures category Energy Savings Potential Energy Efficiency Increase Specific Savings Specific Costs Residential Sector Transport Sector Industry Sector Tertiary Sector Highest Potentials: Buildings (notably existing) and Appliances Transport Sector

17 Weaknesses of the ESD and the NEEAPs Heterogeneous designs, calculation methods and levels of information making comparisons difficult. Inconsistency of intermediate and overall targets as well as between the national targets. Mixture of old and new measures. For some Member States there is a considerable gap between the political commitment to energy efficiency and the measures adopted or planned, as reported in the NEEAPs, and the resources attributed.

18 The role of ESCOs Definitions Market outlook Barriers Policy mix and national strategy Successful projects business models ideas

19 ESCOs Definitions Energy Service Company (ESCO): a natural or legal person that delivers energy services and/or other energy efficiency improvement measures in a user's facility or premises, and accepts some degree of financial risk in so doing. The payment for the services delivered is based (either wholly or in part) on the achievement of energy efficiency improvements and on the meeting of the other agreed performance criteria. Energy Performance Contracting (EPC): a contractual arrangement between the beneficiary and the provider (normally an ESCO) of an energy efficiency improvement measure, where investments in that measure are paid for in relation to a contractually agreed level of energy efficiency improvement (from the ESD)

20 ESCOs Quick EU market outlook The ESCO market started in the late 80s-early 90s It is still an emerging market Germany is the leading country: ~500 ESCOs Other MS with a relatively well developed market: Austria (pioneer country with Germany), France, Italy, UK, Sweden, and also The Czech Republic. Denmark, the Netherlands and Lithuania: successful energy efficiency policy but no or few contributions by ESCOs. Customer segments: local administration, the industry sector and hospital are the most developed; public housing sector, the retail sector and residential sector are the least developed.

21 ESCOs Barriers to development 1. Common barriers: low energy price, lack of support from policy makers, lack of awareness and information, mistrust and skepticism, lack of standard procedure (M&V) and documents (contract), pay back time (5-10 years), lack of appropriate form of financing. 2. Public sector barrier: inadequate procurement and tendering rules, split incentives, administrative complexity and transaction costs. 3. Industry sector barriers: organizational structure, level of energy intensity. 4. Commercial sector barriers: reluctance to enter a multiyear contract, large players often have the financial capacity to carry out the project themselves. 5. Residential sector barriers: financial costs, split incentive (renter-owner division), fear of commitment and disturbance, complex negotiation in multiapartment buildings.

22 ESCOs Best practices: Successful policy mix and national strategy Germany Strong support of policy makers at all level, governmental, regional and municipal. Key success factors: Overarching policies: German NEEAP, Integrated Energy and Climate Plan Demonstration projects in public buildings Rise of the energy price (establishment of an energy tax) Project-support by energy agencies Development of standard documents and procedures.

23 ESCOs Best practices: Successful policy mix and national strategy Sweden Development and implementation of a coherent and targeted national strategy Creation of a Forum for Energy Services Ground studies and market studies Guidelines for procurement and model contracts Pilot projects Targeted and neutral information on EPC was provided to potential clients Dissemination and capacity building Subsidies for energy efficiency investments in public buildings Evaluation studies

24 ESCOs Best practices: successful projects and business models Energy Saving Partnership (Berlin, Germany) : Established in shareholders: Federal State of Berlin, Vattenfall Europe, GASAG and KfW Banking Group 2.5 million of capital stock for an annual turnover of 6.0 million Energy Performance Contracting with Third-Party Financing Bundling of small projects to push down transaction costs Main results: 21 pools of buildings for a total of 1300 buildings, 10.5 million of guaranteed saving, million of net investment, 63,844 t of CO2 emission reduction per year.

25 ESCOs Best practices: successful projects and business models Integrated Energy Contracting: Innovative ESCO model that allows the combination of energy efficiency improvement (EPC) and efficient supply of renewable energy (Energy Supply Contracting, ESC). Higher energy saving potential than EPC (15%-20%) or ESC (10%) alone. Comprehensive refurbishment of buildings through an Energy Performance Contract (CR-EPC): Combining construction measures (e.g. thermal insulation of the building envelope) with standard EPC measures

26 The role of electricity and gas companies Energy Efficiency Obligations and White Certificate Key learning from existing experiences Towards an EU Wide White Certificate Scheme

27 Energy Efficiency Obligations and White Certificate Energy utilities have a critical role to play with energy savings: From Megawatts to negawatts Selling less energy and more energy services Energy efficiency obligations (EEOs) Are legal obligations set on energy utilities to realize energy efficiency measures and achieve substantial energy savings. The savings can be certified and traded (White Certificate). EEOs are currently successfully operated in several MS (Notably: Denmark, Flanders-Belgium, France, Italy, UK) and similar experience occurs in the USA.

28 Key learning from existing experiences EEOs are a successful market-based policy instrument to achieve energy savings: cost-effective over compliance with the savings target, many design modalities: supply/distribution; monopoly or fully liberalised, one or more energy sector (gas and oil, electricity and district heating) and one or more end-use sector (residential, commercial, industrial, transport)

29 Key learning from existing experiences National experiences provide valuable best practices for the European Union: Define clear targets saving, obliged parties, beneficiaries EEOs are best suited for sectors with low individual energy demand (residential sector) Set clear Measurement and Verification methodologies Integrate a certification and trading dimension Consider the technological innovation as well and behavioral change

30 Towards an EU Wide White Certificate Scheme: opportunities and threats Opportunities The tool is market-based Successful results at national level Threats lie in the political and technical hurdles created by a potential European harmonization, notably: Multiplicity of experiences and different design of key parameters for setting the obligations, assessing the savings and developing the certification and trading The need to harmonize M&V methodologies The lack of mature cross-border energy markets The differences between MS in terms of energy taxation and energy efficiency policies

31 Towards an EU Wide White Certificate Scheme: perspective? Obstacles related to the EU Harmonization. Differences at MS level (tax, incumbent systems) If a scheme is created, the saving targets should remain at the level of the MS: The EU would act on the harmonization and standardization of the certification and trading of the savings. The obliged parties could undertake savings measures across Europe and the certificates could be traded across Europe Other alternatives: voluntary schemes, regional schemes, integration with EU ETS

32 The role for of electricity and gas companies Technical investments Smart grid Smart metering Economic business model Higher future energy prices Investment pay back times DSM Aggregators business models SME s Value of Energy Storage

33 Summary US Japan China Energy Labels Lessons from around the globe

34 Summary US, Japan, China have distinct regulatory systems Success factors Lessons from the ENERGY STAR (US) and the Top Runner programme (JP)

35 Lessons from the US - Periodic analysis and revision - Financial incentives (e.g. ENERGY STAR & tax credits and rebates) - Integration of policy to market strategies National Academy of Sciences & National Academy of Engineering, most cost-effective energy efficiency measures - Increased investments in cost-effective measures for EE would create jobs and reduce utility bills

36 Lessons from Japan - Business interest in energy efficiency investment - Cooperation and consultation between the government and business - Clarity about allocation of responsibility (e.g. appointment of an energy management officer) - Best practices: e.g. the Top Runner Programme (appliances, vehicles) - Incentives: e.g. Eco-points

37 Lessons from China - Phase-in legislative development - Political will (e.g. Five Year Plans) 11 th Five Year Plan Energy intensity reduction by 20% in key projects Specific targets for local governments and sectors

38 Energy labels (1) US ENERGY STAR, Japan

39 Energy labels (2) Australia China Energy Label

40 EU policy options Binding targets would seem to be preferred Design Options for Binding Energy Savings Targets Pro s and Con s of binding targets Potential effects of binding targets on ESCO s and EEO / white certificates

41 Binding or not? With current policy measures the energy savings target of 20% by 2020 will be missed by a wide margin. EU has sufficient potential to realise the overall 20% energy savings target in Need to increase policy impact and policy incentives to retrieve this potential EU Binding target as a feasible option EU Binding target seen as desirable by many experts to achieve overall EU EE goals

42 Design Options Design Options for Binding Energy Savings Targets EU-level Economy-wide Target EU-level Sectorial Targets Member-State-level Economy-wide Target Member-State-level Sectorial Targets

43 Binding Member-State-level Economy-wide Target Pro Need to increase and accelerate energy savings Strong international message Logical next step in climate policy Ensures political accountability and provides flexibility Con Loss of control on European level Member State committment partly lacking Danger of incoherence

44 Potential impacts on ESCO s and EEO / WC Realising cost effective end-use savings through ESCO s and EEO / WC could benefit from EU binding targets in different ways: Widened market opportunities and larger scale of actions for ESCOS => Promotion of ESCOs Widened market opportunities for trading White Certificates => Promotion of Energy Efficiency Obligations on Energy Utilities => Improved liquidity for Efficiency projects Coherent interaction with EU-ETS and RES policies Faster EU wide achievement of energy efficiency targets

45 Preliminary Recommendations NEEAPS Define coherent measurement methodology of energy savings Define coherent reporting format and information Policy Increase policy effort in order to achieve 20% target Introduce Binding Energy Savings Target Strong focus on buildings (notably existing), appliances and transport Promote ESCOs models Promote Energy Efficiency Obligations and White Certificate schemes

46 Thank you for your attention Matthias Altmann Senior Consultant LudwigBölkowSystemtechnik GmbH Daimlerstr Munich/Ottobrunn Germany p: +49/89/ f: +49/89/ W: Anthony Brenninkmeijer Partner Hinicio Sprl Rue des Palais, 44 - Bte 71 B-1030 Brussels Belgium Mobile: Tel: anthony.brenninkmeijer@hinicio.com W: Noriko Fujiwara Centre for European Policy studies CEPS Congresplein Brussel, Belgium Mobile: Tel: noriko.fujiwara@ceps.eu W:

47 Back-up Slides

48 Best practices in the public sectors Best practices in the public sector which can be observed in different Member States cover one or several of the following aspects: Setting quantitative targets for energy use within the public sector Development of enhanced public procurement strategies and obligations Mandatory implementation of energy saving projects Development of ambitious standards for the public buildings sector Use of financial instruments for energy efficiency improvements in the public sector