Market barriers to energy efficiency

Discussions of energy policy in an environmentally constrained world often focus on the use of tax instruments to internalize the external effects of energy utilization or achieve specified reductions in energy use in the most cost-effective manner. A substantial literature suggests, however, that significant opportunities exist to reduce energy utilization by implementing technologies that are cost-effective under prevailing economic conditions but that are not fully implemented by existing market institutions. This paper examines the theory of the market for energy-using equipment, showing that problems of imperfect information and transaction costs may bias rational consumers to purchase devices that use more energy than those that would be selected by a well-informed social planner guided by the criterion of economic efficiency. Consumers must base their purchase decisions on observed prices and expectations of post-purchase equipment performance. If it is difficult or costly for individuals to form accurate and precise expectations, the level of energy efficiency achieved by competitive markets will vary from the socially efficient outcome. Such ‘market barriers’ suggest a role for regulatory intervention to improve market performance at prevailing energy prices.     

Impact of energy efficiency measures on the economic value of buildings

A main objective of energy policies is to make all levels of the society, from governments to citizen, interested in increasing the energy efficiency of buildings. One of the most important barriers in implementation of energy policies is that the cost of potential energy savings, typically considered being the only financial benefit, does not sufficiently motivate investments. The target is therefore to identify further possible drivers pushing positive reaction according to energy saving action.The paper discusses whether a market-based instrument, capturing the increase of the economic value of energy efficient buildings, can be also used. Methods that quantify the added value due to energy performance, including recommendations on how they can be incorporated in the financial analysis of investments in weatherization, are developed. By applying the proposed methods, the payback period of investments in energy efficiency measures depends on two factors: potential energy savings and the added value to the property. Case studies on some existing condominiums from Romania are analyzed and provide evidence to the research question.The market sensitivity to energy efficiency measures, the possibility of an intangible added value as well as the impact to financial investment decisions is subsequently in the focus.     

Energy-efficiency supervision systems for energy management in large public buildings: Necessary choice for China

Buildings are important contributors to total energy consumption accounting for around 30% of all energy consumed in China. Of this, around two-fifths are consumed within urban homes, one-fifth within public buildings, and two-fifths within rural area. Government office buildings and large-scale public buildings are the dominant energy consumers in cities but their consumption can be largely cut back through improving efficiency. At present, energy management in the large public sector is a particular priority in China. Firstly, this paper discusses how the large public building is defined, and then energy performance in large public buildings is studied. The paper also describes barriers to improving energy efficiency of large public buildings in China and examines the energy-efficiency policies and programs adopted in United States and European Union. The energy-efficiency supervision (EES) systems developed to improve operation and maintenance practices and promote energy efficiency in large public sector are described. The benefits of the EES systems are finally summarized.     

A method of identifying and weighting indicators of energy efficiency assessment in Chinese residential buildings

This paper describes a method of identifying and weighting indicators for assessing the energy efficiency of residential buildings in China. A list of indicators of energy efficiency assessment in residential buildings in the hot summer and cold winter zone in China has been proposed, which supplies an important reference for policy makings in energy efficiency assessment in buildings. The research method applies a wide-ranging literature review and a questionnaire survey involving experts in the field. The group analytic hierarchy process (group AHP) has been used to weight the identified indicators. The size of survey samples are sufficient to support the results, which has been validated by consistency estimation. The proposed method could also be extended to develop the weighted indicators for other climate zones in China.     

Development of a new energy efficiency rating system for existing residential buildings

Building energy efficiency rating systems have been established worldwide to systematically manage the energy consumption of existing buildings. This study aimed to develop a new energy efficiency rating system for existing residential buildings from two perspectives: (i) establishment of reasonable and fair criteria for the building energy efficiency rating system; and (ii) establishment of comparative incentive and penalty programs to encourage the voluntary participation of all residents in the energy saving campaign. Based on the analysis of the conventional energy efficiency rating system for existing residential buildings, this study was conducted in five steps: (i) data collection and analysis; (ii) correlation analysis between the household size and the CO₂ emission density (i.e., CO₂ emission per unit area); (iii) cluster formation based on results of the correlation analysis using a decision tree; (iv) establishment of a new energy efficiency rating system for existing buildings; and (v) establishment of incentive and penalty programs using advanced case-based reasoning. The proposed system can allow a policymaker to establish a reasonable and fair energy efficiency rating system for existing residential buildings and can encourage the voluntary participation of all residents in the energy saving campaign.     

Long-term energy scenarios for Mexico: Policy options for carbon savings and main barriers

This paper shows that possibilities exist for maintaining current energy-related carbon emissions per capita in Mexico at almost constant levels in the long term. It is argued, however, that the identified carbon emissions reductions will not be achieved easily or rapidly, as they require a restructuring of Mexico's current technological base and an unusual degree of coordination among the government, lending institutions, equipment manufacturers, and final users. Such changes also will entail surmounting major institutional and financial barriers and creating a better international environment for technology transfer and capital lending.     

Financial impact of energy efficiency under a federal combined efficiency and renewable electricity standard: Case study of a Kansas “super-utility”

Historically, local, state and federal policies have separately promoted the generation of electricity from renewable technologies and the pursuit of energy efficiency to help mitigate the detrimental effects of global climate change and foster energy independence. Federal policymakers are currently considering and several states have enacted a combined efficiency and renewable electricity standard which proponents argue provides a comprehensive approach with greater flexibility and at lower cost. We examine the financial impacts on various stakeholders from alternative compliance strategies with a Combined Efficiency and Renewable Electricity Standard (CERES) using a case study approach for utilities in Kansas. Our results suggest that an investor-owned utility is likely to pursue the most lucrative compliance strategy for its shareholders—one that under-invests in energy efficiency resources. If a business model for energy efficiency inclusive of both a lost fixed cost recovery mechanism and a shareholder incentive mechanism is implemented, our analysis indicates that an investor-owned utility would be more willing to pursue energy efficiency as a lower-cost CERES compliance strategy. Absent implementing such a regulatory mechanism, separate energy efficiency and renewable portfolio standards would improve the likelihood of reducing reliance on fossil fuels at least-cost through the increased pursuit of energy efficiency.     

The role of corporate reputation and employees' values in the uptake of energy efficiency in office buildings

Although office market actors in the United Kingdom show a growing interest in energy efficiency, the pace of takeup of energy efficient office features is slow. Previous studies have highlighted the roles of limited direct financial costs and benefits (‘efficiency gaps’) and market barriers in limiting the rate of technology adoption. This study provides further evidence on the importance of these factors, but the primary contribution is focused on the role of corporate reputation and on the importance of individuals' values in shaping corporate behaviour. The paper presents a theoretical framework to explain environmental decision making in firms and we present qualitative evidence drawing from sixteen semi-structured individual and group interviews with office market stakeholders in London, Glasgow and Edinburgh. The research finds that companies, despite gradually becoming more energy conscious, still regard energy costs as a negligible part of their business costs. Nevertheless, an increasingly important driver is the reputational gain obtained by corporate businesses implementing sustainable practices. All the interviewees agreed that the pace of change in the office market is slow and that only further policy interventions will accelerate it.     

An overview of solar energy applications in buildings in Greece

This work classifies and describes the main fields of solar energy exploitation in buildings in Greece, a country with high solar energy capacities. The study focuses on systems and technologies that apply to residential and commercial buildings following the prevailing design and construction practices (conventional buildings) and investigates the effects of the architectural and constructional characteristics of these buildings on the respective applications. In addition, it examines relevant applications in other building categories and in buildings with increased ecological sensitivity in their design and construction (green buildings). Through its findings, the study seeks to improve the efficiency and broaden the scope of solar energy applications in buildings in Greece to the benefit of their energy and environmental performance.     

Regulating district heating in Romania: Legislative challenges and energy efficiency barriers

Many states in Eastern and Central Europe (ECE) possess extensive district heating (DH) networks that were constructed during the days of communist rule in order to provide a universally accessible energy service that supported Soviet development policies. But the post-communist transition was marked by the exacerbation of the sector’s numerous technical, economic, regulatory and environmental problems, accompanied by its abandonment in favour of alternative methods of domestic heating. Recent efforts to increase the use of DH in ECE as a result of environmental and energy security concerns have taken place in an absence of critical, context-sensitive research.     

USE Efficiency: an innovative educational programme for energy efficiency in buildings

Power engineers are expected to play a pivotal role in transforming buildings into smart and energy-efficient structures, which is necessary since buildings are responsible for a considerable amount of the total energy consumption. To fulfil this role, a holistic approach in education is required, tackling subjects traditionally related to other engineering disciplines. In this context, USE Efficiency is an inter-institutional and interdisciplinary educational programme implemented in nine European Universities targeting energy efficiency in buildings. The educational programme effectively links professors, students, engineers and industry experts, creating a unique learning environment. The scope of the paper is to present the methodology and the general framework followed in the USE Efficiency programme. The proposed methodology can be adopted for the design and implementation of educational programmes on energy efficiency and sustainable development in higher education. End-of-course survey results showed positive feedback from the participating students, indicating the success of the programme.     

Optimisation of a Swedish district heating system with reduced heat demand due to energy efficiency measures in residential buildings

The development towards more energy efficient buildings, as well as the expansion of district heating (DH) networks, is generally considered to reduce environmental impact. But the combined effect of these two progressions is more controversial. A reduced heat demand (HD) due to higher energy efficiency in buildings might hamper co-production of electricity and DH. In Sweden, co-produced electricity is normally considered to displace electricity from less efficient European condensing power plants. In this study, a potential HD reduction due to energy efficiency measures in the existing building stock in the Swedish city Linköping is calculated. The impact of HD reduction on heat and electricity production in the Linköping DH system is investigated by using the energy system optimisation model MODEST. Energy efficiency measures in buildings reduce seasonal HD variations. Model results show that HD reductions primarily decrease heat-only production. The electricity-to-heat output ratio for the system is increased for HD reductions up to 30%. Local and global CO₂ emissions are reduced. If co-produced electricity replaces electricity from coal-fired condensing power plants, a 20% HD reduction is optimal for decreasing global CO₂ emissions in the analysed DH system.     

Building energy efficiency in rural China

Rural buildings in China now account for more than half of China's total building energy use. Forty percent of the floorspace in China is in rural villages and towns. Most of these buildings are very energy inefficient, and may struggle to provide for basic needs. They are cold in the winter, and often experience indoor air pollution from fuel use. The Chinese government plans to adopt a voluntary building energy code, or design standard, for rural homes. The goal is to build on China's success with codes in urban areas to improve efficiency and comfort in rural homes. The Chinese government recognizes rural buildings represent a major opportunity for improving national building energy efficiency. The challenges of rural China are also greater than those of urban areas in many ways because of the limited local capacity and low income levels. The Chinese government wants to expand on new programs to subsidize energy efficiency improvements in rural homes to build capacity for larger-scale improvement. This article summarizes the trends and status of rural building energy use in China. It then provides an overview of the new rural building design standard, and describes options and issues to move forward with implementation.     

Implementing effect of energy efficiency supervision system for government office buildings and large-scale public buildings in China

The Chinese central government released a document to initiate a task of energy efficiency supervision system construction for government office buildings and large-scale public buildings in 2007, which marks the overall start of existing buildings energy efficiency management in China with the government office buildings and large-scale public buildings as a breakthrough. This paper focused on the implementing effect in the demonstration region all over China for less than one year, firstly introduced the target and path of energy efficiency supervision system, then described the achievements and problems during the implementing process in the first demonstration provinces and cities. A certain data from the energy efficiency public notice in some typical demonstration provinces and cities were analyzed statistically. It can be concluded that different functional buildings have different energy consumption and the average energy consumption of large-scale public buildings is too high in China compared with the common public buildings and residential buildings. The obstacles need to be overcome afterward were summarized and the prospects for the future work were also put forward in the end.     

China's ongoing energy efficiency drive: Origins,progress and prospects

In 2004 China's government launched a vigorous programme to reverse the trend of rising national energy intensity and to reduce intensity by 20% over the period 2006–2010. The aim of this paper is to examine this programme in the context of nearly 30 years of measures to enhance energy efficiency in China, and thus to evaluate the likelihood that today's policies will yield improvements over a longer period. The country achieved a sustained decline of energy intensity in the period 1980–2001 but this trend was reversed in 2002. This reversal arose from a shift in the structure of the economy to more energy-intensive industries and from a decline in the rate of technical innovation. The measures taken since 2003 have been directed principally at energy-intensive industries, but have also addressed other sectors of the economy. Though the energy intensity target for the year 2010 may be achieved, greater efforts will be needed to address a number of constraints which include: the reluctance to use economic and financial instruments; the dependency of energy policy on industrial and social policies; the nature of political decision-making and of public administration; a shortage of skills; and social attitudes to energy.     

Potential impact evaluation: an ex ante evaluation of the Mediterranean buildings energy efficiency strategy

The building sector is among the largest energy users while offering cost-effective means of reducing energy use. Dynamics of energy efficiency improvements in the building stock are very slow due to the long life span of buildings and barriers such as high investment cost. A list of general policy measures to overcome the barriers to energy efficiency improvements in the Mediterranean (MED) area was proposed by regional experts in the framework of the MARIE project. These measures could be considered as a first draft of the MED buildings energy efficiency strategy. This study assesses the potential impacts of such measures, so as to inform on their effectiveness. The MARIE measures result in larger energy savings than an equally ambitious strategy based on ‘conventional measures’. However, the benefits of MARIE arrive slowly and show large variations among regions depending on the characteristics of their current building stock.     

Energy saving and energy efficiency concepts for policy making

Departing from the concept of rational use of energy, the paper outlines the microeconomics of end-use energy saving as a result of frugality or efficiency measures. Frugality refers to the behaviour that is aimed at energy conservation, and with efficiency we refer to the technical ratio between energy input and output services that can be modified with technical improvements (e.g. technology substitution). Changing behaviour from one side and technology from the other are key issues for public energy policy. In this paper, we attempt to identify the effects of parameters that determine energy saving behaviour with the use of the microeconomic theory. The role of these parameters is crucial and can determine the outcome of energy efficiency policies; therefore policymakers should properly address them when designing policies.     

Enhanced understanding of energy ratepayers: Factors influencing perceptions of government energy efficiency subsidies and utility alternative energy use

This study explores factors related to energy consumers' perceptions of government subsidies for utility provided energy efficiency (EE) programs and for utility providers' use of more clean/alternative energy sources. Demographic factors, attitudes, planned purchases, and perceptions of utility provider motives in relation to governmental and utility provider EE initiatives (i.e. providing discounts and coupons for CFL bulbs), plus the influence of gain- and loss-framed messages are investigated. Over 2000 respondents completed a 16 item phone survey. Hierarchical regression explained 38% of the variance in reactions regarding government subsidies of the cost of utility provided EE programs and 43% of the variance in perceptions involving whether utility companies should use of more clean or alternative forms of energy. Gender and party differences emerged. Loss-framed messages were more important when the issue was government subsidies. Both gain- and loss-framed messages were important when clean/alternative energy was the issue.     

Energy efficiency supervision strategy selection of Chinese large-scale public buildings

This paper discusses energy consumption, building development and building energy consumption in China, and points that energy efficiency management and maintenance of large-scale public buildings is the breakthrough point of building energy saving in China. Three obstacles are lack of basic statistics data, lack of service market for building energy saving, and lack of effective management measures account for the necessity of energy efficiency supervision for large-scale public buildings. And then the paper introduces the supervision aims, the supervision system and the five basic systems’ role in the supervision system, and analyzes the working mechanism of the five basic systems. The energy efficiency supervision system of large-scale public buildings takes energy consumption statistics as a data basis, Energy auditing as a technical support, energy consumption ration as a benchmark of energy saving and price increase beyond ration as a price lever, and energy efficiency public-noticing as an amplifier. The supervision system promotes energy efficiency operation and maintenance of large-scale public building, and drives a comprehensive building energy saving in China.     

How energy efficiency fails in the building industry

This paper examines how energy efficiency fails in the building industry based on many years of research into the integration of energy efficiency in the construction of buildings and sustainable architecture in Norway. It argues that energy-efficient construction has been seriously restrained by three interrelated problems: (1) deficiencies in public policy to stimulate energy efficiency, (2) limited governmental efforts to regulate the building industry, and (3) a conservative building industry. The paper concludes that innovation and implementation of new, energy-efficient technologies in the building industry requires new policies, better regulations and reformed practices in the industry itself.