Towards cooperative policy approaches in China—Drivers for voluntary agreements on industrial energy efficiency in Nanjing

Energy efficiency is a national priority for China as rapid energy consumption growth aggravates its greenhouse gas emissions, local air pollution and energy scarcity. In the 1990s, a large number of voluntary agreements emerged in industrialised countries in order to improve industrial energy efficiency. These experiences are now taken into account in China. This article analyses the drivers for voluntary agreements on industrial energy efficiency in China, based on a case study of three enterprises in Nanjing, Jiangsu Province. Furthermore, the article reviews the institutional set-up of energy policy and investigates the pertaining policy culture. From the findings, conclusions are drawn on the role of voluntary agreements within China's larger policy context. We conclude that opposed to avoiding stricter regulation, voluntary agreements in Nanjing are reinterpreted in view of more stringent national provisions on energy efficiency in the 11th Five Year Plan. Hence, agreements have evolved into an implementation tool of national policy at the local level. For industry, another major driver for participation was identified as improving its relations with local authorities. Voluntary agreements showed to have the potential to overcome traditional constraints of implementing top–down policies at the local level in China.     

Implementation of voluntary agreements for energy efficiency in China

Low-energy efficiency and environmental pollution have long been taken as key problems of Chinese industry, although a number of command-and-control and economic instruments have been adopted in the last few decades. In this paper, policy and legislation development for voluntary agreements were summarized. The voluntary agreements pilot project in two iron and steel companies in Shandong Province as well as other cases were analyzed. In order to identify the existing problems in Chinese cases, comparison was made between China and industrialized countries in the practices of energy efficiency voluntary agreements. Based on the analysis, detained recommendations, including the use of supporting policies for voluntary agreements, were raised. It is expected that voluntary agreements could play a more important role in energy efficiency improvement of Chinese industry.     

Voluntary agreements in the field of energy efficiency and emission reduction: Review and analysis of experiences in the European Union

A number of Member States of the EU have introduced voluntary agreements (VAs) that aim to deliver energy savings and emission reductions via increased energy efficiency in different end-use sectors, mainly targeting industry.     

Tradeable energy efficiency certificates in Australia

Tradeable energy efficiency certificates are created in Australia as part of a larger baseline-and-credit emissions trading scheme, the Greenhouse Gas Reduction Scheme (GGAS) that operates in the State of New South Wales and the Australian Capital Territory. GGAS aims to reduce greenhouse gas emissions associated with the generation and use of electricity through project-based activities to offset the production of emissions. GGAS applies in two jurisdictions that are part of a wholesale electricity market operating across a total of six jurisdictions and this imposes some constraints on scheme design. Nevertheless, GGAS has developed a set of comprehensive operational systems and procedures to validate energy efficiency projects and verify the abatement they produce. To the end of calendar year 2006, nearly ten million energy efficiency certificates have been created under GGAS, representing nearly ten million tonnes of CO2-e abatement. Some significant issues have arisen regarding the creation of certificates from the mass distribution of small energy-efficient household appliances. However, the experience with GGAS still demonstrates that tradeable energy efficiency certificates can be an effective mechanism for incentivising greenhouse gas emissions abatement in the context of a baseline-and-credit emissions trading scheme.

The implementation of a multi-annual agreement for energy efficiency in The Netherlands

The paper analyses the implementation of the second multi-annual agreement for energy efficiency concluded in the Netherlands with industrial sectors for the period 2002–2010. It aims to investigate whether the multi-annual agreement MJA2, as a voluntary instrument, is sufficiently stimulating behavioral change at the target group level, and sustained transformation of production and management patterns towards significant gains in energy efficiency. The analysis uses a Structure–Conduct–Performance analytical framework for implementation processes in order to: (a) analyze the setting of implementation, actor roles, attitudes and interactions; (b) discuss emerging obstacles and positive experiences with the implementation of the three core policy instruments envisaged: energy management system, process efficiency measures, and ‘expansion themes’ measures. Based on this policy recommendations are formulated regarding voluntary agreements in general, using the Structure–Conduct–Performance framework of implementation analysis, and regarding how the implementation process of MJA2 in particular could be improved.     

Tradable energy efficiency certificates: the Italian experience

The Italian white certificates scheme took effect in January 2005. The command and control component of the scheme, i.e., the energy efficiency obligation, was introduced with the implementation of the first European directives on the liberalization of the electricity and natural gas market (Ministero dell’Industria, del commercio e dell’artigianato. Legislative Decree of 16th March 1999, n.79, 1999; Ministero dell’Industria, del commercio e dell’artigianato. Legislative Decree of 23rd May 2000, n. 164, 2000), in the form of a public service obligation (PSO) raised on distribution companies. The market-based component, the trading of energy efficiency certificates (EECs), was introduced by the government in mid-2001, together with the definition of the level of the obligation and of the other elements of the policy package. In the following three years the regulatory authority for electricity and gas (AEEG) designed the implementing technical and economic regulation governing the system through an extensive public consultation. During the same period, a revision of some of the basic elements of the scheme was also carried out, in order to take into account some institutional changes (i.e., new shared responsibilities between the federal government and regional administrations in the energy policy field), as well as some improvements suggested by the regulator. In December 2007, some components of the mechanism were updated on the basis of the results achieved and of the critical issues that emerged during its implementation (Ministero delle Attività Produttive (MSE). Ministerial Decree of revision and update of the Ministerial Decrees of 20the July 2004, 2007).

Interactions of white certificates with other policy instruments in Europe

In a tradable white certificate (TWC) scheme, each certificate issued represents a certain amount of energy saved. Used in conjunction with an energy-saving obligation on certain parties in the energy supply chain and with rules for trading, monitoring and verification established, an efficient market for energy savings in sectors not covered by the European Union (EU) Emissions Trading Scheme can be established. However, a plethora of other mechanisms are already in place to promote a more sustainable use of energy in Europe. This paper analyses the interactions (both potential and realised in existing schemes) between TWCs and other policy instruments including tradable green certificates, the European Union Emissions Trading Scheme, the European Union Energy Performance in Buildings Directive as well as taxes, subsidies and loans. Measures implemented through a TWC scheme that reduce the consumption of electricity can make targets under a tradable green certificate scheme easier to attain. Where a tradable green certificate scheme contains relative targets, the target should be increased to achieve the same absolute amount of renewable power. A TWC scheme can also reduce the number of allowances electricity generators will need to surrender under the EU Emissions Trading Scheme. By reducing the available emission rights in the National Allocation Plans, this effect is possible to counteract.

White Certificates for energy efficiency improvement with energy taxes: A theoretical economic model

In this paper we analyze interactions of two energy policy instruments, namely a White Certificates (WhC) scheme as an innovative policy instrument for energy efficiency improvement and energy taxation. These policy instruments differ in terms of objectives and final impacts on the price of electricity. We examine the effect of these policy instruments in the electricity sector, focusing on electricity producers and suppliers in a competitive market. Using microeconomic theory, we identify synergies between market players and demonstrate the total effect on the electricity price when suppliers internalize the behaviour of producers in their decisions. This model refers to an ideal market situation of full liberalization. The cases we examine consist of electricity producers with and without a carbon tax, electricity suppliers with and without an electricity tax, and with WhC obligations. Furthermore, we present a parallel implementation of WhC for electricity suppliers with carbon tax on electricity producers and an electricity tax with WhC obligations to electricity suppliers. We demonstrate differences in optimization behaviour of producers and suppliers. Based on a couple of cases of WhC with carbon and electricity taxes, various positive and negative effects of both schemes in terms of target achievement and efficiency are present, which can lead to an added value of such schemes in the policy mix, although uncertainties of outcomes are quite high. A basic finding is that in a merit order several parameters can increase final electricity price after the implementation of different policies: demand for electricity and electricity supply cost at a large scale and then follow the level of level of obligation for energy saving, level of penalty, and price of WhC (representing the marginal costs of energy saving projects). The impact magnitude of parameters depends on the values chosen and on the initial position of suppliers (i.e. if their actual behaviour deviates from full compliance with targets).     

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.     

Energy savings certificates: A market-based tool for reducing greenhouse gas emissions

Energy savings certificates (ESCs) are potentially a major tool that can be used by regulators and policy makers in reducing greenhouse gas (GHG) emissions. In this paper, we present our findings on the experience to date with ESCs, outline potential program opportunities in the US, and conclude with our perspective on how to proceed with the use of ESCs, particularly as a component of GHG reduction programs.     

Market imperfections and economic efficiency of white certificate systems

This paper takes the view that energy markets and markets for energy efficiency have significant imperfections, including ones that cannot be repaired through prices alone. The acknowledgement of the various market imperfections, however, does not endorse automatically the use of various instruments, such as tradable white certificates (TWC). Therefore, it is necessary to clarify under what conditions a TWC system can have equal or superior effectiveness and economic efficiency as compared to other instruments. The article explains the principles of a TWC system in terms of market functioning and price formation. It also highlights some key assumptions regarding additionality of energy savings, transaction cost, free riding, target setting and regulatory predictability. Subsequently, the paper illustrates how a TWC system interacts with other energy efficiency policy instruments, in particular standards and taxes. After these explanatory sections the article turns to the modelling of actual TWC price formation in selected countries and subsequently presents a comparative assessment of a TWC system with an energy tax for Finland and the Netherlands.

Utility energy efficiency schemes: savings obligations and trading

Utility financed and/or operated energy efficiency schemes have a long history going back to the first energy crisis in 1973. It is therefore appropriate to ask what is new about the recent raft of white certificate schemes and whether there is anything that makes them more effective than the older approaches. This paper attempts to answer these questions by reviewing the experience with earlier utility schemes and comparing them with the more recent schemes implemented on both sides of the Atlantic as well as Australia. Up-to-date results are reported on utility programme impact in all the regions, including a new indicator analysis of the collective, long-term impact of such schemes in the USA. From this it is clear that both the new and old schemes are highly effective in delivering substantial, sustained and cost effective energy savings and associated reductions in CO₂ emissions. A key component of programme impact, including cost-effectiveness, is the effective alignment of utility commercial incentives with the delivery of energy savings. There are essentially two new elements of the recent utility energy efficiency schemes: i) mandated energy savings obligations and ii) the flexibility to trade the obligations. The mandated savings obligation, when linked to a suitable non-compliance penalty structure, seems to be an especially effective means of ensuring that public policy objectives for energy efficiency are met. The importance of allowing obligations to be traded for programme success is not yet clear and will require more time before proper longitudinal evaluations can be attempted.

上海市公共建筑实施自愿节能协议的必要性

建设能源节约型社会是一项涉及后代的事业,其关键在于建立一套有利于可持续地实现节能效益最大化的管理模式和运行机制。自愿节能协议是目前许多国家为提高能源利用效率所采取的一种管理模式。结合上海公共建筑的运行管理现状,论述了自愿节能协议在公共建筑运行管理过程中实施的必要性,并为进一步推动在建筑运行管理过程中实施自愿节能协议提出建议。     

How much market do market-based instruments create? An analysis for the case of “white” certificates

Among the diverse economic instruments to foster energy efficiency (EE) and climate protection, tradable certificates have been investigated for renewable energy, and the EU directive on an emissions-trading scheme for CO₂ certificates has been approved in 2003. In contrast, tradable energy efficiency—or “white”—certificates have only lately been considered as a market-based tool to foster EE as compared with standards and labelling, for example. Theoretically, there is little doubt about the advantages. In practice, however, some fundamental problems arise. Critical issues are the design of an efficient artificial market for white certificates, its compatibility with the European emissions-trading system, the identification of a suitable target group for an EE obligation and the measurement of energy savings as compared with a reference use of energy. We use the theoretical framework of transaction cost economics to elaborate these issues. We conclude that transaction costs and investment specificity will restrict markets for white certificates in practice. Long-term contracts rather than spot trade will be the prevailing form of governance for EE investments.     

Red light for Green Paper: The EU policy on energy efficiency

The EU Green Paper on energy efficiency calls for action to decrease energy use and thus achieve increased competitiveness, fulfil the environmental targets and increase security of supply. In this comment, we examine the role the EU Commission suggest that energy efficiency, and policies supporting energy efficiency, takes. The policies and the suggestions are qualitatively elaborated upon in the light of the goal of a common European electricity market. We suggest that the rationales for the energy efficiency measures are weak, and that the suggested goals of increased competitiveness, environmental targets, and security of supply are best reached with the direct measures especially designed for each goal. Some of the energy efficiency measures may counter-act other direct policies. Further, The Green Paper measures may prove detrimental to the European Electricity market insofar as the policies suggested could lead to a policy fatigue among the electricity consumers.     

Method for calculating annual energy efficiency improvement of TV sets

The popularization of 24 h pay-TV, interactive video games, web-TV, VCD and DVD are poised to have a large impact on overall TV electricity consumption in the Malaysia. Following this increased consumption, energy efficiency standard present a highly effective measure for decreasing electricity consumption in the residential sector. The main problem in setting energy efficiency standard is identifying annual efficiency improvement, due to the lack of time series statistical data available in developing countries. This study attempts to present a method of calculating annual energy efficiency improvement for TV set, which can be used for implementing energy efficiency standard for TV sets in Malaysia and other developing countries. Although the presented result is only an approximation, definitely it is one of the ways of accomplishing energy standard. Furthermore, the method can be used for other appliances without any major modification.     

Systems interactions analysis for the energy efficiency improvement of a Kraft process

Several techniques are available to improve the energy performance of a process (internal heat recovery, water reutilization, condensates return, energy upgrading and conversion, elimination of non-isothermal mixing). They are applied to specific energy systems on the utility or process side (steam production and distribution, hot or cold water networks, process heat sources and sinks). Since those systems are interconnected, actions taken on one of them may have effects on another. These effects can be positive (synergies) or negative (counter-actions). A systematic, stepwise methodology has been developed to ensure that synergies are exploited and counter-actions avoided, and is presented. It has been validated by application to an existing Kraft pulping mill. Key performance indicators and the evolution of the thermal composite curves were used to monitor progress as the successive steps of the methodology were implemented. It was found that the combined direct and indirect effects of water reutilization constituted the most important source of potential energy savings. Water reutilization also reduced the need for additional purchased heat exchanger area. Overall, the water intake by the mill could be reduced by 33% and steam savings could be 26% of current production. This would liberate sufficient steam production capacity for the installation of a 44.4 MW cogeneration unit.     

A two-factor method for appraising building renovation and energy efficiency improvement projects

The renovation of residential buildings usually involves a variety of measures aiming at reducing energy and building maintenance bills, increasing safety and market value, and improving comfort and aesthetics. A significant number of project appraisal methods in current use—such as calculations of payback time, net present value, internal rate of return or cost of conserved energy (CCE)—only quantify energy efficiency gains. These approaches are relatively easy to use, but offer a distorted view of complex modernization projects. On the other hand, various methods using multiple criteria take a much wider perspective but are usually time-consuming, based on sometimes uncertain assumptions and require sophisticated tools. A ‘two-factor’ appraisal method offers a compromise between these two approaches. The main idea of the method is to separate investments into those related to energy efficiency improvements, and those related to building renovation. Costs and benefits of complex measures, which both influence energy consumption and improve building constructions, are separated by using a building rehabilitation coefficient. The CCE is used for the appraisal of energy efficiency investments, while investments in building renovation are appraised using standard tools for the assessment of investments in maintenance, repair and rehabilitation.     

Theory-based policy evaluation of 20 energy efficiency instruments

Realizing a 20% energy efficiency improvement in Europe by 2020 requires the introduction of good new energy efficiency policies as well as strengthening and enforcing the existing policies. This raises the question: what characterizes good and effective energy efficiency policies and their implementation? Systematic ex post evaluation of energy efficiency policies can reveal factors determining not only what works and what does not but also explain why. Ex post evaluation of 20 energy efficiency policy instruments applied across different sectors and countries in Europe among others showed that ex post evaluation does not yet have a high priority among policy makers: Often, quantitative targets and clear timeframes are lacking, and monitoring information is not collected on a regular basis. Our analysis, however, did reveal some general factors in the process of design and implementation of policy instruments that appear as important including (1) existence of clear goals and a mandate for the implementing organization, (2) the ability to balance and combine flexibility and continuity, (3) the involvement of stakeholders, and (4) the ability to adapt to and integrate adjacent policies or develop consistent policy packages. The analysis was performed using a uniform methodology called “theory-based policy evaluation”. The general principle behind this approach is that a likely theory is drawn up on the program’s various steps of logic of intervention to achieve its targeted impact in terms of energy efficiency improvement. The approach has several benefits over other ex post evaluation methods because (1) the whole policy implementation process is evaluated and the focus is not just on the final impacts, (2) through the development of indicators for each step in the implementation process, the “successes and failures” can be determined to the greatest extent possible, and (3) by applying this approach, we not only learn whether policies are successful or not but also why they succeeded or failed and how they can be improved.     

Assessment of energy efficiency performance measures in industry and their application for policy

Energy efficiency improvement is a basic yet significant way of addressing both energy security and environment concerns. There are various measures of industrial energy efficiency performance, with different purposes and applications. This paper explores different ways to measure energy efficiency performance (MEEP): absolute energy consumption, energy intensity, diffusion of specific energy-saving technology and thermal efficiency. It discusses their advantages and disadvantages, and roles within policy frameworks. Policy makers should consider the suitability of MEEP based on criteria such as reliability, feasibility and verifiability. The limitations of both energy intensity and necessity of broader all-inclusive indicators and technology diffusion indicators are also discussed. A case study on Japan's iron and steel industry illustrates the critical role of proper boundary definitions for a meaningful assessment of energy efficiency in industry. Depending on the boundaries set for the analysis, the energy consumption per ton of crude steel ranges from 16 to 21 GJ. This paper stresses the importance of a proper understanding of various methods to assess energy efficiency, and the linkage with policy objectives and frameworks. Possible next steps for improvement of MEEP, such as database development, were also discussed.