Industrial energy efficiency and climate change mitigation

Industry contributes directly and indirectly (through consumed electricity) about 37% of the global greenhouse gas emissions, of which over 80% is from energy use. Total energy-related emissions, which were 9.9 GtCO₂ in 2004, have grown by 65% since 1971. Even so, industry has almost continuously improved its energy efficiency over the past decades. In the near future, energy efficiency is potentially the most important and cost-effective means for mitigating greenhouse gas emissions from industry. This paper discusses the potential contribution of industrial energy-efficiency technologies and policies to reduce energy use and greenhouse gas emissions to 2030.

Promoting a level playing field for energy options: electricity alternatives and the case of the Indian Point Energy Center

The Indian Point Energy Center, with two operational nuclear reactors, sits in a densely populated region just 40 mi north of midtown Manhattan. It is a vital part of the electricity supply system for the New York City region, but its propinquity to the largest city in the USA has raised public concerns about its safe operation, particularly in the event of a terrorist attack. Such concerns prompted the US Congress to request a study of potential options for replacing the 2,000 MW of power provided by Indian Point. This paper assesses the potential for electricity alternatives in the Indian Point service area. It documents that increased investments in energy efficiency, combined heat and power facilities, and solar photovoltaics could cost-competitively reduce peak demand in the Indian Point service area by 1 GW or more by 2010 and by 1.5 GW by 2015. If the cost of solar photovoltaics can be brought to near-competitive levels over the next decade, these totals could be raised to 1.7 GW by 2015, approaching the capacity of the Indian Point Energy Center. This result challenges the conventional focus of system operators and policymakers on supply-side solutions.

The potential for electricity conservation and carbon dioxide emission reductions in the household sector of Brazil

Pressure is mounting in large Non-Annex 1 countries like Brazil, China, and India to accept binding commitments to reduce their greenhouse gas emissions in the second, post-2012, commitment period. In the case of Brazil, pressure is higher for the country to commit itself to reduce its emissions from land use changes but, because of the country’s recent high economic growth rates, very soon, this pressure will also turn to reducing its greenhouse gas emissions from electricity production and use in the various sectors of the economy. This paper summarizes the methodological approach, and the results, of a study aimed at assessing the potential for electricity conservation and carbon dioxide emissions reductions in the Brazilian household sector. The study splits the household sector into 20 subsectors, considering five different geographical regions and four household electricity consumption levels (a proxy for different household income levels). Technical, economic, and market potentials are determined for electricity conservation in these 20 subsectors for the period 2005–2030, and results are also translated into carbon dioxide emission reductions using the Clean Development Mechanism (CDM) combined margin (build margin plus operating margin) approach for determining the emission’s factor for the power grids. Results show significant electricity and carbon dioxide reduction potentials at negative costs for both household final consumers (market potential) and the economy as a whole (economic potential) in the residential sector of Brazil.

Breaking down the silos: the integration of energy efficiency, renewable energy, demand response and climate change

This paper explores the feasibility of integrating energy efficiency program evaluation with the emerging need for the evaluation of programs from different “energy cultures” (demand response, renewable energy, and climate change). The paper reviews key features and information needs of the energy cultures and critically reviews the opportunities and challenges associated with integrating these with energy efficiency program evaluation. There is a need to integrate the different policy arenas where energy efficiency, demand response, and climate change programs are developed, and there are positive signs that this integration is starting to occur.

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 business case for energy management in high-tech industries

The high-technology sector – characterized by facilities such as laboratories, cleanrooms, and data centers – is often where innovation first occurs. These facilities are sometimes referred to as the “racecars” of the buildings sector because new technologies and strategies to increase performance often trickle down to other building types. Although these facilities are up to 100 times as energy-intensive as conventional buildings, highly cost-effective energy efficiency opportunities are often overlooked. Facility engineers are in the trenches identifying opportunities to improve energy productivity but often are unable to make the broader business case to financial decision makers. This article presents the technical opportunities for reducing energy costs, along with their broader strategic value for high-tech industries.

Feedback on household electricity consumption: a tool for saving energy?

Improved feedback on electricity consumption may provide a tool for customers to better control their consumption and ultimately save energy. This paper asks which kind of feedback is most successful. For this purpose, a psychological model is presented that illustrates how and why feedback works. Relevant features of feedback are identified that may determine its effectiveness: frequency, duration, content, breakdown, medium and way of presentation, comparisons, and combination with other instruments. The paper continues with an analysis of international experience in order to find empirical evidence for which kinds of feedback work best. In spite of considerable data restraints and research gaps, there is some indication that the most successful feedback combines the following features: it is given frequently and over a long time, provides an appliance-specific breakdown, is presented in a clear and appealing way, and uses computerized and interactive tools.

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.

Estimating the potential CO2 mitigation from agricultural energy efficiency in the United States

Energy efficiency in agriculture is an underanalyzed aspect of a potential climate change mitigation strategy. According to the Fourth Assessment Report, experts report only medium agreement and medium evidence that energy efficiency can provide substantial reductions (Smith et al. 2007). This paper estimates the CO₂ mitigation potential achievable through improvements in energy efficiency in the US agriculture sector. The data are presented in three formats: the cost data or break-even points of each technology, a marginal abatement supply curve expressed in terms of reduction in energy use by fuel category, and a marginal abatement supply curve expressed in terms of CO₂ emission reductions by fuel category. The largest sources of energy use in the sector were identified as motors used in irrigation systems or other pumping operations; farm machinery such as tractors used in daily farm operations; and space conditioning, such as HVAC systems for livestock and crop-drying systems.

Multiple instruments to change energy behaviour: The emperor’s new clothes?

Over the last few decades, several instruments have evolved to deal with similar energy and environmental challenges. For instance, the economic literature prescribes separate tax or cap-and-trade systems to internalize negative environmental externalities and subsidies to internalize positive externalities such as research and development. However, policy is not straightforward because of the influence on cost and competition and concerns for regional employment, economic activity within certain industries and any distributional effects. Tax discrimination, subsidies and regulations then undermine the efficiency of energy instruments. To balance any environmental concerns, other instruments, including green and white certificates, have been created. While innovative, these work as simple combinations of taxes and subsidies. While the extant literature thoroughly analyzes the partial effects of these instruments, there has been little focus on their basics and the effects of aggregate taxes and subsidies. This complexity calls for research on the efficiency of each instrument, including the administration and transaction costs associated with holding a large set of instruments. We should consider the coordination and simplification of policy tools before complicating the system further by introducing new, primarily equivalent, instruments.

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.

Tradable white certificate schemes: what can we learn from tradable green certificate schemes?

In this paper, we analyze the experiences gained from tradable green certificate (TGC) schemes and extract some policy lessons that can lead to a successful design of a market-based approach for energy efficiency improvement, alias tradable white certificate schemes. We use tradable green certificate schemes existing in the Netherlands and Sweden as case studies. Departing from an assessment of both TGC schemes, we identify several institutional and market aspects that have affected their performance. We conduct the analysis by addressing key evaluation criteria (i.e., cost and energy effectiveness, administrative burden, technological innovation, political feasibility, and transaction costs). It is not our intention to demonstrate to the reader a normative aspect of designing tradable white certificate schemes. Rather, we identify some key policy lessons which can be summarized as: a binding long-term target must be clearly expressed in terms of policy time frame and certainty, a proper liquid market must be ensured for tradability of certificates, the scheme should be technology neutral, transaction costs should be kept low, and the energy efficiency target should not only address ‘low hanging fruits’ but also promote innovation.

Overview of energy consumption and GHG mitigation technologies in the building sector of Japan

This paper outlines the energy consumption and greenhouse gas emission trends in the residential and commercial sectors in Japan. The results showed that the increase in residential energy consumption in Japan is mainly caused by the widespread use of heating equipment, hot water supply apparatus, and other household electrical appliances. On the other hand, it was indicated that the increase in commercial energy use is mainly due to the increase of the floor area of buildings, particularly hotels, hospitals, and department stores. The paper also describes political measures to promote energy conservation, including the building energy conservation standard, Comprehensive Assessment System for Building Environmental Efficiency, top runner programs, financial incentives, and the dissemination of the Cool Biz concept. Finally, the projections of CO₂ emissions until 2050 are presented.

An energy efficient Swedish pulp and paper industry – exploring barriers to and driving forces for cost-effective energy efficiency investments

Despite the need for increased industrial energy efficiency, studies indicate that cost-effective energy efficiency measures are not always implemented, which is explained by the existence of barriers to energy efficiency. This paper investigates whether this holds for the Swedish pulp and paper industry, and if so, investigates the barriers inhibiting and the driving forces stressing cost-effective energy efficiency investments. By so, this case study covers about 2% of the EU-25 industrial end-use of energy. The overall results from a questionnaire show that there is an energy efficiency gap in the sector and that the largest barriers were technical risks such as risk of production disruptions, cost of production disruption/hassle/inconvenience, technology inappropriate at the mill, lack of time and other priorities, lack of access to capital, and slim organization. As regards the driving forces for energy efficiency, the highest ranked driving forces were cost reductions resulting from lower energy use, people with real ambition, long-term energy strategy, the threat of rising energy prices, the electricity certificate system, the PFE. The results show that many of the barriers and driving forces were not solely market-related, e.g., lack of time or other priorities, slim organization, other priorities for capital investments, lack of staff awareness, and long decision chains indicate that firm-specific barriers plays an important role. These barriers may not be overcome by market-related public policy instruments but is rather a consequence of how the energy issue is organized within the firms. The second and the third largest driving forces, people with real ambition and a long-term energy strategy further support this.

Integrated cost-estimation methodology to support high-performance building design

Design teams evaluating the performance of energy conservation measures (ECMs) calculate energy savings rigorously with established modeling protocols, accounting for the interaction between various measures. However, incremental cost calculations do not have a similar rigor. Often there is no recognition of cost reductions with integrated design, nor is there assessment of cost interactions amongst measures. This lack of rigor feeds the notion that high-performance buildings cost more, creating a barrier for design teams pursuing aggressive high-performance outcomes. This study proposes an alternative integrated methodology to arrive at a lower perceived incremental cost for improved energy performance. The methodology is based on the use of energy simulations as means towards integrated design and cost estimation. Various points along the spectrum of integration are identified and characterized by the amount of design effort invested, the scheduling of effort, and relative energy performance of the resultant design. It includes a study of the interactions between building system parameters as they relate to capital costs. Several cost interactions amongst energy measures are found to be significant. The value of this approach is demonstrated with alternatives in a case study that shows the differences between perceived costs for energy measures along various points on the integration spectrum. These alternatives show design trade-offs and identify how decisions would have been different with a standard costing approach. Areas of further research to make the methodology more robust are identified. Policy measures to encourage the integrated approach and reduce the barriers towards improved energy performance are discussed.

Energy efficiency technologies for road vehicles

A key message of the Fourth Assessment Report (AR4) of the Intergovernmental Panel on Climate Change is that improved energy efficiency is one of society’s most important instruments for combating climate change. This article reviews a range of energy efficiency measures in the transportation sector as discussed in AR4 and assess their potentials for improving fuel efficiency. The primary focus is on light-duty vehicles because they represent the largest portion of world transport energy use and carbon dioxide emissions; freight trucks, a rapidly expanding source of greenhouse emissions, are also discussed. Increasing energy efficiency can be achieved by improving the design and technology used in new vehicles, but vehicle technology is only one component of fleet fuel economy. Measures that create strong incentives for customers to take energy efficiency into consideration when buying and operating their vehicles will be crucial to policy success.

Tradable white certificate schemes: fundamental concepts

A number of European countries have introduced market-based instruments to encourage investment in energy efficiency improvement and achieve national energy savings targets. Some of these schemes are based on quantified energy savings obligations imposed on energy distributors or suppliers, coupled with a certification of the energy savings (via white certificates), and a possibility to trade certificates. The paper describes the concept and the main elements of a tradable white certificate scheme, where appropriate giving examples from existing schemes in Europe. It discusses design and operational features that are key to achieve the overall savings targets, such as delineation of the scheme in terms of obliged parties, eligible projects and technologies, institutional structure, and processes to support the scheme, such as measurement and verification. Finally, the paper looks at a number of open issues, most importantly the possibility of creating a voluntary market for white certificates via integration into the carbon market.

New thinking on the agentive relationship between end-use technologies and energy-using practices

The subject of efficient technologies and how to get them into the homes and hands of users has been at the centre of energy efficiency policy from its inception. What the record shows is that efficient technologies may well increase the efficiency of energy throughput but that promised reductions in energy demand seldom pan out. Confronted with this problem, the usual policy approach has been to work harder to get markets, incentives and information to loosen up the ‘barriers’ to technology penetration. Social scientists have been recruited to facilitate markets with better information and incentives, in other words, to improve the behaviour of energy end-users. The paper argues that both technologists and behaviouralists have oversimplified the ways that technologies and socio-cultural contexts interact to affect energy-using practices. The concept of distributed agency is introduced to capture the theoretical link between technology and behaviour. The examples of air conditioning and food refrigeration are used to illustrate these points.

Model for optimizing energy efficiency through controlling speed and gear ratio

Specific fuel consumption of vehicles has been improved through technical changes in the last three decades. There has been little study of the impact of behavioral aspects on the specific fuel consumption of vehicles. Analytical tools developed recently have included options for quantifying the specific fuel consumption in certain predefined driving cycles. Empirical studies have shown that real driving cycles are different from predefined ones. It has also been observed that optimal coordination of both speed of vehicle and gear ratio are detrimental to the improved performance of a vehicle. Previous studies have only considered the vehicle speed as the explanatory parameter, and gear ratio has rarely been discussed. Therefore, an optimal model of vehicle fuel consumption has been developed on the basis of microeconomic theories. The application of this model helps to identify the optimal driving strategy of a vehicle in a certain real driving cycle. The model has then been applied to estimate the optimal fuel consumption of a vehicle in a given real case, and the results of model estimate have been compared with measured data. It has been found that the implementation of optimal driving strategy based on the model estimates may help to reduce specific fuel consumption by 3.2 l/100 km on average (37% of actual specific consumption). It is also observed that the potential for energy saving prevails when the traffic flow is dense and slow. Hence, the implementation of optimal driving strategy based on the coordination of speed and gear ratio would lead to the realization of energy saving potential that is considerable.

Energy intensities and greenhouse gas emission mitigation in global agriculture

Energy efficiency and greenhouse gas emissions are closely linked. This paper reviews agricultural options to reduce energy intensities and their impacts, discusses important accounting issues related to system boundaries, land scarcity, and measurement units and compares agricultural energy intensities and improvement potentials on an international level. Agricultural development in recent decades, while increasing yields, has led to lower average energy efficiencies when comparing the 1960s and the mid 1980s. In the two decades thereafter, energy intensities in developed countries increased, but with little impact on greenhouse gas emissions. Efficiency differences across countries in the year 2000 suggest a maximum improvement potential of 500 million tons of CO₂ annually. If only below average countries would increase their energy efficiency to average levels of the year 2000, the resulting emission reductions would be below 200 million tons of CO₂ annually.