Barriers to energy efficiency in shipping: A triangulated approach to investigate the principal agent problem

Energy efficiency is a key policy strategy to meet some of the challenges being faced today and to plan for a sustainable future. Numerous empirical studies in various sectors suggest that there are cost-effective measures that are available but not always implemented due to existence of barriers to energy efficiency. Several cost-effective energy efficient options (technologies for new and existing ships and operations) have also been identified for improving energy efficiency of ships. This paper is one of the first to empirically investigate barriers to energy efficiency in the shipping industry using a novel framework and multidisciplinary methods to gauge implementation of cost-effective measures, perception on barriers and observations of barriers. It draws on findings of a survey conducted of shipping companies, content analysis of shipping contracts and analysis of energy efficiency data. Initial results from these methods suggest the existence of the principal agent problem and other market failures and barriers that have also been suggested in other sectors and industries. Given this finding, policies to improve implementation of energy efficiency in shipping need to be carefully considered to improve their efficacy and avoid unintended consequences.     

Barriers to energy efficiency improvement and decision-making behavior in Thai industry

The industrial sector is one of the main energy consuming sectors in Thailand and accounted for 36.7% of total energy consumption in 2005. The trend of rising energy prices and tougher competition increases the demand to improve energy efficiency in Thai industry. However, the existence of various barriers often hinders the realization of even some cost-effective energy efficiency measures. In an attempt to investigate key barriers to and drivers for energy efficiency improvement in Thai industry, this study found that the most important barrier expressed by both the textile and cement industries studied as well as experts interviewed is that the management is concerned about production and other matters rather than energy efficiency. Reducing product cost by reducing energy cost is found to be the main driver for energy efficiency investment. Using a conceptual industrial energy efficiency policy framework this study shows how various energy efficiency policies can affect the process of decision-making for and investment in energy efficiency in industry.     

Barriers to and drivers for energy efficiency in the Swedish foundry industry

Despite the need for increased industrial energy efficiency, studies indicate that cost-efficient energy conservation measures are not always implemented, explained by the existence of barriers to energy efficiency. This paper investigates the existence of different barriers to and driving forces for the implementation of energy efficiency measures in the energy intensive Swedish foundry industry. The overall results from a questionnaire show that limited access to capital constitutes by far the largest barrier to energy efficiency according to the respondents. A comparison between group-owned and privately owned foundries shows that, except for limited access to capital, they face different high-ranked barriers. While barriers within group owned companies are more related to organizational problems, barriers within private foundries are more related to information problems. This study also found that energy consultants or other actors working with energy issues in foundries are of major importance in overcoming the largest barriers, as the foundries consider them trustworthy. They may thus help the foundries overcome organizational problems such as lack of sub-metering and lack of budget funds by quantifying potential energy efficiency investments. The two, by far, most important drivers were found to be people with real ambition and long-term energy strategies.     

Tailoring cross-sectional energy-efficiency measures to target groups in industry

The improvement of energy efficiency in industrial companies plays a crucial role for the energy transition. Although significant economic potentials have been identified, the concerned actors are still struggling to realize them fully. To support the implementation of energy efficiency measures by passing policies, a deeper understanding of the barriers affecting different kinds of companies is necessary to better match the options to their needs and requirements. This paper considers companies’ characteristics and barriers to draw conclusions on energy efficiency policies and specific recommendations on energy efficiency measures. It recommends compromises for policies between high administrative efforts to design individual solutions for companies and too generic approaches, which are not tackling the specific barriers and companies’ characteristics. Our analysis assesses monitoring data of 263 enterprises of the Learning Energy Efficiency Networks LEEN in Germany. The LEEN support energy audits, company networking and assesses implemented energy efficiency measures. Lack of information combined with unfavourable reasoning in decision-making impedes the adoption of profitable measures. Thus, financial policy instruments should aim at promoting long-term decision-making. Audits turned out to be an effective information tool and are more common in LEs than in SMEs. Accordingly, the number of implemented measures and the choice of specific measures relate to company size. Regarding barriers to energy efficiency measures, we found financial barriers most prevalent, but there was no general correlation with company size. Moreover, financial restrictions are not necessarily caused by a lack of money, but also by risk aversion or unlikely payback periods. LEs are stronger affected by motivational barriers, especially if the expected organizational effort is high. Reducing transaction costs can increase the willingness to invest greater efforts in energy efficiency measures.     

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.

Barriers to and driving forces for energy efficiency in the non-energy intensive manufacturing industry in Sweden

The manufacturing industry is facing tougher competition which increases the demand to implement cost-effective energy efficiency measures. However, studies have indicated that obvious cost-efficient measures are not always undertaken. This is explained by the existence of barriers to energy efficiency. The aim of this study is to investigate the existence and importance of different barriers to the implementation of energy efficiency measures in the Swedish non-energy intensive manufacturing industry. Results from this study highlight a number of factors that inhibit the degree of implementation, such as the cost and risk associated with production disruptions, lack of time and other priorities, lack of sub-metering in larger organizations, etc. The study also finds a number of drivers, such as the existence of people with real ambition and a long-term energy strategy at site level.     

State-level benefits of energy efficiency

This paper describes benefits attributable to state-level energy efficiency programs. Nationwide, state-level energy efficiency programs have targeted all sectors of the economy and have employed a wide range of methods to promote energy efficiency. Standard residential and industrial programs typically identify between 20% and 30% energy savings in homes and plants, respectively. Over a 20-year period of time, an average state that aggressively pursues even a limited array of energy efficiency programs can potentially reduce total state energy use by as much as 20%. Well-designed energy efficiency programs can be expected to help overcome numerous barriers to the market penetration of energy efficient technologies and accelerate the market penetration of the technologies. Energy efficiency programs are cost-effective; typical benefit–cost ratios exceed 3:1 and are much higher when non-energy and macroeconomic benefits are included. Indeed, energy efficiency and associated programs and investments can create significant numbers of new jobs and enhance state tax revenues. Several states have incorporated energy efficiency into their economic development programs. It should also be noted that increasing amounts of venture capital are being invested in the energy sector in general and in specific technologies like solar power in particular.     

Energy policies for increased industrial energy efficiency: Evaluation of a local energy programme for manufacturing SMEs

The most extensive action targeting the adoption of energy efficiency measures in small- and medium-sized manufacturing industries in Sweden over the past 15 years was project Highland. This paper presents an evaluation of the first part of this local industrial energy programme, which shows an adoption rate of more than 40% when both measures that have already been implemented and measures that are planned to be implemented are included. A comparison between this programme and another major ongoing programme for the Swedish energy-intensive industry indicates that the approach used in project Highland aimed at small- and medium-sized industries is an effective way to increase energy efficiency in the Swedish industry. The major barriers to energy efficiency among the firms were related to the low priority of the energy efficiency issue.     

A new NAMA framework for dispersed energy end-use sectors

This paper presents a new approach for a nationally appropriate mitigation actions (NAMA) framework that can unlock the huge potential for greenhouse gas mitigation in dispersed energy end-use sectors in developing countries; specifically, the building sector and the industrial sector. These two sectors make up the largest portions of energy consumption in developing countries. However, due to multiple barriers and lack of effective polices, energy efficiency in dispersed energy end-use sectors has not been effectively put into practice. The new NAMA framework described in this paper is designed to fulfill the demand for public policies and public sector investment in developing countries and thereby boost private sector investment through project based market mechanisms, such as CDM. The new NAMA framework is designed as a need-based mechanism which effectively considers the conditions of each developing country. The building sector is used as an example to demonstrate how NAMA measures can be registered and implemented. The described new NAMA framework has the ability to interface efficiently with Kyoto Protocol mechanisms and to facilitate a systematic uptake for GHG emission reduction investment projects. This is an essential step to achieve the global climate change mitigation target and support sustainable development in developing countries.     

Broadening to sustainability the perspective of industrial decision-makers on the energy efficiency measures adoption: some empirical evidence

The industry should take further efforts towards increased energy efficiency, that is a major contributor to improve industrial sustainability performance, by implementing energy efficiency measures (EEMs). However, the rate of adoption of these measures is still quite low. Hitherto, EEMs and barriers to their adoption have been evaluated almost exclusively from the viewpoint of energy efficiency decision-makers, not accounting for the broader sustainability perspective. This work aims at understanding whether an industrial sustainability perspective can better address issues related to EEMs adoption, analyzing the question through different viewpoints and insights offered by industrial decision-makers of different industrial sustainability areas within a firm. By doing this, we aim at offering a contribution in the understanding of the low rate of adoption of EEMs. As case studies, we investigated 12 firms from Northern Italy. In comparison to previous literature, results show that an industrial sustainability perspective can better explain the real decision-making process of adopting an EEM. Indeed, people knowledgeable about different industrial sustainability areas may perceive different barriers about the same EEM. EEMs may be negatively affected by reasons related to other areas of industrial sustainability, while positive reciprocal impacts may exist among areas of industrial sustainability; thus, EEMs may have effects on areas other than energy efficiency, and these effects may be perceived only by such areas. The study concludes with some remarks for policy and industrial decision-makers and advice for further research.     

Classification of drivers for industrial energy efficiency and their effect on the barriers affecting the investment decision-making process

Industrial energy efficiency represents a priority for European industrial competitiveness. Many studies offer contributions providing evidence of the existence of driving forces supporting the adoption of energy efficiency measures, but a structured approach to drivers for industrial energy efficiency is still lacking. Therefore, in the present study, we propose a definition of drivers, making emphasis on the industrial decision-maker perspective, that is needed for their classification here proposed. Focus is given to point out the difference between internal and external drivers, highlighting the major stakeholders responsible for their promotion. Drivers are further categorized into: regulatory, economic, informative, and vocational training. Moreover, we propose a framework describing the effect of drivers on barriers in the decision-making process, as well as a preliminary identification of the major stakeholders to promote drivers. The study opens several opportunities for further research in the area of industrial energy efficiency.     

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.     

Lessons learned from studying public initiatives to support energy efficiency finance in Thailand from 1992 to 2014

Despite the huge technical and market potential for cost-effective energy efficiency investments in Southeast Asian markets, only a small fraction of this potential has been realised. Given that the major share of global future energy demand, and associated greenhouse gas emissions, will come from emerging economies, it is important to understand the barriers to mainstreaming energy efficiency into the financial sector. This paper focuses on public initiatives that support one of the main barriers: access to capital. The researchers chose Thailand as a case study because of the range of energy efficiency finance programmes that have been designed and implemented since the early 1990s. Interviews with 21 experts from government, the private sector and academia provided the core data for this research. The analysis employed a multi-level perspective and focused on the historical evolution of public support of energy efficiency finance in the country. We identified three distinct phases of public policy development over the past two decades. Despite an impressive variety of ambitious and creative programmes, the initiatives have not yet succeeded in integrating energy efficiency into the financial sector in a meaningful way. Some of the key lessons found are that (a) it is better to treat energy efficiency and renewable energy in separate financing initiatives, (b) governments find it challenging to design effective mechanisms to de-risk financial investments, and (c) international organisations play an important role in testing and facilitating the introduction of new financing approaches and mechanisms. In emerging economies, cost-effective implementation of energy efficiency measures is a promising alternative that can reduce the need for investment in large-scale power generation capacity. The researchers hope that this paper will contribute to more effective design of programmes to incentivise energy efficiency financing in Thailand and in other economies in Southeast Asia.     

Success factors of energy management in energy‐intensive industries: Development priority of energy performance measurement

Economic, environmental and social pressures have increased the need for business organisations to control and manage their energy performance on a continual basis. Responding to these pressures follows a learning curve that is influenced by changing drivers and barriers. Consequently, different energy management factors have different development priorities over time. This paper explores the development priority of one factor, namely, energy performance measurement, in the energy‐intensive industrial sector, which is the most advanced industrial sector in its energy management learning curve. In addition, the paper identifies the research and development needs of energy performance measurement that are required to further improve energy performance. The results are based on interviews carried out with managers and operators in three energy‐intensive industrial sectors in Finland. Energy performance measurement is found to be the third development priority in energy management, behind resource and commitment issues. This represents a paradox as resources and commitment are prerequisites for energy performance measurement to be developed, whereas energy performance measurement influences the very same issues by enforcing changed behaviour. Several deficiencies are identified in energy performance measurement in the temporal, systemic and organisational dimensions. Research should be continued towards the implementation of energy performance measurement as a process, the integration of energy performance metrics into overall management and the development of metrics for different industrial sectors, companies and operating cultures. Copyright © 2012 John Wiley & Sons, Ltd.     

Pricing district heating by marginal cost

A vital measure for industries when redirecting the energy systems towards sustainability is conversion from electricity to district heating (DH). This conversion can be achieved for example, by replacing electrical heating with DH and compression cooling with heat-driven absorption cooling. Conversion to DH must, however, always be an economically attractive choice for an industry. In this paper the effects for industries and the local DH supplier are analysed when pricing DH by marginal cost in combination with industrial energy efficiency measures. Energy audits have shown that the analysed industries can reduce their annual electricity use by 30% and increase the use of DH by 56%. When marginal costs are applied as DH tariffs and the industrial energy efficiency measures are implemented, the industrial energy costs can be reduced by 17%. When implementing the industrial energy efficiency measures and also considering a utility investment in the local energy system, the local DH supplier has a potential to reduce the total energy system cost by 1.6 million EUR. Global carbon dioxide emissions can be reduced by 25,000 tonnes if the industrial energy efficiency measures are implemented and when coal-condensing power is assumed to be the marginal electricity source.     

Implementation of energy efficiency measures in compressed air systems: barriers,drivers and non-energy benefits

Increased global competition and resource scarcity drives industrial companies to cut costs. Energy can be a significant component of such cuts, particularly for energy-intensive companies. Improving energy efficiency in industry is complex, as it pertains to various energy-using processes that are heavily intertwined. One such process is the compressed air system (CAS), which is used in most industrial companies worldwide. Since energy efficiency improvement measures for various types of energy-using processes differ, technology-specific measures might encounter different barriers to and drivers for energy efficiency. The same applies to the non-energy benefits (NEBs) related to energy efficiency improvement measures; since measures vary between various energy-using processes, the perceived NEBs might be different as well. The aim of this paper is to study the barriers to, drivers for and NEBs of CAS energy efficiency improvement measures from the perspectives of three actors. Carried out as an interview study combined with a questionnaire, the paper merges the perspectives of users, audit experts and suppliers of CASs. The results showed that the major barriers are related to the investment, or are of an organisational character, and that organisational and economic factors seemed to be important for making positive decisions on energy efficiency investments and measures in CASs. Major NEBs for CASs include productivity gains and the avoidance of capital expenditures. The results of this study also address the importance of having a comprehensive approach to recognise additional effects of energy efficiency improvements in CASs.     

A Danish case: portfolio evaluation and its impact on energy efficiency policy

A political agreement from 2005 stated that an evaluation of the entire Danish energy efficiency policy portfolio must be carried out before the end of 2008, with the aim to assess the following: (1) Is the policy portfolio sufficient to meet the energy efficiency targets? (2) Do the policies enable the national goals to be met in a cost-effective manner? (3) Is the overall design of the policy portfolio appropriate? The evaluation gave recommendations on how to improve and develop the portfolio, mainly using cost-effectiveness as criteria. The evaluation was completed in December 2008, and this paper presents the main findings and the subsequent impact on Danish policy. A key lesson learned is the importance of including all energy efficiency policies in the evaluation. Examining the entire portfolio of policies (as opposed to only selected policies) gave way to findings that would otherwise not have been captured. With its broad perspective, the evaluation found that the policy instruments prioritised the commercial and industrial sectors less than the household and public sectors. The recommendations made by the authors contributed to the implementation of new taxes for the commercial and industrial sectors together with the reform of the Electricity Saving Trust to a Centre for Energy Savings charged with energy savings within all sectors, except transport—both which have been important steps towards a more cost-effective solution.     

Financing energy efficiency in developing countries—lessons learned and remaining challenges

Although energy efficiency implementation is increasingly being recognized by policymakers worldwide as one of the most effective means to mitigating rising energy prices, tackling potential environmental risks, and enhancing energy security, mainstreaming its financing in developing country markets continues to be a challenge. Experience shows that converting cost-effective energy savings potential, particularly the demand-side improvement opportunities across sectors, into investments face many barriers and unforeseen transaction costs. This paper draws upon selected experiences with financing energy efficiency in developing countries to explore the key factors of various programmatic approaches and financing instruments that have been applied successfully for delivering energy efficiency solutions. Through case studies, a diverse range of institutional issues are examined related to the identification, packaging, designing, and monitoring approaches that have been used to catalyze traditional and innovative financing of energy efficiency projects. With adequate liquidity in major developing country markets and availability of modern energy savings technologies, it is often the institutional issues that become a key challenge to address in order to finance and implement robust programs. As further operational experience is gained, increased knowledge sharing can lead to scaling-up of such energy efficiency investments. The paper concludes with some ideas for accelerating implementation.     

Encouraging the implementation of small renewable electricity CDM projects: An economic analysis of different options

Apart from contributing to the mitigation of GHG emissions, the deployment of renewable electricity Clean Development Mechanism projects (RE-CDM) may provide substantial local economic, social and environmental sustainability benefits to host countries. However, in spite of these advantages, a wide array of barriers prevents the realisation of these projects. They compete with other CDM options which lead to cheaper GHG emissions reductions but which do not provide as much opportunities for sustainable development in developing countries. Taking into account that, in contrast to GHG benefits, sustainability benefits are not valued in the market place and that article 12 of the Kyoto Protocol envisages two objectives for the CDM (cost-effective emissions reductions and contribution to sustainability), this market mechanism might be leading to a “market failure” in RE-CDM projects. This paper explores the different barriers affecting the implementation of RE-CDM projects and proposes and analyses several policies and measures that could be implemented to encourage their deployment by tackling those obstacles.     

Review of policies and measures for energy efficiency in industry sector

Energy efficiency in industry plays key roles in improving energy security, environmental sustainability and economic performance. It is particularly important in strategies to mitigate climate change. The evidence of great potential for cost-effective efficiency-derived reductions in industrial energy use and greenhouse gas (GHG) emissions have prompted governments to implement numerous policies and measures aimed at improving their manufacturing industries’ energy efficiency. What can be learned from these many and varied initiatives? This paper provides foundation for policy analysis for enhancing energy efficiency and conservation in industry, by surveying more than 300 policies, encompassing about 570 measures, implemented by governments in IEA countries, Brazil, China, India, Mexico, Russia and South Africa. It outlines the measures’ main features, their incidence of use, and their connections with specific technical actions and key stakeholders (i.e., how and where measures affect the energy efficiency of industry). It also examines the key features underlying the measures’ success: (1) potential to reduce energy use and CO₂ emissions cost-efficiently; (2) ease of policy development, execution and assessment and (3) ancillary societal effects.