Export orientation and domestic electricity generation: Effects on energy efficiency innovation in select sectors

Why are some countries developing many energy efficiency innovations, while others are lagging behind? I argue that export orientation and electricity at low variable cost from nuclear and hydropower plants have an interactive effect on energy efficiency innovation. Export-oriented countries have strong incentives to invest in energy efficiency innovation, as they are in a position to export these technology innovations for global markets. But if inexpensive electricity is supplied in a country, the domestic demand for energy efficiency innovation is missing, and so the home market cannot serve as a springboard for international commercialization. I test this theory against international patent data on energy efficiency innovation in insulation, heating, and lighting for 22 OECD countries, 1991–2007. The statistical analysis indicates that export orientation has large positive effects on energy efficiency innovation in countries that do not rely on nuclear and hydroelectricity.     

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.     

Light vehicle energy efficiency programs and their impact on Brazilian CO2 emissions

This paper analyses the impact of an energy efficiency program for light vehicles in Brazil on emissions of carbon dioxide (CO₂), the main greenhouse gas in the atmosphere. Several energy efficiency programs for light vehicles around the world are reviewed. The cases of Japan and Europe were selected for presentation here given their status as current and future world leaders in the control of passenger vehicle fuel consumption. The launching of the National Climate Change Plan and the pressure on the Brazilian car industry due to the world financial crisis make it a good time for the Brazilian government to implement such a program, and its various benefits are highlighted in this study. Three scenarios are established for Brazil covering the 2000–2030 period: the first with no efficiency goals, the second with the Japanese goals applied with a 10 years delay, and the third, with the Japanese goals applied with no delay. The consequences of a vehicular efficiency program and its middle and long-term effects on the consumption of energy and the CO₂ emissions are quantified and discussed. The simulation results indicate that efficiency goals may make an important contribution to reducing vehicular emissions and fuel consumption in Brazil, compared to a baseline scenario.     

Replacement or additional purchase: The impact of energy-efficient appliances on household electricity saving under public pressures

This study examined the influence of additional and replacement purchases of energy-efficient air-conditioners on power savings. We used a questionnaire survey and measured electricity use data from 339 Japanese households, collected from two city areas with different level of government-requested electricity-saving rates, namely, Osaka (10%) and Matsuyama (5%). The main findings of our study are as follows: (1) Households that purchased energy-efficient air-conditioners saved more electricity than those that did not. (2) “Additional-purchase households” showed significant energy savings, whereas “replacement households” did not. The rebound effect may negate the energy-saving effects of a new air-conditioner. (3) Altruistic attitude is associated with more active participation in power saving. (4) Households in Osaka saved more electricity than those in Matsuyama, probably because the government call to save electricity was more forceful.     

Optimum energy storage techniques for the improvement of renewable energy sources-based electricity generation economic efficiency

The high wind and solar potential along with the extremely high electricity production cost met in the majority of Greek Aegean islands comprising autonomous electrical networks, imply the urgency for new renewable energy sources (RES) investments. To by-pass the electrical grid stability constraints arising from an extensive RES utilization, the adaptation of an appropriate energy storage system (ESS) is essential. In the present analysis, the cost effect of introducing selected storage technologies in a large variety of autonomous electrical grids so as to ensure higher levels of RES penetration, in particular wind and solar, is examined in detail. A systematic parametrical analysis concerning the effect of the ESSs’ main parameters on the economic behavior of the entire installation is also included. According to the results obtained, a properly sized RES-based electricity generation station in collaboration with the appropriate energy storage equipment is a promising solution for the energy demand problems of numerous autonomous electrical networks existing worldwide, at the same time suggesting a clean energy generation alternative and contributing to the diminution of the important environmental problems resulting from the operation of thermal power stations.     

The role of energy efficiency spending in Maryland’s implementation of the Regional Greenhouse Gas Initiative

What are the economic consequences of increased state spending on electricity consumption efficiency? The State of Maryland faces this question in deciding how much of its CO₂ allowances auction proceeds (under the Regional Greenhouse Gas Initiative) to devote to such programs. Starting at a base of 25% of the proceeds, we consider the energy savings, emissions reductions, employment, and other impacts of increasing that percentage to 50% and 100%. A series of models – Haiku, JHU-OUTEC, and IMPLAN – are used for the analysis. We conclude that increasing the state’s expenditures on energy efficiency programs would result in a decline in electricity consumption in the state and a corresponding decline in expenditures on electricity. Program implementation would lead to net positive growth in statewide economic activity and include growth in both jobs and wages.     

A combined sustainability index for electricity efficiency measures

One of the most substantial tools that serve decision makers in their efforts to reduce greenhouse gas emissions includes energy efficiency measures that in most cases benefit from governmental assistance for achieving electricity consumption reduction goals. This paper examines five energy efficiency measures, defining a combined sustainability index. A multi-criteria analysis of five predefined indices was developed (economic, environmental, technology, social and political), providing a combined index for each measure and a tool for identifying the preferred measure within a specific situation, based on its total sustainability score. In this research, a case study was conducted and the preferred measure was found to be municipal street lighting systems, based on its high political and social scores, and its relatively high installation potential. The second choice would be replacement of chillers in the industrial sector, and the least favorable measure is the replacement of water pumps in the water sector. The methodology described brings into account the technological specifications of the measure implemented, and the specific national conditions under which it is implemented.     

Polices for increasing energy efficiency: Thirty years of experience in OECD countries

Energy efficiency improvement was an important phenomenon in the global energy balance over the past 30 years. Without energy efficiency improvements, the OECD nations would have used approximately 49% more energy than was actually consumed as of 1998. This paper first reviews energy intensity trends for the major OECD nations since 1973, considering how much of the overall reduction in E/GDP was due to energy efficiency improvement and how much was due to structural change. The bulk of the paper examines the energy efficiency policies and programs adopted in Japan, United States, and Western Europe, commenting on their effectiveness and energy savings impacts where possible. The paper also reviews the energy efficiency policies and programs adopted in California. This experience shows that well-designed policies can result in substantial energy savings, as demonstrated in the United States where nine specific policies and programs reduced primary energy use in 2002 by approximately 11%. Substantial energy savings also occurred in Japan, some European countries, and in the electricity sector in California.     

Economic impacts of power electronics on electricity distribution systems

To achieve more efficient energy use, power electronics (PEs) may be employed. However, these introduce nonlinear loads (NLLs) into the system by generating undesired frequencies that are harmonic in relation to (multiples of) the fundamental frequency (60 Hz in Brazil). Consequently, devices using PEs are more efficient but also contribute significantly to degradation of power quality. Besides this, both the conventional rules on design and operation of power systems and the usual premises followed in energy efficiency programs (without mentioning the electricity consumed by the devices themselves) consider the sinusoidal voltage and current waveforms at the fixed fundamental frequency of the power grid. Thus, analysis of electricity consumption reductions in energy efficiency programs that include the use of PEs considers the reduction of kWh to the final consumer but not the additional losses caused by the increase in harmonic distortion. This article contributes to a better understanding of this problem by reporting the results of a case study of the ownership and use of television sets (TV sets) to estimate the economic impacts of residential PEs on a mainly residential electricity distribution system.     

Designing building energy efficiency programs for greenhouse gas reductions

Costs and benefits of building energy efficiency are estimated as a means of reducing greenhouse gas emissions in Pittsburgh, PA and Austin, TX. The analysis includes electricity and natural gas consumption, covering 75% of building energy consumption in Pittsburgh and 85% in Austin. Two policy objectives were evaluated: maximize GHG reductions given initial budget constraints or maximize social savings given target GHG reductions. This approach evaluates the trade-offs between three primary and often conflicting program design parameters: initial capital constraints, social savings, and GHG reductions. Results suggest uncertainty in local stocks, demands, and efficiency significantly impacts anticipated outcomes. Annual GHG reductions of 1 ton CO₂ eq/capita/yr in Pittsburgh could cost near nothing or over $20 per capita annually. Capital-constrained policies generate slightly less social savings (a present value of a few hundred dollars per capita) than policies that maximize social savings. However, sectors and end uses targeted for intervention vary depending on policy objectives and constraints. Optimal efficiency investment strategies for some end uses vary significantly (in excess of 100%) between Pittsburgh and Austin, suggesting that resources and guidance conducted at the national scale may mislead state and local decision-makers. Results are used to provide recommendations for efficiency program administrators.     

The impact of ICT investment and energy price on industrial electricity demand: Dynamic growth model approach

The authors investigate the effects of information and communications technology (ICT) investment, electricity price, and oil price on the consumption of electricity in South Korea's industries using a logistic growth model. The concept electricity intensity is used to explain electricity consumption patterns. An empirical analysis implies that ICT investment in manufacturing industries that normally consume relatively large amounts of electricity promotes input factor substitution away from the labor intensive to the electricity intensive. Moreover, results also suggest that ICT investment in some specific manufacturing sectors is conducive to the reduction of electricity consumption, whereas ICT investment in the service sector and most manufacturing sectors increases electricity consumption. It is concluded that electricity prices critically affect electricity consumption in half of South Korea's industrial sectors, but not in the other half, a finding that differs somewhat from previous research results. Reasons are suggested to explain why the South Korean case is so different. Policymakers may find this study useful, as it answers the question of whether ICT investment can ultimately reduce energy consumption and may aid in planning the capacity of South Korea's national electric power.     

Assessing the impact of regulatory reforms on China's electricity generation industry

In the past two decades, China has experienced a series of regulatory reforms in its electricity industry, aimed at improving power production efficiency. The central planning system was broken up and the market-oriented modern enterprise system was established. Furthermore, the former vertically integrated electricity utilities were divested and the generation sector was separated from the transmission and distribution networks. In this paper, we intend to estimate the impact of regulatory reforms on production efficiency of fossil-fired generation plants using the plant-level national survey data collected in 1995 and 2004. Applying the econometric method of Differences-in-Differences, we estimate the effects of these reforms on the demand for inputs of employees, fuel and nonfuel materials. The results show that the net efficiency improvement in labor input associated with the regulatory reforms is roughly 29% and the gains in nonfuel materials are about 35%, while there is no evidence of efficiency gains in fuel input associated with the electricity reforms.     

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.     

Potential energy savings and environmental impact by implementing energy efficiency standard for household refrigerators in China

With the rapid economic growth and improvement in standard of living, Chinese people are employing more and more household appliances to make their living convenient and comfortable, of which refrigerators are indispensable. Because refrigerators operate continuously irrespective of seasons and regions, the total electricity consumption of refrigerators is huge and consequently causes severe energy-related environmental issues. China has been paying more and more attention to this and issued a national energy efficiency standard, GB12021.2-2003, for refrigerators. This paper first describes the standard briefly. Then it develops a mathematic model to evaluate the potential energy savings and environmental impacts of the standard. The estimated results indicate implementing the standard will save large energy, as well as benefit greatly to environment. Thus, it is very necessary to implement energy efficiency standard for refrigerators 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.     

Analysis of the impact of electricity grid interconnection between Korea and Japan—Feasibility study for energy network in Northeast Asia

This study analyzes the impact of an electricity grid interconnection between Korea and Japan on their energy systems. Both countries seriously consider energy security as the most important policy issue because of a lack of domestic energy resources. In addition, public concern for the environment is recently rising up in response to the global warming. Electricity grid interconnection has strong potential to cope with such complicated problems cost-effectively. We have developed the interconnection model, which includes the electricity grid interconnection between the electricity sectors of Korea and Japan, considering both technological and economic efficiency. The result of the study reveals the significant cost-effectiveness of the interconnection, in particular, under stringent condition such as nuclear phase-out in Japan and CO₂ emission target in Korea and Japan. In the case that Japan's nuclear power plants will be phased out, the interconnection attains further cost reduction of constructing substitutive thermal power plants. On the other hand, when Korea and Japan set a joint CO₂ emission target, it achieves the emission target more efficiently than they reduce the emission individually.     

Final energy use in IEA countries: The role of energy efficiency

Improved energy efficiency is a key policy goal of all International Energy Agency (IEA) member countries, but tracking energy efficiency gains is not straightforward. As part of its contribution to the G8 Gleneagles Plan of Action, the IEA has been developing in-depth indicators—tools that provide data and analysis of energy use and efficiency trends. This paper gives an overview of the IEA indicator methodology and presents examples of how disaggregated indicators can be used to identify the factors that drive and restrain energy demand at the end-use level. A decomposition approach is also used to separate efficiency effects from the impacts of structure and activity. The results clearly show the important role that energy efficiency has played in shaping trends in final energy use in IEA countries for more than 30 years. However, the analysis also reveals that recent gains in energy efficiency have been much lower than in earlier decades. Accelerating energy efficiency improvements is therefore a crucial challenge for IEA governments and indicators have an important role to play in helping to develop and evaluate the policies that will be required.     

Analysing the interactions between renewable energy promotion and energy efficiency support schemes: The impact of different instruments and design elements

CO₂ emissions reduction, renewable energy deployment and energy efficiency are three main energy/environmental goals, particularly in Europe. Their relevance has led to the implementation of support schemes in these realms. Their coexistence may lead to overlaps, synergies and conflicts between them. The aim of this paper is to analyse the interactions between energy efficiency measures and renewable energy promotion, whereas previous analyses have focused on the interactions between emissions trading schemes (ETS) and energy efficiency measures and ETS and renewable energy promotion schemes. Furthermore, the analysis in this paper transcends the “certificate” debate (i.e., tradable green and white certificates) and considers other instruments, particularly feed-in tariffs for renewable electricity. The goal is to identify positive and negative interactions between energy efficiency and renewable electricity promotion and to assess whether the choice of specific instruments and design elements within those instruments affects the results of the interactions.     

Policy issues in improving energy efficiency

Today many urgent policy issues need addressing within the overall topic of improving energy efficiency. Also, they need to be addressed at many levels in society, each level possibly requiring a different approach: the overall national economy; the national energy sector; the energy utility; and the energy consumer. This article looks at some of the more important common issues, which apply at all levels, and gives some options on how these issues might be addressed.     

Should policy-makers allocate funding to vehicle electrification or end-use energy efficiency as a strategy for climate change mitigation and energy reductions? Rethinking electric utilities efficiency programs

In order to reduce greenhouse gas emissions in the United States by an order of magnitude, a portfolio of mitigation strategies is needed. Currently, many utilities pursue energy efficiency programs. We study a case where utilities could choose whether to allocate their energy efficiency budget to either end-use efficiency or vehicle electrification as a means to reduce CO₂ emissions. We build a decision space that displays the conditions under which utilities should pursue either strategy. To build such decision space, assumptions are needed on how consumers respond to electric vehicle incentives, and what would be the baseline vehicle selected by consumers if no incentives were in place. Since these two aspects are highly uncertain, we treat them parametrically: if consumers are replacing a conventional vehicle with a PHEV, utility incentive programs to induce PHEV adoption appear to be cost-effective for a wide range of efficiency program costs and grid emissions factors.