How to measure the overall energy savings linked to policies and energy services at the national level?

The Energy End-use Efficiency and Energy Services Directive (ESD) of the European Union requires the member states to define and attain an overall target of at least 9% annual energy savings between 2008 and 2016. Even if this target is indicative, this is the first international framework mandating countries to report on their energy savings results and prove achievement of their targets. The directive thus also required the development of harmonised calculation methods that can be used by member states for this proof and reporting. Existing literature covers most of the usual issues related to energy savings evaluation, but mostly looking at single, given energy efficiency programmes or policies. The evaluation objective for the ESD implementation is different, as it aims at accounting for the whole energy savings achieved in a country. Moreover, one of the main difficulties is the diversity in history and experience on this topic among the member states. In this context, the European project EMEEES has worked out an integrated system of bottom-up and top-down methods for the measurement of energy savings. The paper presents the overview of its final results. The proposals, inter alia, include 20 bottom-up and 14 top-down case applications of general evaluation methods. They enable more than 90% of the potential energy savings to be measured and reported. They were used as a starting point by the European Commission to develop the methods recently recommended to the member states. Furthermore, the paper briefly discusses the importance of the quantity to be measured—all or additional energy savings—and the effect of measures implemented before the entering into force of the ESD (‘early action’), and what this meant for the methods to be developed. It compares the main elements of calculation needed to ensure consistent results between bottom-up and top-down methods at the overall national level. Finally, general conclusions are drawn about what could be the next steps in developing an evaluation system that enables a high degree of comparability of results between different countries.     

How much wind energy will be curtailed on the 2020 Irish power system?

This paper describes a model of the 2020 Irish electricity system which was developed and solved in a mixed integer programming, unit commitment and economic dispatch tool called PLEXOS^®. The model includes all generators on the island of Ireland, a simplified representation of the neighbouring British system including proposed wind capacity and interconnectors between the two systems. The level of wind curtailment is determined under varying levels of three influencing factors. The first factor is the amount of offshore wind, the second is the allowed limit of system non-synchronous penetration (SNSP) and the third is inclusion or exclusion of transmission constraints. A binding constraint, resulting from the 2020 EU renewable energy targets, is that 37% of generation comes from wind. When the SNSP limit was increased from 60% to 75% there was a reduction in wind curtailment from 14% to 7%, with a further reduction when the proportion of wind capacity installed offshore was increased. Wind curtailment in the range of SNSP limit of 70–100% is influenced primarily by the inclusion of transmission constraints. Large changes in the dispatch of conventional generators were also evident due to the imposition of SNSP limits and transmission constraints.     

Overcoming problems in Turkey's renewable energy policy: How can EU contribute?

Fossil fuels cover most of the energy demand in the world, and this creates significant social, economic and environmental problems. Many countries have taken measures to increase the share of renewable energy sources (RES), especially in electricity generation, and the review of literature shows that the success of a country in RES diffusion depends on a comprehensive renewable energy policy which combines political commitment with stable and long-term support measures that stimulate technological innovation. As the largest economy in the world, EU has also taken steps to increase RES usage in electricity generation in member states. Similar to other developing countries, Turkey is learning lessons from EU experiences regarding RES policies, and Turkey is also reforming its legal framework in line with acquis communautaire as a candidate country. As a result, EU has a multiway impact on Turkey's renewable energy policy. An overview of Turkey's renewable energy policy showed that EU has significantly contributed to Turkey in shaping its renewable energy policy, and Turkey should increase cooperation with EU in order to utilize its renewable energy potential.     

From oil to consumer energy prices: How much asymmetry along the way?

A longstanding question in macroeconomics is whether fuel prices react more to increases than to decreases of the price of oil. This paper analyzes the response of weekly gasoline and gasoil prices to oil prices in the U.S., the euro area and the four largest euro area countries (Germany, France, Italy and Spain) using nonlinear impulse response functions and forecast accuracy tests. While for the U.S. both approaches point to the presence of asymmetries in the adjustment of retail prices, for the euro area the evidence is mixed.     

Five years left – How are the EU member states contributing to the 20% target for EU's renewable energy consumption; the role of woody biomass

The European Union has set ambitious targets of raising the share of EU energy consumption produced from renewable resources from 20% by 2020 to 27% by 2030. The aim of this paper is to assess the role of woody biomass in renewable energy as gross final energy consumption in the European Union (the EU-28). The paper identifies leading and lagging countries in biomass development by focusing on their current biomass use and forecasts future perspectives. The research compares and evaluates the role of biomass in renewable energy in the EU-28 focusing on countries' potential resources and policy support. The study shows that all countries are making efforts to reach the 20% target in 2020 and exhibit a trend of increasing renewable energy as gross final energy consumption towards the new target of 2030. Solid biomass plays an important role in reaching the EU's renewable energy targets. The majority of the EU-28 countries are close to reaching their national renewable energy targets and show a very attractive biomass development. Unless energy consumption decreases however, some member states will face serious problems in reaching their renewable energy target in 2020. Following our analysis, the largest problems occur in those MS having a relative high-energy consumption pattern: France, Germany and the United Kingdom. It is unlikely that they can comply with expected renewable energy demand, unless they mobilize more woody biomass from their available domestic potential (France, Germany) or considerably increase their woody biomass imports (mostly wood pellets) from elsewhere (United Kingdom).     

Energy performance contracts in the municipal sector in Norway: overcoming barriers to energy savings?

In this paper, we investigate which factors are significant for the uptake of energy performance contracts (EPCs) in Norway’s municipal sector, based on qualitative case studies. An EPC consists of a set of energy efficiency measures provided by an energy service company. The model used in Norway guarantees that savings produced by a project will finance its full cost. Estimates indicate that an EPC is a promising way of substantially increasing savings. We find that a committed individual in the administration is essential for the adoption of an EPC. Such individuals have the technical and/or economic competence to see the potential for energy savings and the organizational competence for moving an EPC through to the political level. Further, we find that the guarantee that accompanies an EPC is well suited for addressing the logic of politicians, and is crucial when the final decision is made. These findings indicate that a standard economic understanding of energy savings is not sufficient. Efforts to increase energy savings might benefit from being targeted at the contexts where measures are to be implemented and at the logic of those making energy-saving decisions.     

Can the future EU ETS support wind energy investments?

This article discusses how the future Emissions Trading Scheme legislation should be designed to allow the European Union to comply with the 20% CO₂ emissions reduction target, while at the same time promoting wind energy investments. We examine whether CO₂ prices could eventually replace the existing support schemes for wind and if they adequately capture its benefits. The analysis also looks at the effectiveness of the clean development and joint implementation mechanisms to trigger wind projects and technology transfer in developing countries. We find out that climate policy is unlikely to provide sufficient incentives to promote wind power, and that other policies should be used to internalise the societal benefits that accrue from deploying this technology: CO₂ prices can only reflect the beneficial impact of wind on climate change but not its contribution to the security of supply or employment creation. A minimum price of around €40/tCO₂ should be attained to maintain present support levels for wind and this excludes income risks and intermediation costs. Finally, CDM improves the return rate of wind energy projects in third countries, but it is the local institutional framework and the long-term stability of the CO₂ markets that matters the most.     

Counting project savings—an alternative way to monitor the results of a voluntary agreement on industrial energy savings

In 2008, the Dutch voluntary agreements on industrial energy efficiency faced fundamental changes to their monitoring methodology. Where the old method was based on measuring the improvement of energy use per unit of production, the new method focuses on the energy savings from projects implemented by participating companies. Advocates of the new method claim that it gives a better view of the companies’ efforts to save energy, as it shows their deliberate changes in production processes, whereas opponents emphasise that the relation with ‘real’ energy efficiency is lost. By applying the two methods on the same group of companies, the results can be compared and show to what extent the choice of monitoring method affects the key message to policy makers. Of special interest is the relation between energy and production in the period 2008–2012, a period with large fluctuations in the level of production and energy use as a result of the economic crisis. The data show that energy-saving projects made a significant impact on energy use in the analysis period, although their effect is smaller than that of other factors such as fluctuations in production and in the number of participating companies. The old method shows a result for the period 2005–2013 that is less than half of that of the new method, mainly because of a decrease in efficiency during years of decreasing production. The analysis clearly shows that the two methods do not show the same development of energy efficiency improvement and should be presented as such.     

Putting renewables and energy efficiency to work: How many jobs can the clean energy industry generate in the US?

An analytical job creation model for the US power sector from 2009 to 2030 is presented. The model synthesizes data from 15 job studies covering renewable energy (RE), energy efficiency (EE), carbon capture and storage (CCS) and nuclear power. The paper employs a consistent methodology of normalizing job data to average employment per unit energy produced over plant lifetime. Job losses in the coal and natural gas industry are modeled to project net employment impacts. Benefits and drawbacks of the methodology are assessed and the resulting model is used for job projections under various renewable portfolio standards (RPS), EE, and low carbon energy scenarios We find that all non-fossil fuel technologies (renewable energy, EE, low carbon) create more jobs per unit energy than coal and natural gas. Aggressive EE measures combined with a 30% RPS target in 2030 can generate over 4 million full-time-equivalent job-years by 2030 while increasing nuclear power to 25% and CCS to 10% of overall generation in 2030 can yield an additional 500,000 job-years.     

Do vehicle efficiency improvements lead to energy savings? The rebound effect in Great Britain

Fuel efficiency improvements in vehicles reduce the cost of travel, which could stimulate drivers to travel further limiting energy savings. Estimates of this effect, known as the rebound effect, have varied widely, partly due to data constraints and a reliance upon highly aggregated government statistics. This paper instead uses a dataset of over 275 million vehicle roadworthiness tests. The high level of detail in our dataset can reveal, for the first time, how the response to changes in travel costs may differ across types of vehicles and socio-economic areas in Great Britain.We find that the rebound effect in Great Britain is just 4.6%, meaning efficiency improvements are unlikely to stimulate increased mileage in the short-run. We find that larger, less fuel efficient vehicles are more responsive to fuel price changes than smaller vehicles and that drivers in urban areas are more responsive to fuel price changes than drivers in rural areas. Our findings shed light on the effects that policies such as fuel taxation and fuel economy standards may have on vehicle mileage. This has implications for both CO₂ emissions savings and social equity.     

The role of coal in energy policy and sustainable development of Turkey: Is it compatible to the EU energy policy?

This paper aims to assess the current and future role of coal in energy strategy of Turkey, and evaluates the compatibility of policies to the EU energy policy and strategy. Coal is regarded as the most important indigenous energy source in Turkey together with hydropower to strengthen the supply security of the country. Turkish government set targets to fully utilize coal reserves of the country in next decades. However, the country is also in the process of becoming an EU Member State, hence, it is expected that the energy policies have to comply with the EU. Moreover, Turkey ratified Kyoto Protocol in 2009, thus the country should limit CO₂ emission together with other greenhouse gases. The probable obstacles that Turkey may face due to the utilization of coal were determined as CO₂ emissions, lack of technology and application in Carbon Capture and Storage (CCS) and health and safety issues. It is concluded that coal is a very important domestic energy source for Turkey but new policies have to be developed and adopted immediately, and more realistic targets for the country should be set accordingly.     

How to decarbonize the transport sector?

This article investigates possible evolution pathways for the transport sector during the 21st century, globally and in Europe, under a climate change control scenario. We attempt to shed light on the question how the transport sector should best be decarbonized. We perform our study with the global bottom-up energy systems model TIAM-ECN, a version of the TIAM model that is broadly used for the purpose of developing energy technology and climate policy scenarios, which we adapted for analyzing in particular the transport sector. Given the global aggregated perspective of TIAM-ECN, that in its current version yields at every point in time a single CO₂ price for different forms of energy use across geographic regions and economic sectors, it generates a decarbonization process that for the transport sector occurs later in time than for the power sector. This merely reflects that emission reductions are generally cheaper for electricity production than for transportation, and that it is thus cost-minimizing to spend limited financial resources available for CO₂ emissions abatement in the power sector first. In our scenarios the use of hydrogen in internal combustion engines and fuel cells, rather than electricity as energy carrier and batteries to store it, gradually becomes the dominant transport technology. This outcome is in agreement with some recent publications but is at loggerheads with the current popularity of the electric car. Based on sensitivity analysis we conclude that even if the establishment of a hydrogen infrastructure proves about an order of magnitude more costly than modeled in our base case, electricity based transportation only broadly emerges if simultaneously also the costs of electric cars go down by at least 40% with respect to our reference costs. One of the explanations for why the electric car is today, by e.g. entrepreneurs, often considered the supposed winner amongst multiple future transportation options is that the decision horizon of many analysts is no more than a few decades, instead of a full century. Electric cars fit better the current infrastructure than hydrogen fueled vehicles, so that from a short time perspective (covering the next decade or two) investments are not optimally spent by establishing an extensive hydrogen distribution network. Hence the path-dependency created by the present existence of a vast power transmission and distribution network can make electricity the most efficient choice for transportation, but only if the time frame considered is short. Electric transportation generally proves the more expensive alternative in our long-term perspective, except when electric car costs are assumed to drop substantially.     

Food or fuel? What European farmers can contribute to Europe's transport energy requirements and the Doha Round

Farm support in higher income countries is a testament to the fundamental social and economic importance of agriculture, yet domestic efforts to support this sector can arouse multilateral discord in a world of global food markets. In this paper, we argue that the advent of biofuels offers a new opportunity for agriculture to contribute to society, and to do so in a way that reduces trade rivalry and improves energy security. Holding current agricultural production constant, we find that the EU has the potential to reduce oil imports between 6% and 28% by converting eligible agricultural crops into biofuels under two differing conversion scenarios. Further, 33% of food support could be removed with no net farm revenue loss, using the biofuel premia (compared with food value) of corn and rapeseed to compensate for subsidy reductions. These results can help overcome the current impasse in global trade negotiations by reconciling the needs of EU farmers with those who would gain from more liberal international trade.     

Flip sides of the same coin? A simple efficiency score versus energy bill savings information to drive consumers to choose more energy-efficient products

Together with our utility clients, Enervee is experimenting with behavioural intervention strategies to see which are most effective in nudging purchasing decisions toward more efficient products. This paper presents results on decision-making, preferences and online shopping behaviour obtained from a series of observational (utility-branded marketplace platform analytics) and experimental studies (randomized controlled trials). Within the trials, we tested potential direct and interaction effects of two distinct but related energy product attributes that improve market transparency: an energy score (a relative product model energy efficiency index) and energy savings (estimated energy bill dollar savings compared to a base model benchmark). The trials all show that the use of an energy score has a significant effect on consumer product choices, encouraging them to select more energy-efficient products, consistent with the observational data. These robust results make a strong case for leveraging heuristics-based nudges to drive energy-efficient purchasing behaviour at scale. Responses to the energy bill savings information varied across the studies, offering insights about the influence of buying context and decision styles on consumer choice. The simple-to-process energy score appears to elicit a hot/impulsive decision style, whilst the cognitively more complex energy bill savings information prompts a reflective/cool decision style. Overall, the studies provide intriguing and robust insights to inform the continued development of cost-effective and scalable interventions to drive more energy-efficient consumer product choices.     

How sensitive to time period sampling is the asymmetric price response specification in energy demand modelling?

The purpose of this paper is to investigate the criticism that energy demand estimates based on a specific price decomposition are sensitive to the chosen time period used for the estimation. To analyse this in a systematic way, different time series sample periods are constructed from annual data for 17 OECD countries covering the overall period 1960 to 2008. The specific price decomposition under consideration, often used to estimate asymmetric price response models of energy demand, separates the impact of prices above the previous maximum, of a price recovery below the previous maximum and of a price cut. Therefore, the analysis does not just involve using different time periods; instead, for each time period investigated, a new dataset is constructed and for each dataset, the price variable is decomposed in this way. An energy demand relationship allowing for asymmetric price responses is therefore estimated for each different sample period and the results suggest that recalculation of the decomposed price variables for each different period does affect the stability of the estimated energy demand responses. In contrast, a similarly estimated energy demand relationship with symmetric price responses for each different sample period is found to have less instability.     

EU–MENA energy technology transfer under the CDM: Israel as a frontrunner?

The majority of the Middle East and North Africa (MENA) countries possess substantial potential for the implementation of CDM projects. Abatement of Greenhouse Gas (GHG) emissions can mainly be achieved through utilizing the abundant Renewable Energy Sources (RES) in the region and the implementation of Energy Efficiency (ENEF) measures. However, most of the MENA countries have a limited track record as regards CDM projects in the pipeline comparing to the major CDM-players, like Asia-Pacific regions and Latin America. In the above framework, this paper investigates the current status of CDM in the MENA region and the related perspectives for further diffusion of the CDM though the elaboration of a Strengths–Weaknesses–Opportunities and Threats (SWOT) Analysis. Particular emphasis is laid on the case of Israel, which seems to make an exception to the rule, since it hosts most projects in the region and dominates among the MENA countries.     

How connected is the carbon market to energy and financial markets? A systematic analysis of spillovers and dynamics

Carbon allowances are a new class of financial instrument which aim to assist in limiting the extent and impact of global warming and climate change. The feedback mechanism in the “Carbon-Energy-Finance” system makes the information connectedness dynamics more complex since we add equity, bond and non-energy commodity assets into the system. Using modified error variance decomposition and network diagrams, we quantify and systematically analyze how the European carbon market connects with information from a wide range of other markets. Our results indicate: (i) the nature of information spillover changes over time, with system-wide return connectedness being higher and more variable than the volatility interdependence; (ii) both the oil and carbon markets closely connect with equity and non-energy commodity markets rather than bond markets; (iii) we identify three structural breaks in carbon volatility and their implication for carbon-finance linkages; (iv) financial risk-type macroeconomic factors make greater contributions to system-wide connectedness than commodity factors. These findings have economic implications for investors, portfolio managers and policymakers.     

How to achieve a 100% RES electricity supply for Portugal?

Portugal is a country with an energy system highly dependent on oil and gas imports. Imports of oil and gas accounted for 85% of the country’s requirements in 2005 and 86% in 2006. Meanwhile, the share of renewable energy sources (RES) in the total primary energy consumption was only 14% in 2006. When focusing only on electricity production, the situation is somewhat better. The share of RES in gross electricity production varies between 20% and 35% and is dependent on the hydropower production in wet and dry years. This paper presents, on a national scale, Portugal’s energy system planning and technical solutions for achieving 100% RES electricity production. Planning was based on hourly energy balance and use of H₂RES software. The H₂RES model provides the ability to integrate various types of storages into energy systems in order to increase penetration of the intermittent renewable energy sources or to achieve a 100% renewable island, region or country. The paper also represents a stepping-stone for studies offering wider possibilities in matching and satisfying electricity supply in Portugal with potential renewable energy sources. Special attention has been given to intermittent sources such as wind, solar and ocean waves that can be coupled to appropriate energy storage systems charged with surplus amounts of produced electricity. The storage systems also decrease installed power requirements for generating units. Consequently, these storages will assist in avoiding unnecessary rejection of renewable potential and reaching a sufficient security of energy supply.     

Enlarging the EU's internal energy market: Why would third countries accept EU rule export?

Why would countries without a membership perspective seek integration into the EU's internal energy market? One major element of the EU's external energy policy is the export of EU energy norms and regulations to neighbourhood countries and beyond. A core legal instrument the EU uses in this context is the Energy Community Treaty (ECT). The ECT goes both geographically and regarding its depth significantly beyond neighbourhood or association policies, addressing potentially also countries in the ‘far neighbourhood’ and aiming at the creation of a Single Market for energy with these countries. While, however, EU candidate countries are obliged to adopt the “acquis” before accessing the EU and therefore comply to EU rules already before they enter the Club, I argue that countries with no or only a vague membership perspective – i.e. countries where the EU cannot apply the “conditionality” – approach (e.g., ENP countries)—aim at deeper integration with the EU because they are either eager to demonstrate their capability and potential to become part of the Club, they seek greater independence from a regional hegemon or they envisage significant economic gains as common norms, rules and standards are likely to increase economic exchange with the EU.