Engineering estimates versus impact evaluation of energy efficiency projects: Regression discontinuity evidence from a case study

Energy efficiency upgrades have been gaining widespread attention across global channels as a cost-effective approach to addressing energy challenges. The cost-effectiveness of these projects is generally predicted using engineering estimates pre-implementation, often with little ex post analysis of project success. In this paper, for a suite of energy efficiency projects, we directly compare ex ante engineering estimates of energy savings to ex post econometric estimates that use 15-min interval, building-level energy consumption data. In contrast to most prior literature, our econometric results confirm the engineering estimates, even suggesting the engineering estimates were too modest. Further, we find heterogeneous efficiency impacts by time of day, suggesting select efficiency projects can be useful in reducing peak load.     

英国能源政策的抉择与后果

英国政府最近公布的能源法案为我们提供了一个了解该国能源政策走向及其潜在影响的机会。笔者认为能源政策的困难,在于现代能源系统必须满足多方面的不同要求,并且必须在不确定的动态环境下实现这一点。这意味着拥有更多的政策选项非常重要。如果你不知道天然气价格的走向,就不要建立以其为基础的能源系统。你需要做的是去投资那些可以增加灵活度的技术选项:如能源效率,智能电网,需求侧管理,储能技术,跨国电网和电动汽车。尽管这些技术可能目前表面看起来成本效益并不是最大化的,但是,他们提供了灵活适应未来能源系统条件的机会。     

Integrated energy and carbon modeling with a decision support system: Policy scenarios for low-carbon city development in Bangkok

Energy use in Bangkok accounts for a large portion of the total energy consumption in Thailand. Few energy and carbon studies, however, have focused on the level of the city. International research indicates that cities are the key drivers of energy usage and the associated carbon emissions. This paper presents a study on the options for energy and carbon development for the city of Bangkok. The Long-range Energy Alternatives Planning System (LEAP) model is used to simulate a range of policy interventions and to predict how these would change energy and carbon development from 2000 to 2025. The planning period is assumed to start in 2005, and 2000 is used as the baseline year. Sustainability of the sixteen proposed policies and scenarios is analyzed using a multi-criteria decision-making approach. Results of this study provide an insight into Bangkok's energy and carbon future and highlight the steps required to promote a sustainable low-carbon society. The most significant energy savings are in the transport sector, where a modal shift from private passenger vehicles to mass transit systems has the potential to significantly reduce energy demand, carbon emissions, and local air pollutants.     

Reshaping markets for the benefit of energy saving

Energy saving is an important option for preventing emission of greenhouse gases. Furthermore, when energy saving is reducing the spatial and temporal density of energy consumption, it supports a rising market share of renewable energy sources. Last but not the least, energy saving plays a role in reducing the vulnerability for import dependency and supply disruptions. Despite these virtues energy saving and energy efficiency, being typically demand side options, appear to be harder to ‘sell’ than the other options which focus on the supply side. The currently prevailing market-based approach in energy policy initially brought setbacks for energy saving. The introductory article and the selected contributions to this special issue intend to show that markets can and should be shaped to the benefit of the uptake and of the potential of energy saving. To this end, all elements of the energy efficiency delivery context should be addressed in energy-saving policies. Learning, measurement and observation are important tools in this reshaping process. All contributions are based on papers of the European Council for an Energy Efficient Economy 2003 Summer Study.     

Validating energy-oriented CGE models

Although CGE models have received heavy usage — particularly in the analysis of broad-based policies relating to energy, climate and trade, they are often criticized as being insufficiently validated. Key parameters are often not econometrically estimated, and the performance of the model as a whole is rarely checked against historical outcomes. As a consequence, questions frequently arise as to how much faith one can put in CGE results. In this paper, we employ a novel approach to the validation of a widely utilized global CGE model — GTAP-E. By comparing the variance of model-generated petroleum price distributions – driven by historical demand and supply shocks to the model – with observed five-year moving average price distributions, we conclude that energy demand in GTAP-E is far too price-elastic over this medium run time frame. After incorporating the latest econometric estimates of energy demand and supply elasticities, we revisit the validation question and find the model to perform more satisfactorily. As a further check, we compare a deterministic global general equilibrium simulation, based on historical realizations over the five year period: 2001–2006, during which petroleum prices rose sharply, along with growing global energy demands. As anticipated by the stochastic simulations, the revised model parameters perform much better than the original GTAP-E parameters in this global, general equilibrium context.     

Analysis of policies to reduce oil consumption and greenhouse-gas emissions from the US transportation sector

Even as the US debates an economy-wide CO₂ cap-and-trade policy the transportation sector remains a significant oil security and climate change concern. Transportation alone consumes the majority of the US’s imported oil and produces a third of total US Greenhouse-Gas (GHG) emissions. This study examines different sector-specific policy scenarios for reducing GHG emissions and oil consumption in the US transportation sector under economy-wide CO₂ prices. The 2009 version of the Energy Information Administration’s (EIA) National Energy Modeling System (NEMS), a general equilibrium model of US energy markets, enables quantitative estimates of the impact of economy-wide CO₂ prices and various transportation-specific policy options. We analyze fuel taxes, continued increases in fuel economy standards, and purchase tax credits for new vehicle purchases, as well as the impacts of combining these policies. All policy scenarios modeled fail to meet the Obama administration’s goal of reducing GHG emissions 14% below 2005 levels by 2020. Purchase tax credits are expensive and ineffective at reducing emissions, while the largest reductions in GHG emissions result from increasing the cost of driving, thereby damping growth in vehicle miles traveled.     

Energy productivity improvements and the rebound effect: An overview of the state of knowledge

The ‘rebound effect’ from more efficient use of energy has been well investigated, with plenty of evidence suggesting that the ‘direct’ rebound effect is relatively small for most energy services—typically less than 30%. However, the same conclusion may not apply to ‘indirect’ and ‘economy-wide’ rebound effects. Here, several authors suggest that improved energy efficiency may increase energy consumption in the medium to long term, a view that undermines the rationale for energy efficiency as an instrument of climate-related energy policy and has been ardently debated. One of the main reasons behind the debate is the lack of a rigorous theoretical framework that can describe the mechanisms and consequences of the rebound effect at the macro-economic level. Proponents of the rebound effect point to ‘suggestive’ evidence from a variety of areas including economic history, econometric measurements of productivity and macro-economic modelling. This evidence base is relatively small, highly technical, lacks transparency, rests upon contested theoretical assumptions and is inconclusive. This paper provides an accessible summary of the state of knowledge on this issue and shows how separate areas of research can provide relevant insights: namely neoclassical models of economic growth, computable general equilibrium (CGE) modelling and alternative models for policy evaluation. The paper provides a synopsis of how each approach may be used to explain, model and estimate the macro-economic rebound effect, criticisms that have been suggested against each, and explanations for diversity in quantitative estimates. Conclusions suggest that the importance of the macro-economic rebound effect should not be underestimated.     

Financial impacts of UK's energy and climate change policies on commercial and industrial businesses

This study provides a detailed case study assessment of two business sites in the UK, to understand the policy drivers of increases to their energy costs and energy bills, considering all current UK energy and climate change policies. We compare our findings to more generalised, theoretical calculations of the policy cost impact on energy costs and bills – we have found no other studies as comprehensive as ours in terms of policy coverage.We find that for one site the government has over-estimated the likely energy savings due to energy efficiency options. Such differences in estimates should be taken into account when considering the efficacy of climate change policies on future energy savings. The overall impact of energy and climate change policies on costs will be of the order 0.4% of total business costs by 2020. This provides an important metric for the near-term cost of mitigation to meet longer-term climate change goals.     

Energy security and climate change protection: Complementarity or tradeoff?

Energy security and climate change protection have risen to the forefront of energy policy—linked in time and a perception that both goals can be achieved through the same or similar policies. Although such complementarity can exist for individual technologies, policymakers face a tradeoff between these two policy objectives. The tradeoff arises when policymakers choose the mix of individual technologies with which to reduce greenhouse gas emissions and enhance energy security. Optimal policy is achieved when the cost of the additional use of each technology equals the value of the additional energy security and reduction in greenhouse gas emission that it provides. Such an approach may draw more heavily on conventional technologies that provide benefits in only one dimension than on more costly technologies that both increase energy security and reduce greenhouse gas emissions.     

Costing electricity supply scenarios: A case study of promoting renewable energy technologies on Rodriguez, Mauritius

Small Island Developing States (SIDS) import increasing amounts of fossil fuel to meet their rising energy demand. This places an unnecessary financial burden on their budget, as abundant Renewable Energy Sources (RES) are often available. The introduction of Renewable Energy Technologies (RETs) can harness these resources, providing sufficient electricity as well as maintaining a high degree of independence. However, one of the principle barriers to their application has been the high cost of installing them. This paper argues that the economics of instigating RETs on SIDS are potentially favourable over the application of fossil fuel technologies if the full life-cycle costs are considered. A case study conducted in 2001, modelling three alternative electricity provision scenarios on Rodrigues, Mauritius supports these assumptions. The findings are based on a comparative economic model using Discounted Cash Flow (DCF) analyses, as well as a variety of sensitivity analyses, to predict changing economic environments. This provides crucial guidance for the formulation of energy policy and planning. This work is part of a tripartite research project that connects the economics with renewable resources assessment and a multi criteria analysis investigating the social and environmental consequences to provide a transferable framework assessment of renewable energy supply options on SIDS.     

Capital-labour-energy substitution in a nested CES framework: A replication and update of Kemfert (1998)

The ease with which firms can substitute away from energy to other inputs is an important determining factor in the costs of climate change mitigation policies. Climate policy simulation models usually represent this substitutability by using the Constant Elasticity of Substitution (CES) function with parameter values often taken from econometric studies. Hence, the accuracy of the estimated substitution parameters has a strong influence on the validity of the climate policy simulation. In this article, we attempt to replicate the results presented in a widely cited article in this field: Kemfert (1998) (‘Estimated substitution elasticities of a nested CES production function approach for Germany’, Energy Economics, 20, 249–264). We first use the data and software reported in that article and compare our results with those reported in the original study. We then test the same data and a new, more recent, data set on German industrial data with an improved econometric approach. Despite applying various approaches and modifications, we are not able to replicate the results in Kemfert (1998). We furthermore conclude that the data sets that are typically used to estimate nested CES functions often have too few observations and too little independent variation of the explanatory variables to obtain reliable estimates when using a direct non-linear approach.     

Modelling UK sub-sector industrial energy demand

The importance of considering homogenous economic agents when estimating energy demand functions is recognized in the literature, but so far data availability problems have explained the prevalence of empirical analyses only at an aggregate level. Motivated by the goal of developing the new industrial module to be adopted by the UK government Department of Business, Energy and Industrial Strategy (BEIS) for their econometric Energy Demand Model, we propose the first cointegration analysis that provides evidence on energy demand elasticities with respect to economic activity and energy price at a disaggregated industrial level. While the average of our estimates are comparable to those of the existing literature on the industrial sector as a whole, we find that there is considerable heterogeneity in relation to the long-run impact of economic activity and energy price on energy consumption, as well as to the speed with which firms re-adjust their equilibrium demand of energy in response to economic shocks. Finally, we learn that long-run disequilibria are tackled through altering the level of energy consumption rather than economic activity, a conclusion that has important implications for policy analysis.     

A post-2020 EU energy technology policy: Revisiting the strategic energy technology plan

With the European Strategic Energy Technology Plan (SET Plan) expiring in 2020, the EU needs to revisit its energy technology policy for the post-2020 horizon and to establish a policy framework that fosters the achievement of ambitious EU commitments for decarbonization by 2050. We discuss options for a post-2020 EU energy technology policy, taking account of uncertain technology developments, uncertain carbon prices and the highly competitive global market for energy technologies. We propose a revised SET Plan that enables policy makers to be pro-active in pushing innovation in promising technologies, no matter what policy context will be realized in the future. In particular, a revised SET Plan should include a more technology-specific focus, provide the basis for planning and prioritization among decarbonization technologies, and should be based on a comprehensive approach across sectors. Selected technology targets and EU funding of innovation should be in line with the SET Plan prioritization.     

Medium-term energy outlook for Cyprus and its policy implications

This short paper presents results from an energy forecast model for the Republic of Cyprus. The model was used during years 2010–2011 to assist national authorities in their preparation of the National Renewable Energy Action Plan and the Energy Efficiency Action Plan of Cyprus in line with the requirements of European Union Directives. Major macroeconomic and price assumptions of the model are presented, and results from model application under different assumptions with regard to the evolution of energy efficiency are outlined and discussed. On the basis of these scenarios the paper discusses policy implications for Cyprus regarding the country's compliance with EU energy and climate legislation.     

Policy analysis for energy efficiency in the built environment in Spain

Energy efficiency is considered one of the most cost effective ways to enhance security of energy supply and reduce greenhouse gas emissions. According to Europe's Energy Efficiency Plan, the biggest energy savings potential in the EU lies in the built environment. However, the many barriers to energy efficiency have prevented the implementation of the existing potential so far. This paper evaluates the existing policy instruments aimed at energy efficiency in buildings in Spain as laid down in the 2nd National Energy Efficiency Action Plan (NEEAP). The results show that the current policy package is insufficient to yield the existing energy savings potential in this sector. As much of the savings potential can be found in existing buildings and realization of this potential very much relies on voluntary action, the renovation sector is in need of an appropriate financial framework that mobilizes sufficient public and private financial resources, and transparent and efficient mechanisms to ensure the return on investment and payments from those who benefit from the renovation. Such financial framework needs to be supported by a regulatory framework that is tuned to existing buildings and an organizational framework that effectively connects the different policy layers in Spain.     

Technologies and policies for the transition to a sustainable energy system in china

The paper highlights the energy dilemma in China’s modernization process. It explores the technological and policy options for the transition to a sustainable energy system in China with Tsinghua University’s Low Carbon Energy Model (LCEM). China has already taken intensive efforts to promote research, development, demonstration and commercialization of sustainable energy technologies over the past five year. The policy actions cover binding energy conservation and environmental pollution control targets, economic incentives for sustainable energy, and public R&D supports. In order to achieve the sustainable energy system transformation eventually, however, China needs to take further actions such as strengthening R&D of radically innovative sustainable energy technologies and systems such as poly-generation, enhancing the domestic manufacturing capacity of sustainable energy technologies and systems, creating stronger economic incentives for research, development, demonstration and commercialization of sustainable energy technologies, and playing a leading role in international technology collaborations.     

Energy indicators for sustainable development

Energy is an essential factor in overall efforts to achieve sustainable development. Countries striving to this end are seeking to reassess their energy systems with a view toward planning energy programmes and strategies in line with sustainable development goals and objectives. This paper summarizes the outcome of an international partnership initiative on indicators for sustainable energy development that aims to provide an analytical tool for assessing current energy production and use patterns at a national level. The proposed set of energy indicators represents a first step of a consensus reached on this subject by five international agencies—two from the United Nations system (the Department of Economic and Social Affairs and the International Atomic Energy Agency), two from the European Union (Eurostat and the European Environment Agency) and one from the Organization for Economic Cooperation and Development (the International Energy Agency). Energy and environmental experts including statisticians, analysts, policy makers and academics have started to implement general guidelines and methodologies in the development of national energy indicators for use in their efforts to monitor the effects of energy policies on the social, economic and environmental dimensions of sustainable development.     

The impact of EU policies on energy use in and the evolution of the UK built environment

Energy use in buildings is influenced by a variety of factors in complex ways. Historically, in the UK the efficiency of energy use in buildings has not been a major consideration in their design. Now policy concern with climate change is changing this, because buildings have come to be perceived as the locus of energy use with the highest cost-effective energy savings potential. In the UK, the energy efficiency of the building stock is rather low. The paper focuses largely on energy use in the UK's existing building stock and the two main European Union Directives which affect it: the Energy Performance in Buildings Directive and the Energy Services Directive. The Directives are complex, and there are a number of supporting programmes set up by the European Commission to aid their implementation. Even so, they have been implemented in differing ways in different European countries, and implementation remains patchy. The Directives have the potential to be a major influence on the evolution of the UK's built environment, but their effect will depend on the details of the Directives’ implementation and enforcement, many of which are not yet clear.     

Communications on energy: Fighting London's cold war

This communication illustrates the work of the London Energy and Employment Network. LEEN has the twin aims of promoting a rational energy policy for London and, in the process, generating much needed employment. In cooperation with Hackney, one of Britain's poorest boroughs, LEEN organized Hackney's Cold War — a series of initiatives showing the practical measures, informational back-up and funding sources necessary for a local energy policy. LEEN intends to repeat this project in other London Boroughs, with the eventual aim of helping to persuade central government to adopt a more comprehensive approach to energy conservation nationally.     

Global energy security and the implications for the EU

The following article will analyse the global and geopolitical dimensions of the future international energy security and its implications for Europe and the EU-27. In this context, I will discuss to which extent the EU's newly proclaimed “Energy Action Plan” of the EU Spring summit of 2007 and its declared common energy (foreign) policy are a sufficient strategy to cope with the new global and geopolitical challenges. The article concludes the following: (1) The interlinkage between globally designed traditional energy security concepts – that rely just on economic factors and “market-strategies” – and domestic as well as regional political stability demands new thinking with regard to both energy supply security and foreign and security policies. (2) Although after the Russian–Ukrainian gas conflict in January 2006, energy security has forced its way up the European energy and foreign policy agendas, the EU-27 member states have largely failed to forge a coherent European energy security and energy foreign policy strategy after their Spring summit of 2007 because its declared political solidarity has been still lacking. But the 2nd Strategic Energy Review of November 2008 has recommended new initiatives to overcome this lack by promoting concrete infrastructure and other projects for enhancing Europe's supply security and its political solidarity as part of a common energy (foreign) policy. If the EU is able to implement the March 2007 and November 2008 decisions, the EU oil and gas demand will drastically reduce and freeze at current levels. In this case, Putin's energy policies by using Russia's energy resources and pipeline monopolies as a political instrument to enforce its economic and geopolitical interests will be proved as self-defeating in Russia's long-term strategic interests. It will reduce Gazprom's gas exports to a much smaller EU gas market than originally forecasted as the result of a deliberate EU policy of decreasing its overall gas demand and by diversifying its gas imports.