Evaluation of different policy instruments to promote industrial energy efficiency in a national context

Abstract

To promote energy efficiency in industry, a variety of policies have been successfully implemented in the European Union. Besides the EU-ETS with its direct and indirect impacts on industrial energy efficiency, other instruments such as energy saving funds, energy efficiency obligations (EEOs), fiscal and financial instruments, subsidies as well as regulative instruments and information policies are currently implemented and used. The intensity and the mix of these instruments, however, differ significantly between the EU Member States. The actual proposal for a new Energy Efficiency Directive suggests saving obligations as preferred instrument to promote energy efficiency among all sectors. In any case the Directive will lead to further implementation of such policies. Their actual impact, however, depends highly on the national framework. We systematically show the strengths and weaknesses of the main policy instruments which are actually implemented or discussed in order to promote energy efficiency in industry. With a multi-criteria, semi-quantitative approach considering eight main criteria we evaluate the costs and benefits of these instruments, taking the example of Germany. Among these criteria are costs, addressable energy saving potentials, market conformity, price and rebound effects and (re)financing. The quantitative evaluation shows that none of these instruments on their own can exploit all efficiency potentials in industry determined here in full, but that a mix of instruments is necessary. The calculations also show that a further development of the currently implemented instruments in Germany addressing energy efficiency in industry is in principle sufficient in order to tap the existing saving potentials. This requires, however, considerable efforts with regard to a further development of regulation, compliance control, budget-funded financial incentives and the wider spread of energy management systems. This option, however, is especially limited by the restricted availability of public funds. Therefore, the possibility of a budget-independence of the funding in particular supports a supplementary deployment of new instruments such as an EEO as part of the future mix of policy instruments addressing energy efficiency in industry