Markets for Energy Efficiency - Exploring the new horizons of tradable certificate schemes

This doctoral thesis explores the implications of establishing tradable certificate schemes for improving energy efficiency (so-called ‘Tradable White Certificate’ [TWC] schemes). Carrying out different case studies, a set of complementary evaluation methods is applied in conducting ex-ante and ex-post evaluation studies. To analyse the attributes and complexities of TWC schemes, the thesis focuses on several aspects, including (i) the modelling of potential impacts, (ii) the identification and analysis of transaction costs, (iii) the investigation of trading patterns and other flexibilities used to achieve cost-effective compliance, (iv) the level of energy-saving effectiveness under TWC schemes, (v) the use of cost-benefit analysis, and (vi) the application of multi-criteria evaluation. The findings help answer questions concerning the impacts and outcomes of TWC schemes and identify critical endogenous and exogenous conditions that affect their performance. Furthermore, the research assists in developing an understanding of what aspects of TWC schemes need to be evaluated and how

Exploring transaction costs in passive house-oriented retrofitting

In order to tap the energy saving and climate mitigation potential of the building sector, transaction costs of implementing energy efficient technologies need to be better understood and ultimately reduced. The objective of this paper is to identify and analyze the nature and scale of transaction costs resulting from the application of the passive house concept in energy efficient renovations. Related conceptual choices are also discussed. Our study explores measures to promote learning and knowledge development as potential strategies to reduce transaction costs. It focuses on transaction costs borne by building owners and building developers in the planning and implementation phases of a passive house-oriented renovation in Sweden. Results reveal three main sources of transaction costs: due diligence, negotiations and monitoring. The analysis shows that transaction costs are non-negligible, and for individual cost sources the scale can be 200% higher than for conventional renovations. To reduce transaction costs, various strategies such as study visits, demonstration projects, new forms of meetings and new channels of (written) information were found

How smart are electricity users with ‘Smart Metering’? A Behavioural Economics experiment

The purpose of this paper is to examine how behavioural biases affect consumers’ response to energy-use information provided through smart meters (SM). We take insights from behavioural economics and carry out two real-life experiments with SMs and electricity users. The experiments were conducted in Copenhagen (Denmark) to identify and assess the potential of two economic behavioural biases, salience and loss aversion. The results of the first experiment (i.e. installation of SM without further intervention) generally aligned with electricity use reductions found in previous research, and indicate that it may be reasonable to expect a reduction in electricity use in the medium-term (weeks/months) of ~5-7% approximately. Results of the second experiment (i.e. introduction of SM with and without intervention) show that subjecting participants to loss aversion and salience seems to affect their behaviour toward electricity use, as the intervention group reduced their consumption roughly twice as much as the reference group. With due limitations, the results suggest that the delivery of information to energy users needs to take into account not only its pure provision, but how it is designed, framed and presented. At all events, the results and reviewed studies strongly suggest that increased energy efficiency and energy conservation need to be addressed with a mix of policies – not only information schemes or the provision of feedback alone

Measuring progress towards a ‘Green Energy Economy’: Proposing and scrutinising a multi-level evaluation framework for policy instruments

Numerous economic recovery packages have been implemented to stimulate green economic growth through the deployment of low-carbon technologies. The emerging literature shows, however, that there is substantial ambiguity and discrepancy about how to measure the performance of policy instruments driving a Green Economy in general, and in our case, a Green Energy Economy (GEE) in particular. Identified approaches cover a spectrum from narrow concerns about job creation or growth of technological patents on the one hand, to broader aspects of sustainability on the other. Proposed evaluation approaches up to now tend to overlook policy instruments altogether, or focus on measuring the scale of ‘supply-driven’ policy impacts based on public and private expenditures (e.g. measuring progress according to expenditure on green initiatives as a proportion of GDP). The objective of our paper is to propose and assess a multi-level ex-post policy evaluation framework to quantitatively measure progress towards a GEE. The proposed framework aims at evaluating the performance of policy instruments encouraging a GEE, taking low-carbon energy technologies as the main focus. The evaluation framework is composed of: (1) multi-criteria policy evaluation, (2) socio-economic carbon and energy indicators; and (3) genuine (or adjusted savings) savings. We assess the proposed evaluation framework against the following criteria: policy compatibility, reliability and measurability

A decomposition approach to evaluating the progress of the New Green Economy

Various policy instruments and policy reforms are being implemented to encourage Green Growth and Green Economy. However, comprehensive ex-post evaluation policy methods have yet to be developed. The emerging literature shows that there is substantial ambiguity and discrepancy about how to measure the performance of policy instruments driving a Green Economy in general and, in our case, a Green Energy Economy (GEE) in particular. Observed methodologies have tended to measure progress according to expenditure on green initiatives as a proportion of GDP. This paper aims to move beyond this by applying an approach that gives consideration to policy and economy-wide aspects that drive, or have an impact on, energy production and carbon emissions. The core methodology is based on a macro decomposition analysis using an empirical quantitative approach. It is supported by correlation and regression analyses and framed by both policy-oriented research and policy evaluation. To achieve this, time-series data from the International Energy Agency are used. The analysis is applied to three countries, Sweden, the UK and China. Then, the proposed methodology is preliminarily assessed against the following criteria: (1) policy compatibility, (2) reliability and (3) measurability. The focus is on carbon dioxide (CO2) emissions

Assessing ‘Green Energy Economy’ policies for transforming the building stock in Shanghai

The 2008–2009 global financial crisis triggered ‘Green Energy Economy’ (GEE) policy packages to stimulate green growth in many countries. China soon became a leader and, supported by its 11th Five-Year Plan (2006–2010), devoted approximately one-third of its US$ 647 billion stimulus package to green energy technologies. Since then, numerous policy instruments have been implemented to encourage ‘Green Buildings’. We take the Chinese city of Shanghai as a case study as it has the largest population, urbanization ratio and GDP in China and evaluate the performance of GEE policies targeted at the multi-household building sector. We use a bottom-up modelling tool to quantitatively estimate alternative baselines and assess different policy scenarios for the period 2010–2050. We measure the performance of policies in relation to energy use, efficiency improvements, CO2 emissions and net direct economic impacts. Our results suggest that current GEE policies are insufficient to stimulate radical change in the building sector. When unambitious policy measures are implemented in isolation, they provide marginal improvements compared to current building codes. The retrofitting of existing buildings is both a significant policy challenge, and offers fertile ground for improvements. Our results show that ambitious, technology-oriented financial incentives for both new and existing buildings, including energy price reform and a CO2 tax offer the right mix of incentives for green building transformation. When the social costs of climate change are taken into account, an integrated policy mix also delivers the highest net economic benefits. We conclude that policies must be more ambitious and include an integrated mix of instruments in order to drive a low-carbon transformation of both new and existing buildings in Shanghai. Finally, the theoretical impacts and potential benefits of GEE policy instruments must not underestimate the challenges associated with their design, implementation and enforcement

Walking away from a low-carbon economy? Recent and historical trends using a regional decomposition analysis

Using the latest available data, this brief article attempts to provide the first regional decomposition analysis of CO2 emissions from fuel combustion. Covering eight regions of the world, determinants are estimated in relative and absolute terms for the period 1971-2010. We use the unparalleled 2010 global surge in CO2 emissions as a reference and entry point for the analysis. Overall, results show that most regions have recently performed worse than their historical trends and lack of meaningful progress is identified. Whereas specific drivers for certain regions suggest some level of continuous improvement (e.g. reduced energy intensity in Asia, decarbonisation of of energy supply in OECD Europe), they are incapable of offsetting the effects of economic growth and increased energy use. With the exception of Africa, most regions appear to have missed the low-carbon economy opportunity' provided by the 20082009 global financial crisis. Results suggest a lack of serious environmental effectiveness of regional policy portfolios aiming at reducing CO2 emissions. Highly ambitious energy efficiency and renewable energy policies across all regions are immediately needed. Additionally, absolute reductions in energy use from fossil fuels and resulting CO2 emissions are urgently required in rich regions if we are to align production and consumption patterns with maintaining global warming below the 2 degrees C threshold. (C) 2013 Elsevier Ltd. All rights reserved

Policy Instruments for Energy Efficiency in Buildings: Experiences and Lessons from the Nordic Countries

The Nordic countries have often been seen as “fore-runners” of energy efficiency in buildings – in both the implementation of policy instruments and the evaluation of effects. Since the 1970s, the Nordic countries have introduced a range of policy instruments for energy conservation in buildings. The choice of instruments and experiences, however differs between countries. The aim of this study is to review policy instruments for energy efficiency in buildings in the Nordic countries as well as to analyse how to advance related learning processes. The study discusses traditional and innovative policy instruments, organisational matters, and policy evaluations. An overall observation from this study is that Sweden is “slowing down” its energy efficiency activities in the building sector, while Denmark, Finland and Norway are all “speeding up”. Denmark is leading the way on implementing policy instruments, which are long-term, strategic, innovative and well-supported by the organisational structure. This study also concludes that energy efficiency often lacks influential organisations to “drive” efforts forwards – in terms of information, networking, research and innovation. Finally, there is often no strategic approach to evaluations in the Nordic countries with a focus on how to improve learning