hec presentation about ipeec and ee
TRANSCRIPT
An Introduction to Energy Efficiency Amit Bando & Thibaud Voïta, IPEEC
October 2012HEC, Paris
2
The World Today1.
Climate Change: Evolution of World Temperature (1889- 2009)
Source: NASA
Worldwide Final Energy Consumption1990-2008
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20080.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Ener
gy c
onsu
mpti
on (G
toe)
Mining and construction
Agriculture, forestry, fishing
Commercial and public services
Energy sector
Residential
Transport sector
Industry sector
Source: IEA 2010c.
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20080.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Ener
gy c
onsu
mpti
on (G
toe)
Developing Countries’ Final Energy Consumption
1990-2008
5
Mining and construction
Agriculture, forestry, fishing
Commercial and public services
Energy sector
Residential
Transport sector
Industry sector
Source: IEA 2010
6
Other Worrying Trends
Population growth: 9.2 billion by 2050, 2 billion new consumers in emerging economies by
2050;Natural resources depletion:
1.1 billion people lack access to safe drinking water in 2012,
Deforestation: 80,000 square km every year, Food security:
Food prices x 2 by 2030,1.5 bilion people with no access to electricty in 2012,
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Geopolitical Changes in the Energy Sector
80% of the current oil reserves have been discovered before 1979,
75% of these oil reserves will need to be replaced by 2035, it represents:
50 million barrels of oil per day, 4 time Saudi Arabia’s current production.
But shale gas can flood the market, thanks to fields located in:
The USA, Argentina, China, Canada, France, Israel.
Today, Europe pays USD 14/1000 cubic feet of gas from Russia, the USA produces shale gas at USD 2/ 1000 cubic feet.
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What is Energy Efficiency?2.
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“Something is more energy efficient if it delivers more services for the same energy input, or the same services for less energy input.”
What Energy Efficiency (EE) Relates to
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Agriculture
Utilities
Transportation
Buildings & Appliances
Industry
Cities
Definitions of Energy Efficiency Potential
National Action Plan for Energy Efficiency (2007). Guide to Resource Planning with Energy Efficiency. Prepared by Snuller, Price et al., Energy and Environmental Economics, Inc. p. 2-2. <www.epa.gov/eeactionplan> 11
Technical feasibility Cost
EffectivenessMarket & Adoption Barriers
Program design, budget, staffing & time
constraints
Technical Potential
Economical Potential
Achievable Potential
Program Potential
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What is IPEEC?3.
IPEEC is a high level international forumProvides global leadership on energy efficiency by
identifying and facilitating government implementation of policies and programs that yield high energy-efficiency gains.
Aims to promote information exchange on best practices and facilitate initiatives to improve energy efficiency.
Formally established in 2009 at the G8 summit in L'Aquila, Italy and resulting from the Heiligendamm Dialogue Process.
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1414
IPEEC is an Autonomous Entity
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The IPEEC Secretariat is located in Paris, France
Members account for over 75% of world GDP and energy use.
Italy
Russia
Japan
Republic of KoreaChina
India
Australia
GermanyUnited
KingdomFrance
Canada
USA
Mexico
Brazil
EU
IPEEC - guiding principles Improving energy saving and energy efficiency is one of the
quickest, greenest, and most cost-effective ways to address energy security and climate change as well as to ensure sustainable economic growth
All countries, both developed and developing, share common interests in improving their energy efficiency performance
There is abundant potential for international cooperation among them
Will contribute to improvement of energy efficiency at the global level
Developed countries need to play an important role in cooperation with developing countries
Accelerating dissemination and transfer of best practices, efficient technologies and capacity building in developing countries
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Basic research
Technologyjourney
Applied research Early demonstration Full demonstration Marketed product Warranted product
Proofof...Principle Concept Validity Viability Value Quality
Individual innovators
Companyjourney
Small group: start-up/unit in a company
Medium-size operation Large scale operation
Owncapital Venturecapital Revenues Prof it
s
Demonstration& sample distribution
Market journey
Early adopters & niches Rational economic purchase Technology& market evaluation
Awareness Positivepotential Marketpull Feedback
General regulation
Regulation journey
General regulation Specific regulation General regulation General regulation
Negativeoftenunintended Neutral Positive Positive Neutral orpositive
Transition Technologies, Productsand Services Follow Parallel Journeys
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Examples of Energy Efficiency Policies
Case studi
es
USA’s Refrigerator Program
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1945 1978 2010
• Standards, labels & incentives led to EE improvement without interrupting long-term decline in real purchase price: from $1,000 to $600 (2009$)
• Government action has led to savings of about $20 billion/year in 2010 and $300 billion cumulative since 1978
Annual Energy Used a by a
refrigerator X 4
Introduction of refrigerators standards
Annual Energy Used declines: reaches 1945 levels by 2010
Promoting a low carbon economy
China 11th - Five-Year Plan (2006 – 2011)
Government sets policies & objectives to promote a low carbon economy
Top 1000 enterprises
Ten key projects
Closure of inefficient
plants
2006 2011
Results:
Energy intensity
- 19.1%
Chemical oxygen demand
- 12.45%
SO2 emissions
- 14.29%
Japan’s Top Runner Program
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EE standards for appliances/vehicles Standards - set higher than the best performance
value of each product currently on sale in the market
Standard takes into account technological development 21 products are included, low technology products
are phased out Passenger vehicle
standards
In 1999, target: By 2010, fuel economy improvement would be 22.8%Target reached in 2005
Air conditioners
EE improvement of 67.4% (1999-2004)Companies used technologies that they may otherwise have waited to commercialize Improved consumer and retailer awareness accelerated pace of market penetration
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What Can Energy Efficiency Bring? 4.
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Energy Savings: Less GHG EmissionsMitigation potential of energy efficiency can be
substantial since: Building account 40% of energy use, 25% of water use &
1/3 of all GHG emissions (UN estimates) industry accounts for 25% of all GHG emissions manufacturing and construction directly and indirectly
account for 37% of CO2 emissions (developing countries 47%)
Industrial energy efficiency can help reach CO2 reductions of around 1.3 Gtoe equivalent to global emissions reductions of 4% from 2006 levels
Chemical and petrochemical, aluminum, iron and steel, cement and paper and pulp alone would reduce 12% of CO2 emissions
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Financial SavingsMcKinsey estimates:USD 250 – 325 billion annual financial
savings or avoided energy costs (2009 – 2030)USD 900 billion annual savings: investing
USD 170 billion annually in EE worldwide could generate an average rate of return of 17% and produce energy savings up to USD 900 billion per year.
ACEEE estimates:In the US alone, USD 12 - 16 trillion of
possible energy savings (2012 – 2050)
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Green Jobs
General estimates: EUR 1 million spent in EE generates 17 to 19 jobs (as compared to 9 jobs in the renewable industry)
The leverage of public & private funding varies from 5 to 1 to sometimes 10 to 1, meaning EUR 1 million of public money can lead to investments of between EUR 5 and 10 million. That means between 85 to 190 jobs for EUR 1 million of public money.
According to ACEEE, if the US chooses to cut energy consumption, it can create 2 million jobs in 2012 - 2050
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Enhanced Distribution: Energy Access
About 1.5 billion people worldwide, more than one in five, lack electricity,
The UN Secretary-General Ban Ki-Moon has called to double the global rate of improvement in EE by 2030 in order to provide energy for all.
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Enhanced Energy Use: Energy Security
Enhanced energy security in order to: Rely less on foreign supplies from unstable regions of
the world Decrease the influence of energy prices on the
economy Address national security issues (embargo, war, etc.)
By reducing the energy use, EE helps improving energy security
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Water & Energy Efficiency
According to the UN:By 2030: almost 50% of the population will be
living in regions with high water-stress,Water and EE:Between 2 & 3 % of the world's energy
consumption is used to pump and treat water for urban residents & industry.
Energy consumption in most water systems worldwide could be reduced by at least 25 percent through cost-effective efficiency actions.
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Other Benefits
Source: IEA
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Opportunities in Key Sectors5.
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Global CO2 Emissions by Sector (MtCO2)
Source: Lawrence Berkeley National Lab
Industry: Global Energy Intensity Trends
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0
20
40
60
80
100
120
140
160
180
200
Energy MVA EI
Ind
ex (
19
90
=1
00
%)
Manufacturing valued added, 20087.35 trillion $
Industrial energy consumption, 20082.54 gigatonnes of oil equivalentIndustrial energy intensity, 2008
0.35 tonnes of oil equivalent per US$1,000
Note: Industrial energy intensity in 2000 US dollars. Source: UNIDO 2010; IEA 2010.
1990-2008
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Industrial EE: Combined Heat & Power (CHP)• Thermal power emits heat that can be recycled, • CHP consists the use of a heat engine or a power station to
generate both electricity & useful heat.• These applications produce energy where it is needed, avoid
wasted heat, and reduce T&D network and other energy losses. Other benefits cited by policy makers and industry include:• Cost savings for the energy consumer;• Lower CO2 emissions;• Reduced reliance on imported fossil fuels;• Reduced investment in energy system infrastructure;• Enhanced electricity network stability through reduction in
congestion and ‘peak-shaving’; and• Beneficial use of local & surplus energy resources
(particularly through the use of waste, biomass, & geothermal resources in district heating/cooling systems).
• CHP is one of the most cost-efficient EE measures
Motors Account for 60% of industrial electricity consumption and about 15%
of final energy use in industry worldwide (IEA 2007). By 2030, if BAU, energy consumption will rise to 13 360 TWh per
year and CO2 emissions to 8 570 Mt per year. End‐users now spend USD 565 billion per year on electricity used in
motors; by 2030, that could rise to almost USD 900 billion.* Electronic motor controls that allow for variable speed drives (VSD)
have good market potential. Using the best available motors will typically save about 4% to 5% of
all electric motor energy consumption. Linking these motors with electromechanical solutions that are cost‐optimised for the end‐user will typically save another 15% to 25%.
The potential exists to cost‐effectively improve energy efficiency of motor systems by roughly 20% to 30%, which would reduce total global electricity demand by about 10%.
Smart Meters
In 2008, less than 4% of the global installed base of 1.5 billion electricity meters could be considered “smart” but 4 years later this penetration has grown to over 18%, and is expected to exceed 55% by 2020.
The North American market has already peakedEuropean market has begun its growth period. The Asia Pacific region will continue to outpace all
other regions driven by major deployments in China, utilizing a different breed of smart meter technology.
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Enhanced Energy Use: BuildingsEnergy use in « buildings » means energy use of
the building themselves and of the electric appliances. Together they account for 40% of the world GHG emissions,
Measures to enhance EE in buildings can mean: Improving EE of appliances, Refurbishing:
Commercial buildings, or Residential buildings;
Building new EE houses.Buildings situation change depending on the
climate zone,EE in buildings is a sensitive topic with social
implications.
Zero Energy Building
Zero energy buildings market remains a small fraction of the overall building construction industry.
Technologies required to make zero energy buildings possible, add significant upfront cost.
Worldwide revenue from zero energy buildings will grow rapidly over the next two decades, reaching almost $690 billion by 2020 and nearly $1.3 trillion by 2035 (Annual growth rate of 43% - mostly in the EU).
EU’s Energy Performance of Buildings Directive (EPBD) will require nearly zero energy construction in public buildings by 2019 and in all new construction by 2021.
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Buildings Energy Consumption in the US
Source: DOE (2008)/Center for Climate & Energy Solutions
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Residential Buildings Total Energy End Use in the US (2006)
Source: DOE (2008)/Center for Climate & Energy Solutions
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Commercial Sector Buildings Energy End Use in the US (2006)
Source: DOE (2008)/Center for Climate & Energy Solutions
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Improving EE in Buildings: Cool Roofs
A cool roof has a white or special cool color that absorbs less sunlight, staying cooler in the sun and transmitting less heat into a building. Substituting a cool roof for a conventional roof can:• Reduce the annual air-conditioning energy use of a
single-story building by up to 15%• Cool interior spaces in buildings that do not have
air conditioning, • Reduce carbon emissions,• Reduce peak demand for electricity, • Potentially slow global warming.(Source: DOE)
Enhanced Energy Use: At Home
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What can enhanced energy efficiency bring to households?
Reduced energy bill, Enhanced comfort
An example of energy savings: Compact Fluorescent Lamps (CFL) consume 1/5 to 1/3 less electricity than the traditional incandescent lamp & lasts 8 to 15 times longer.
LightingEnergy-efficient products are still for Asia Pacific customersSales of LED lighting systems will increase rapidly over the
next 10 years, accelerating sharply after 2015. Unit shipments (lamps, luminaires) will rise from 66 million
in 2011 to 542 million in 2021 – a 700% increase.Translating into cumulative revenues of $11 billion from
2011 through 2021 for LED lighting in Asia Pacific
Japan’s 21st Century Light Project; China’s commitment to LED is enormous – ex: Shenzhen plans to install LED’s in more than 90% of public lighting applications, street lighting, and commercial spaces in the next decade
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Other Areas
Energy efficiency in transportation; Fuel efficiency, Urban planning.
Energy efficiency in agriculture: Equipment, Water use.
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Government, the Motivator 6.
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International & Regional Organisation Need to Coordinate EE PoliciesGovernments need to exchange:
Their resources (technologies, know-how, finance), Their experiences & best practices,
They need to establish: Standards (see the International Standard Organisation), EE Indicators, Monitoring & Verification Process…
Multilateral institutions implement various type of projects (training, capacity building, technical support): World Bank, regional banks, UN organisations;
IPEEC promotes international cooperation;NGOs implement similar kind of projects on a larger scale
(ClimateWorks network, International Copper Association, Alliance to Save Energy).
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Governments Need to Promote Energy Efficiency
Government
EE policies:- subsidies, - incentives, - standards, - outreach…
Banks,Households,
Industry, Local
governments.
EE investments are costly and involve long-payback periods.
• Loans to promote EE
• Investments in EE equipment,
• Adoption of best practices,
• New projects.
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… but a Top-Down Process is not Enough
Households, Industries
To be effective, EE measures need to be widely adopted.
Investments in EE products
EE measures succeed when government action is combined with market incentives
Market Transformation
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Sustainable Housing Policies in Mexico
Case Stud
y
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Sustainable Housing in Mexico
REGIONAL PLANNING
SUSTAINABLE HOUSING
URBAN DEVELOPMENT
Sustainability
Sustainability
Social Sustainability
Environment
Economic Sustainability URBAN DESIGN
Source: CONAVI
Strategy directed at strengthening Municipal and State legislation in order to promote “Smart city growth”.
• Optimum use of existing infrastructure
• Reclaiming of urban voids• Density increase
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Climate Finance Strategy
DUIS8 certified , 18
in process:800,000 new units in 15
states
“Ésta es tu casa”258,329 subsidies
POAGenerate
CER’s from Green
Mortages
Housing
NAMAPenetration
Fovissste, SHF and upscale
Green Mortgag
e725,740
green credits
DURBAN /COP 17
Urban NAMA (midterm)
Investment in efficient
infrastructureNegotiation with Annex I countries and multilateral
organisms
Source: CONAVI
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Penetration & Scaling-Up
Housing NAMA
Penetration and Scaling up
Green MortgageFOVISSSTE
•Pilot 2012 in hand Green Mortgage Penetration
PENETRATION
Aguascalientes Pilot Project
SCALING UP
&
Source: CONAVI
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The Role of Local Governments
Local governments can: Implement innovative EE measures,
Reach people at the local level,Generate competition in terms of EE policies with other regions.
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Private Sector, the Key Innovator7.
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Utility Companies & EE: an Ambiguious Relation
Utility & energy delivery companies are the best-positioned in the energy marketplace,
Contact with power generation industry & customers (individual & industries)
Key actors in EEBut: they earn money by delivering
energy: by promoting EE, they are being asked to sell less of their product!
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Energy Efficiency Obligations (EEO) for Energy Providers
All EEOs exhibit three core elements: 1. A multi-year energy savings target, shared between the
parties; 2. Penalties for noncompliance; and 3. A measurement, verification and quality assurance
system. The popularity of EEOs stems from their flexibility. Tradable EEOs are usually called White Certificates
CountryObligated
Entities Eligible Sectors Administrator
2011 Spending (€ millions)
Belgium - Flanders
Electricity distributors
Residential, non energy-intensive industry
Flemish Government
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FranceRetailers incl. transport
All except large industry Government
300
ItalyElectricity & gas distributors All incl. transport Regulator (AEEG)
200
Great BritainElectricity & gas retailers Residential only
Regulator (Ofgem)
1,200
Denmark
Electricity, gas & heat distributors All except transport
Danish Energy Authority
40
EEO in Europe
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Appliance ManufacturersResidential energy use: 14% of
world delivered energy consumption (2008),
Likely to increase middle classes grow & adopt new types of consumption in emerging countries
Appliance manufacturers are now expected to produce EE products
Standards & labelling is a key tool to reduce appliances energy consumption
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Financial Institutions The role of financial institutions is critical to
promote loans for EE investments.Some international & bilateral organisations
organise training on EE loans for banks: International Finance Corp., Agence France Developpement,
Some countries have developed specific schemes that facilitate EE investments: KfW in Germany on EE in buildings, SIDBI in India for SMEs.
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Heavy Industry & Others
Industrial processes are most of the time energy intensive (iron & steel, cement, aluminium, petrochemical, textile, paper & pulp),
Most of the companies are committed to significantly reduce their energy use.An example of a succesful EE plan: Lafarge as a WWF
Climate SaversLafarge’s objectives:• Reduce its GHG emissions to 33 % per t. of cement below 1990
levels by 2020,• Develop sustainable construction initiatives by 2015 to achieve a
lower carbon footprint and greater EE, • Contribute to the design of 500 sustainable buildings (2015),• Advocate for ambitious climate change policies, through trade
associations and international organisations as well as for post-2020 climate policies.
Between 1990 & 2010, reduction of: • 21.7% of its net CO2 emissions/t of cement,• 36.5% of its absolute CO2 gross emissions in industrialized
countries.
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Energy Service Companies (ESCOs)
Financial Institution Contractor Customer
Service:- financing,- planning & installation of
energy saving measures- energy savings guarantee
Loan & interest payments
Loan(s)
Remuneration
Energy Performance Contracting
Source: Berlin Energy Agency
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The en.lighten initiative
Case Stud
y
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Light Bulb & Energy UseElectricity for lighting accounts for almost 20% of
global power consumption and close to 6% of worldwide GHG emissions.
If a global transition to efficient lighting occurred, these emissions could be reduced by half.
Few actions could reduce carbon emissions as cheaply and easily as the phase-out of inefficient lighting, making it one of the most effective and economically advantageous ways to combat climate change.
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The En.lighten Initiative
The en.lighten initiative has been established by Philips, Osram, the China National Lighting Test Center, UNEP & the Global Environment Facility
en.lighten assists countries in accelerating market transformation with environmentally sustainable, efficient lighting technologies by: Promoting high performance, efficient technologies in
developing countries. Developing a global policy strategy to phase-out
inefficient and obsolete lighting products. Substituting traditional fuel-based lighting with modern,
efficient alternatives.
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Challenges for Energy Efficiency8.
Assessment of Potential
Strengths• Increased sustainability• Increased energy security• Creation of market leader• Increased energy access
Weaknesses• Cost of investments• Lack of skilled people • Lack of awareness of
need of EE amongst consumers
• Weak in-country R & D
Opportunities• Increased value and
lifespan• Investment relief (tax)• Market for new
innovations• Socio-economic influence• Competitive advantage
Threats• Rebound effect (effort
does not reduce energy consumption as planned)
• Fall in energy prices leading to “expensive” conservation
Moving Forward
Governments need to commit and also provide the following:
Overarching policy framework combining mandatory and voluntary policies and strengthening enforcement;
Promote greater awareness of EEPlay an essential role as integrator of the value chain Establish funding mechanisms to jump-start EE financing,
particularly in the short term. Institutionalize standard-selling and enhance
professionalism within the industry by creating proper accreditation and certification standards,
Publicizing more accurate information about EE product suppliers and ESCOs.
Remove other barriers that distort markets such as energy subsidies
66
Moving Forward - 2And Business needs to Move towards an integrated value chain approach where
suppliers extend their service portfolio to offer complete solutions (auditing, installation, maintenance and financing solutions).
Develop innovative financing vehicles for EE projects by collaborating with financial institutions and by developing expertise in EE project financing.
Increase awareness of EE and enhance professionalism of the industry from within.
EE suppliers and ESCOs should adopt a more active role in promoting EE and in professionalizing the industry from within by setting standards and benchmarks.
Multinationals should act as catalysts by bringing in the best practices from their experiences in other countries.
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The Political ChallengeEE needs strong
government support,EE requires a long-
term vision: how governments in place for only 4–5 years can impose it?
In a time of economic slowdown, how to enhance the EE position in the political agenda?
69
Technical & Know-How ChallengesTo be implemented, EE measures require:
Access to technology, Know-how.
How can emerging and developing economies have access to this knowledge?
Example: the massive need for energy auditors in countries such as China & Russia• How to select them? • How to train new auditors?• Which technology should they use?
70
The Finance Challenge
EE requires long-term investments with uncertain payback
How to finance energy efficiency in the context of global crisis?
How to limit the social impact of enhanced EE standards?
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The International Cooperation ChallengeDifferent resources in different parts of the world :
Lack of standard measures for energy efficiency e.g.: EE indicators, standards.
Technical Knowledge
Money to implement it
Developed Economies Yes No (crisis!)
Emerging crisis Not yet Yes
Developing economies No No
Need for enhanced international cooperation in order to:• Address global issues,• Share lessons learnt, best practices & technologies,• Enhance the measurement of EE.
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The Social Challenge
Implementing EE measures can be costly,When designing policies, governments need to
take into account the potential social impact of: Refurbishing requirements in the building
sector, New equipment standards, The price of energy.
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The Communication Challenge
EE is not trendy: It requires long-term investment, It is technical, It does not result in visible results (as
compared to wind mills in the renewable sector).
At the same time, climate change & energy issues are not priorities on the political agenda anymore because of the economic crisis.
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The Rebound Effect Challenge (?)
What is the rebound effect? When an energy-using technology or process
becomes more efficient, the user can take advantage of the increased service delivered, rather than accepting the same service at a lower energy or financial cost.
Is the rebound effect an issue? Not an issue in the long term? It exists but seems to be limited, Reinvestment of energy savings can act as a driver for achievements of Other policy goals
(source: IEA)
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Questions?