rap lees experiencesintheeuropeanunion erimarketmechanismsworkshop beijing 2011-05-25
TRANSCRIPT
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The Regulatory Assistance ProjectChinaEuropean Union
United States
www.raponline.org
Experiences in the European Union
Workshop on Market Mechanisms to Support
Chinas Energy and Climate GoalsBeijing - 25 & 26 May 2011
2011525&26
Eoin LeesEoin Lees
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Contents
What are energy efficiency
obligations and white
certificates?
European Union existing
energy efficiency
obligations and white
certificates
Experience from European
Union
Lessons learned from
European Union
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Why We Need Energy Efficiency
Obligations
Because of marketbarriers, energy efficiencydoes not happen to the
extent that the rationaleconomist would predict
EU Emission TradingScheme tackles energyintensive users
Buildings in Europeaccount for 40% of finalenergy use
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How do EE Obligations Work? 1
1
Government places an
obligation on energy
retailers/distributors to
save energy in
customers premises orhomes
Target related to volume
of energy supplied or
distributed or residentialcustomer numbers
/
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How do EE Obligations Work? 2
2
For small energy users, need
simple approach to keep
monitoring and verification
costs down use approved
measures for which there arewell established energy
saving values (deemed
savings)
Monitoring and verification
then is a count of the energyefficiency measures +
random audit + checks on
the quality of measures
+ +
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How do EE Obligations Work? 3
3
For larger energy users
scaled engineering
estimates or actual
measured savings for the
bigger projects
Financial penalties if
energy company misses
target
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What Costs are Involved & Who Pays?
Cost of energy efficiencymeasures paid by energycompanies (subsidies)with contributions from
end customers,landlords, charities,manufacturers etc
Cost of energy companymarketing, sales,reporting, planning etc (inBritain estimate ~18% oftheir direct costs)
18%
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How are they delivered?
Mainly by bilateral contractsbetween obligated companyand an energy efficiencymarket actor e.g. insulationcompany, retailer of energy
efficient appliances,manufacturers of energyefficient equipment, heatinginstallers
Only in Italy has there been
significant trading of whitecertificates generated by nonobligated parties
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EE Obligations in European Union
Energy efficiencyobligations varytremendously in detail fromcountry to country
Spain & Portugal have
energy efficiency levy onenergy distributors &(open) regional auctions forenergy saving projects
Ireland & Poland starting
levy on energy retailers Netherlands considering
obligation on energyretailers
&
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EE Obligations in the EU (2008)
2008
10
Country
Obligated Company
Eligible Customers
Administ rator
Belgium
Flanders
Electricity distributors
Residential and non energy
intensive industry and service
Flemish Government
France
All retailers of energy
All (including transport)
except EU ETS
EU ETS
Government
Italy
Electricity & gas
distributors
All including transport
Energy Regulator (AEEG)
AEEG
United Kingdom
Electricity & gas
retailers
Residential only
Energy Regulator (Ofgem)
Denmark
Electricity, gas & heat
distributors
All except transport
or covered by EU ETS
EU ETS
Danish Energy Authority
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EE Obligations in the EU (2008)
2008
11
Country
Nature of saving target
Estimated annual spend bycompanies
(M)
Belgium Flanders
1st year primary energy
26
France
Lifetime delivered energy
180
Italy
Cumulative 5 year
primary energy
5
196
United Kingdom
Lifetime delivered CO2
900
Denmark
1st year delivered energy
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Most Activity is in Residential Sector
Country
Period
% energy savings fromresidential sector
%
Belgium Flanders
2008
58% (mandated)
58%
Denmark
2008 42%
France
2006-9 87%
Italy
2005-8 83%
United Kingdom
2005-8
100% (mandated)
100%
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EU Residential Energy Savings by End-use
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2005-7
2006-9
2008
2005-8
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2005-8 British Evaluation Headlines
2005-8
Over 120 million measuresinstalled in 3 years;
appliances and lighting
dominate in numbers but
insulation dominates the
energy savings (75%) Target met 23% cheaper than
Government estimate (3.6% of
annual fuel bills)
Cost of saving a unit of
electricity is 2.4 cents/kWh;for gas 0.7 cents/kWh; cf
residential prices of 11 & 2.9
cents/kWh respectively
1.2
75%
23%
3.6%
2.4/kWh
0.7/kWh
11
&2.9/kWh
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General Observations from European Union
Schemes vary a lot reflects
local energy market status,
history of energy efficiency &
utilities, culture, climate etc.
Schemes work in both
liberalised energy markets
and where they target
monopolistic segments
Core element is the energy
efficiency obligation -
voluntary markets not
expected to emerge in
foreseeable future
&
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Do Energy Efficiency Obligations Work?
Use British Government dataon residential energy
consumption and as the
United Kingdom has the
longest running and largest
energy efficiency obligation In United Kingdom natural gas
is main (non transport) fuel in
residential sector >70% of
final energy demand in
households Prior to 2005 residential gas
demand increasing at
between 1 and 2% per year
70%
2005
1%
2%
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Factors Reducing Gas Demand 2004-9
2004-2009
Energy efficiency obligation
doubled (75% energy savings
come from insulation
measures)
New regulations on boiler
replacement meant high
efficiency (condensing) boilers
quickly moved from 36% of
the replacement market to
>97%
Price rises for residentialcustomers reduced household
demand
75%
36%
97%
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Other Factors Affecting Gas Demand 2004-9
2004 2009
From 2004 to 2009, gas
customers increased by
~1.6 million (7%) to 22
million thus increasing
demand
More Degree Days in
2008 & 2009 than in the
earlier period, so
warmer winters not anissue
20042009
1607%2200
20082009
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Reduction in British Residential Gas Demand
19
300
325
350
375
400
2004 2005 2006 2007 2008 2009
TWh
British Residential Gas Demand
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Conclusions on Turning Down Demand
Gas demand in the UnitedKingdom has been dropping
(15% in five years)
Reduction due to more
insulation, better boilers and
increased energy prices none on their own can
account for actual reduction
British Gas claims most of the
22% reduction per household
is due to energy efficiency Government analysis
underway (complicated)
515%
British Gas
22%
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