Demand Reduction, Energy
Efficiency and Policy
Effectiveness: What Works?
Nick Eyre, Edinburgh 13th
December 2013
UK energy use trends
Mtoe

Total UK Energy Use 1970-2011
180
160

140
120
100
80
60
40
20
1970

1975
Industry

1980

1985
...
Drivers of UK carbon emissions
Kaya identity values 1971-2008
2.5
2
1.5

C/E
E/GDP

1

GDP/P

P

0.5

2007

2005

2003

20...
…and efficiency is likely to make a key
contribution to future decarbonisation
Zero
carbon
supply
Gas in
power
generation
...
Energy efficiency as a ‘cost reducer’ in
carbon abatement

Taken from IEA, 2010
…but in buildings energy efficiency
we are reducing the level of ambition
80

Carbon savings from the principal buildings
...
Energy efficiency as a ‘cost reducer’ in
carbon abatement

Taken from IEA, 2010
Barriers to energy efficiency
Deficient
information

Incorrect or insufficient knowledge at the point of
decision-making b...
Two key hypotheses for energy
efficiency policy
 It is a socio-technical innovation
problem – so a package of different
p...
Market penetration

Market transformation:
Innovation stages and polices
Policies

Innovation
stage

R, D and D
support

R...
An example: UK fridge/freezer sales
100%
90%

80%

G

70%

F
E

60%

D

50%

C

40%

B

30%

A
A+

20%

A++

10%
0%
1996-9...
40 years of energy efficiency policy:
What have we learnt?
 Energy prices make a difference
 but pricing policies are co...
Energy efficiency as a multi-level
governance problem
Governance level

Ability to engage

Governance powers

Global
EU
Na...
Energy efficiency as a multi-level
governance problem
Governance level

Governance levers

Governance powers

Ability to e...
UKERC Contact Details
UK Energy Research Centre
+44 (0)20 7594 1574
www.ukerc.ac.uk

Nick Eyre
+44 (0)1865 285129
http://w...
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Demand reduction, energy efficiency and policy effectiveness - what works?

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Demand reduction, energy efficiency and policy effectiveness - what works?

  1. 1. Demand Reduction, Energy Efficiency and Policy Effectiveness: What Works? Nick Eyre, Edinburgh 13th December 2013
  2. 2. UK energy use trends Mtoe Total UK Energy Use 1970-2011 180 160 140 120 100 80 60 40 20 1970 1975 Industry 1980 1985 Transport 1990 1995 Domestic 2000 Other 2005 2010
  3. 3. Drivers of UK carbon emissions Kaya identity values 1971-2008 2.5 2 1.5 C/E E/GDP 1 GDP/P P 0.5 2007 2005 2003 2001 1999 1997 1995 1993 1991 1989 1987 1985 1983 1981 1979 1977 1975 1973 1971 0 Based on IEA data
  4. 4. …and efficiency is likely to make a key contribution to future decarbonisation Zero carbon supply Gas in power generation Changes in energy demand IEA ETP, 2010
  5. 5. Energy efficiency as a ‘cost reducer’ in carbon abatement Taken from IEA, 2010
  6. 6. …but in buildings energy efficiency we are reducing the level of ambition 80 Carbon savings from the principal buildings energy efficiency policies Mt CO2 (lifetime) per annum 70 60 CESP Source: Rosenow and Eyre (2013) 50 40 30 CERT 20 GD 10 ECO 0 1994-1998 1998-2000 2000-2002 2002-2005 2005-2008 EESoP 1 EESoP 2 EESoP 3 EEC 1 EEC 2 2008-2012 2013-2015 CERT/CESP Green Deal/ECO
  7. 7. Energy efficiency as a ‘cost reducer’ in carbon abatement Taken from IEA, 2010
  8. 8. Barriers to energy efficiency Deficient information Incorrect or insufficient knowledge at the point of decision-making biases decisions against efficiency Access to capital Constraints on borrowing, including higher interest rates than justified by the risk of the project Split incentives Investors cannot always appropriate the benefits of energy efficiency investments (e.g. landlords) Risk Perceived technical and financial uncertainties, including trust in delivery agents. Bounded rationality Energy consumers do not make the choice identified as optimal by economic analysis Based on Sorrell et al, 2004 Energy efficiency is economically and environmentally beneficial, but it still needs strong policy intervention
  9. 9. Two key hypotheses for energy efficiency policy  It is a socio-technical innovation problem – so a package of different policy instruments is needed  It is a multi-level governance problem – so policy action is needed at different levels of government
  10. 10. Market penetration Market transformation: Innovation stages and polices Policies Innovation stage R, D and D support Research Incentives and engagement Early adoption Mass adoption Regulation Late adoption Time
  11. 11. An example: UK fridge/freezer sales 100% 90% 80% G 70% F E 60% D 50% C 40% B 30% A A+ 20% A++ 10% 0% 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-6 Incentives for B Minimum standard C Incentives for A only 2006-7 2007-08 Source: EST, 2008
  12. 12. 40 years of energy efficiency policy: What have we learnt?  Energy prices make a difference  but pricing policies are constrained by concerns about competitiveness and equity  Regulation works well  but only for ‘mass products’, and where well-signalled and enforced  Investment incentives can be very effective  but they cost money – Government’s or consumers’  People matter  but do not trust, or even expect, Government or energy companies to engage them very effectively Based on Mallaburn and Eyre, 2013
  13. 13. Energy efficiency as a multi-level governance problem Governance level Ability to engage Governance powers Global EU National Country/region Local govt Civil society organisations Households and businesses
  14. 14. Energy efficiency as a multi-level governance problem Governance level Governance levers Governance powers Ability to engage Global UNFCCC EU Carbon markets; product standards; RE/EE targets National Energy policy; fiscal; spending; energy market regulation Country/region Housing and fuel poverty policy; building regulations; transport policy; business support Local govt Civil society Housing/ transport services; organisations energy advice; community projects and engagement Households and businesses Personal action
  15. 15. UKERC Contact Details UK Energy Research Centre +44 (0)20 7594 1574 www.ukerc.ac.uk Nick Eyre +44 (0)1865 285129 http://www.eci.ox.ac.uk/people/eyrenick.php

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