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  • 1. ©  OECD/IEA  2014   Capturing  the     Mul/ple  Benefits  of     Energy  Efficiency  in  Industry     Retool  for  a  compe//ve  and  sustainable  industry     eceee  2014  Industrial  Summer  Study   2–5  June,  Arnhem       Robert  Tromop  
  • 2. ©  OECD/IEA  2014     Beyond  MJs  and  kWhs   n  Increasingly  decision  makers  are  mo/vated  by  social   and  economic  outcomes   n  ‘’Tradi/onal  thermodynamic  indicators  of  energy  efficiency   were  found  to  be  of  limited  use,  as  they  give  insufficient   aOen/on  to  required  end  use  services  …’’   What  is  energy  efficiency?:  Concepts,  indicators  and  methodological  issues.   Pa;erson  M.G.  1996.   hOp://www.sciencedirect.com/science/ar/cle/pii/0301421596000171   n  How  far  have  kWhs  got  us?     n  Price  is  a  cri/cal  driver,      what  are  policies  really  achieving?   n  How  are  the  markets  that  deliver  EE  developing?   n  What  does  society  get  out  of  EE?     n  What  has  changed,  and  what  is  it  worth?  
  • 3. ©  OECD/IEA  2014     USD300Bn  global  EE  market  in  2011   n  Comparable  to  RE  and  fossil  power  genera/on  investments   n  BUT,  investments  in  energy  efficiency  are  s/ll  less  than  two-­‐thirds   of  the  level  of  fossil  fuel  subsidies   0 100 200 300 400 500 600 700 Upstream oil and gas* Coal,oil and gaselectricity generation *** Renewable electricity generation ** Energy efficiency Renewable energy subsidies* Fossil fuel subsidies* USDbillion Estimated range of USD 147 to 300 billion EE stands alongside supply resources
  • 4. ©  OECD/IEA  2014     •  Between  1974  and  2010,  energy  efficiency  was  the  largest  energy   resource     •  Cumula/ve  avoided  energy  consump/on  due  to  energy  efficiency  in   these  IEA  countries  amounted  to  over  1  350  EJ  (32  billion  toe)   IEA’s  first  fuel?     0 500 1000 1500 2000 2500 3000 3500 4000 0 20 40 60 80 100 120 140 160 180 Mtoe EJ Coal Oil Gas Electricity Other Avoided energy use TFC Total final Consumption (TFC) Hypothetical energy use had there been no energy efficiency improvements Avoided energy equal to 65% of 2010 TFC
  • 5. ©  OECD/IEA  2014     Mul/ple  Benefits  of  Energy  Efficiency   Energy efficiency improvement Energy   provider   benefits   Asset   values   Disposable   income   Poverty   allevia/on   Health    &   wellbeing   Energy   savings   Climate   change   mi/ga/on   Energy   prices   Resource   management   Development   Energy   security   Job   crea/on   Macro   impacts   Public   budgets   Industrial   produc/vity  
  • 6. ©  OECD/IEA  2014     • GHG  emissions  abatement   • Energy  prices     • Development  goals   • Resource  management   InternaConal   • Macroeconomic  effects   • Job  creaCon • Energy  security   • Public  budget  impacts   NaConal   • Increased  asset  values   • Energy  provider  and  infrastructure  benefits   • Industrial  producCvity  and  compeCCveness     Sectoral   • Health,  wellbeing  and  social  improvements   • Poverty  alleviaCon:  energy  affordability  &  access   • Increased  disposable  income  Individual   More    Public/Private    Stakeholders   The  Public   Mul/ple  benefits  at  mul/ple  levels  
  • 7. ©  OECD/IEA  2014     Mul/ple  Benefits  Project  Goals   §  Quan/fy  the  social  and  economic  outcomes  delivered  by   energy  efficiency  improvements   §  Highlight  the  tools  and  methods  to  capture  the  range  of   benefits  and  costs   §  Show  how  MB  approach  can  fit  within  exis/ng  evalua/on   approaches   §   Communicate  the  contribu/on  that  improving  energy   efficiency  makes  to  mainstream  social  and  economic  policy     §  Help  countries  build  consensus  on  the  value  of  a  mul/ple   benefits  approach    
  • 8. ©  OECD/IEA  2014     Mul/ple  Benefits  Handbook  Outline                       Part  1  METHODOLOGICAL  TOOLKIT   Outline  for  each  benefit  area:  exisCng  evidence;  key   indicators;  main  methodological  opCons;  default  values/   mulCplier  table;  piUalls;  sample  results.       Part  2    MB  IN  THE  POLICYMAKING  PROCESS   IntegraCng  MB  into  a  step-­‐by-­‐step  evaluaCon  process   CommunicaCon  and  messaging   Resourced  by  4  workshops     Over  300  global  experts     Thanks  to;  UK  DECC,  OEE  NR  Canada,  SEAI,  EEF,    
  • 9. ©  OECD/IEA  2014     Experts  Roundtable  on  Industrial   Produc/vity  &  Compe//veness  Impacts       Stakeholder     Interest  in  quan/fying  non-­‐energy  benefits     Site  or   company  level   •  More  comprehensive  assessment  of  costs  and  benefits  of  energy   efficiency  investments.     •  Increase  benefit-­‐cost  raCos  -­‐  shorter  payback  periods.     •  Enhanced  sustainability  reporCng.     Energy  service   or  financial   sector     •  Enhanced  business  models  –  strengthened  business  case  for  energy   efficiency  projects.     •  Improved  bankability  of  energy  efficiency  projects.     Shareholders   •  Increased  understanding  of  how  key  resources  affect  business   •  Richer  understanding  of  business  investment  performance   •  Beaer  return  on  investment     Programme  or   policy  level     •  More  comprehensive  assessment  of  the  cost-­‐effecCveness  of   programmes  or  policies  ,  jusCfy  funding  and  addiConal  resources   •  IdenCfy  best  opCons  to  access  economic  outcomes   •  Improved  ability  to  engage  industry  in  programmes  by  showing   quanCfied  benefits  beyond  cost  reducCons  from  reduced  energy  use.     Wider  sector  or   economy  level     •  JusCficaCon  for  invesCng  in  policies  to  promote  energy  efficiency.   •  Improved  decision-­‐making  basis  for  where  to  allocate  resources  –   energy  efficiency,  new  generaCon  or  other  measures.     •  Improved  internaConal  compeCCveness  
  • 10. ©  OECD/IEA  2014     Headlines   Produc/vity  and  opera/onal  benefits  to  non-­‐ energy  opera/ons     l 40-­‐50%  of  the  value  of  energy  savings,     l as  much  as  250%  value  of  energy  savings.   Energy  efficiency  projects  improve  control:     l improved  produc/vity,  product  quality,  safety,  which   in  turn  reduce  risk,  process  /me,  and  waste.   Prevailing  use  of  simple  payback  analysis   undervalues  life  impacts  of  EE.   Including  non-­‐energy  benefits,  iden/fying  risks,   opera/onal  value  improvements,  drives  investments   with  a  beOer  return  on  investment.  
  • 11. ©  OECD/IEA  2014     Headlines   n  Opera/onal  outcomes  worth  up  to  2.5  /mes  the   value  of  energy  savings   n  3  -­‐  4  year  paybacks  drop  to  1  year  when  other   benefits  are  assessed.       n  e.g.    153MWh/yr  energy  reducCon  worth   USD12,000.      But  wait  there’s  more;     l -­‐USD50,000/yr  in  process  chemicals,   l -­‐USD12,000/yr  in  corrosion  inhibitors,     l -­‐USD20,000/yr    corrosion  damage.  
  • 12. ©  OECD/IEA  2014     Headlines   For  many  businesses,  energy  is  seen  as  an   opera/onal  cost.     l Strategic  value  added  is  a  more  powerful  driver  for   any  business.    A  mul/ple  benefits  approach  to  evalua/ng  energy   efficiency  investments  starts  to  inform  beOer   strategic  decisions.   A  range  of  tools  quan/fy  mul/ple  benefits   outcomes  where  tradi/onal  market  valua/on   approaches  do  not  easily  apply.    
  • 13. ©  OECD/IEA  2014     We  have  ways  of  mone/sing  your  EE.     Subjective     Quantitative   Direct  monetisation   though  market   valuations       Indirect  link  to   market  valuations       Implicit  monetary  valuation:     Willingness  to  pay  /  accept;   direct  query;  rankings     Scaled  valuations       Contingent  valuations       Orders  of  magnitude       Con-­‐joint  analysis       Qualification-­‐  no  valuation   attributed       Qualitative   Objective    
  • 14. ©  OECD/IEA  2014     Quan/fied  values  for  mul/ple  benefit  impacts  can   be  integrated  into  tradi/onal  policy  decision-­‐ making  tools  to  inform  real  impacts  of  energy   efficiency.   Energy  efficiency  may  also  be  an  undervalued  by-­‐ product  of  opera/onal  improvements  or   upgrading  projects.       l A  reframing  of  improvement  opportuni/es  and   perspec/ves  is  required.  Every  country  should  adapt   the  mul/ple  benefits  approach  to  its  na/onal   priori/es,    
  • 15. ©  OECD/IEA  2014     What  has  changed?   n  We  need  to  engage  some  new  paradigms   n  Mul/disciplinary  evalua/on  is  key   n  Evalua/on  and  valua/on  techniques  exist   n  Expand  scope  of  LCA  frameworks     n  Cri/cally:  Ask  what’s  changing?,     l not  how  many  kWhs  have  we  ‘saved’