Energy Revolution-Energy Revolution- Policies for a Sustainable Future

Summary: Angel PolleriSummary: Angel Polleri

CritiqueCritique : Asong Suh: Asong Suh

By Howard Geller

Policy Options

Policy OptionsPolicy Options The “innovation system” : A set of appropriate mix of policies The “innovation system” : A set of appropriate mix of policies

which help the advancement of energy efficiency and renewable which help the advancement of energy efficiency and renewable energy technologies.energy technologies.

Policy OptionsPolicy Options - Research, development and demonstration, RD & D- Research, development and demonstration, RD & D - Financing- Financing - Financial Incentives- Financial Incentives

- Pricing- Pricing - Voluntary agreements- Voluntary agreements

- Regulations- Regulations - Information dissemination and training- Information dissemination and training - Procurement - Procurement

- Market reforms - Market reforms - Market obligations- Market obligations - Capacity building- Capacity building - Planning techniques- Planning techniques

Research, Development and Research, Development and Demonstration, RD & DDemonstration, RD & D

It is critical for expanding the knowledge base and keeping a flow It is critical for expanding the knowledge base and keeping a flow of new technologies.of new technologies.

Government funded RD & D Government funded RD & D

- Provides many benefits that the private sector can - Provides many benefits that the private sector can not. The private sector tends to under invest in RD & D. not. The private sector tends to under invest in RD & D.

- Has contribute to the innovation of many energy efficiency - Has contribute to the innovation of many energy efficiency and renewable technologies during the past 20 years. and renewable technologies during the past 20 years.

In U.S. thanks to RD & D the cost of wind power and solar In U.S. thanks to RD & D the cost of wind power and solar photovoltaic fell by a factor of 10. The cost of thermal power fell photovoltaic fell by a factor of 10. The cost of thermal power fell by more than a factor of 5.by more than a factor of 5.

Research, Development and Research, Development and Demonstration, DR & DDemonstration, DR & D

Some lessons have been learned over the past 25 yearsSome lessons have been learned over the past 25 years

- DR & D improves the performance and reduces the cost of - DR & D improves the performance and reduces the cost of innovative technologies but does not assure the adoption innovative technologies but does not assure the adoption

and use of new technologies. However policies as financial and use of new technologies. However policies as financial incentives, market reserves and regulations can help.incentives, market reserves and regulations can help.

- DR & D collaboration. Research institutes provide new ideas - DR & D collaboration. Research institutes provide new ideas and have strong technical capabilities, private companies and have strong technical capabilities, private companies understand marketplace’s needs and limitations.understand marketplace’s needs and limitations.

- DR & D programs should support different technological - DR & D programs should support different technological concepts in the early stages of development and concepts in the early stages of development and commercialization.commercialization.

FinancingFinancing Low interest rates, revolving loan funds, and micro credit have Low interest rates, revolving loan funds, and micro credit have

helped the deployment of energy efficiency and renewable energy helped the deployment of energy efficiency and renewable energy technologies. technologies.

Energy Service Companies (ESCOs) - North America, South Korea, Energy Service Companies (ESCOs) - North America, South Korea, China, Hungary, Eastern Europe, and recently in Brazil – provide China, Hungary, Eastern Europe, and recently in Brazil – provide financing technology, installation and performance guarantees. financing technology, installation and performance guarantees.

Governments of several countries are financing energy efficiency Governments of several countries are financing energy efficiency projects. projects.

- World Bank, European Bank for Reconstruction and - World Bank, European Bank for Reconstruction and Development, and several government institutions fund Development, and several government institutions fund ESCOs projectsESCOs projects

Financial IncentivesFinancial Incentives Help to get clean energy technologies, encourage early adopters Help to get clean energy technologies, encourage early adopters

and stimulate wider adoption of new energy sources. and stimulate wider adoption of new energy sources.

Some countries provide financial incentives through tax credits, Some countries provide financial incentives through tax credits, low interest rates, buyback rates above normal wholesale prices.low interest rates, buyback rates above normal wholesale prices.

In the United States many electric utilities provide incentives to In the United States many electric utilities provide incentives to households and businesses that use energy-efficient products. “ It households and businesses that use energy-efficient products. “ It is less expensive to save energy than supply energy”.is less expensive to save energy than supply energy”.

Tax credited incentives are used to promote the use of innovate Tax credited incentives are used to promote the use of innovate technologies such as hybrid and fuel cell vehicles.technologies such as hybrid and fuel cell vehicles.

PricingPricing Many nations heavily tax carbon emission or fossil fuel sources of Many nations heavily tax carbon emission or fossil fuel sources of

energy, this way they have cut carbon dioxide (CO2) and meet the energy, this way they have cut carbon dioxide (CO2) and meet the Kyoto Protocol.Kyoto Protocol.

- France, Germany and Japan have high gasoline taxes.- France, Germany and Japan have high gasoline taxes. - Denmark, Finland, Sweden have increased fossil fuel taxes - Denmark, Finland, Sweden have increased fossil fuel taxes

and decreased personal income, retirement or and decreased personal income, retirement or employment employment taxes. taxes.

Large carbon taxes increase energy efficiency and encourage the Large carbon taxes increase energy efficiency and encourage the use of renewables. In Sweden and Denmark the use of coal for use of renewables. In Sweden and Denmark the use of coal for heating decreased by 50% while the use of biofuels increased by heating decreased by 50% while the use of biofuels increased by 70%.70%.

Energy subsidies have been eliminated in several countries. This Energy subsidies have been eliminated in several countries. This policy improves energy efficiency but has an adverse impact in policy improves energy efficiency but has an adverse impact in low income countries. In Ukraine energy costs is as much as 40% low income countries. In Ukraine energy costs is as much as 40% of the total income householdof the total income household

Another way to encourage the use of renewables is Net metering. Another way to encourage the use of renewables is Net metering. Customers who produce more energy than needed can sell the Customers who produce more energy than needed can sell the extra energy to utility company.extra energy to utility company.

Voluntary AgreementsVoluntary Agreements Voluntary Agreements between the private sector and the Voluntary Agreements between the private sector and the

government. Voluntary commitments by the government itself government. Voluntary commitments by the government itself result in a better use of energy.result in a better use of energy.

In Thailand the government supported the transition from 40 watt In Thailand the government supported the transition from 40 watt lamps to more efficient 36 watt lamps. Reducing the peak demand lamps to more efficient 36 watt lamps. Reducing the peak demand by about 630MWby about 630MW

Voluntary Agreements are easier and faster to adopt than Voluntary Agreements are easier and faster to adopt than mandatory regulations, but since this agreements are not legally mandatory regulations, but since this agreements are not legally binding the targets may not be achieved.binding the targets may not be achieved.

Voluntary commitments. Several cities have committed to reduce Voluntary commitments. Several cities have committed to reduce their green house emissions. Toronto and New Jersey have pledge their green house emissions. Toronto and New Jersey have pledge to reduce its CO2 emissions by 2005.to reduce its CO2 emissions by 2005.

RegulationsRegulations

Help to increase energy efficiency and push the use of renewable Help to increase energy efficiency and push the use of renewable energy devices or cogeneration systems.energy devices or cogeneration systems.

Minimum efficiency standards help to remove deficient products Minimum efficiency standards help to remove deficient products from the market as old cars, domestic appliances, high energy from the market as old cars, domestic appliances, high energy consumption lighting products, etc.consumption lighting products, etc.

Many countries around the world have adopted this regulations. Many countries around the world have adopted this regulations. Japan has one of the best programs to improve energy efficiency. Japan has one of the best programs to improve energy efficiency.

RegulationsRegulations Another way to regulate of energy is through adopting building Another way to regulate of energy is through adopting building

codes. codes.

- Prescriptive based codes. Mandate certain technologies or - Prescriptive based codes. Mandate certain technologies or system configurations during the building process. system configurations during the building process.

- Performance based codes. Require a certain level of - Performance based codes. Require a certain level of energy performance such as the maximum amount of energy performance such as the maximum amount of lighting lighting power per unit of floor area. power per unit of floor area.

Information Dissemination and Information Dissemination and TrainingTraining

Information Dissemination and Training along with other policies Information Dissemination and Training along with other policies such as financing, incentives, voluntary agreements or regulations such as financing, incentives, voluntary agreements or regulations are very effective reducing energy consumption and promoting are very effective reducing energy consumption and promoting the use of high-efficiency products.the use of high-efficiency products.

As of 2000, U.S. Green Lights and Energy Star commercial building As of 2000, U.S. Green Lights and Energy Star commercial building programs have help participants to cut their electricity use by programs have help participants to cut their electricity use by nearly 32 billion KWh per year. This programs provide training, nearly 32 billion KWh per year. This programs provide training, information, analytical tools, and recognition. information, analytical tools, and recognition.

In U.S. the Energy Star product rating is a success, so far this In U.S. the Energy Star product rating is a success, so far this products are saving 42 billion kWh per year.products are saving 42 billion kWh per year.

ProcurementProcurement Bulk purchases help to establish initial markets for clean energy Bulk purchases help to establish initial markets for clean energy

technologies.technologies.

Federal, state and municipal agencies buy large amounts of Federal, state and municipal agencies buy large amounts of lamps. appliances, vehicles, etc. Buying great quantities of energy lamps. appliances, vehicles, etc. Buying great quantities of energy efficient products saves money and creates a new market.efficient products saves money and creates a new market.

Energy Star personal computers succeeded because federal Energy Star personal computers succeeded because federal agencies where required to buy Energy Star equipment.agencies where required to buy Energy Star equipment.

Governments can purchase “green power” for use in their facilities Governments can purchase “green power” for use in their facilities and also coordinate the purchase of renewable energy and also coordinate the purchase of renewable energy technologies by large numbers of households or businesses.technologies by large numbers of households or businesses.

Market ReformsMarket Reforms

A number of countries have restructured their power sectors to A number of countries have restructured their power sectors to stimulate greater competition, privatization and investment.stimulate greater competition, privatization and investment.

This reforms enhance energy and economy efficiency.This reforms enhance energy and economy efficiency.

Creation of rural electric cooperatives helps to expand electricity Creation of rural electric cooperatives helps to expand electricity supply in rural areas where other utilities providers have failed.supply in rural areas where other utilities providers have failed.

Market ReformsMarket Reforms

- Providing long term concessions to renewable energy - Providing long term concessions to renewable energy providers increases access to electricity and boosts providers increases access to electricity and boosts renewable renewable energy useenergy use

- The adoption of a small surcharge on all electricity sales - The adoption of a small surcharge on all electricity sales supports energy efficiency and renewable energy sources. It supports energy efficiency and renewable energy sources. It also assists low-income and rural households to obtain also assists low-income and rural households to obtain energy energy servicesservices

Market ObligationsMarket Obligations Market Obligations is a form of regulation that can be used to Market Obligations is a form of regulation that can be used to

increase energy efficiency or renewable energy use.increase energy efficiency or renewable energy use.

Utilities can be required to supply or purchase a specified amount Utilities can be required to supply or purchase a specified amount

of electricity from renewable energy sources. of electricity from renewable energy sources.

- The Renewable Portfolio Standard RPS policies in U.S. - The Renewable Portfolio Standard RPS policies in U.S. requires the utilities to obtain some fraction of their requires the utilities to obtain some fraction of their capacity capacity from renewables from renewables

Market Obligations introduce renewable-based fuels into the Market Obligations introduce renewable-based fuels into the transportation sector.transportation sector.

Market Obligations stimulate commercialization of advanced Market Obligations stimulate commercialization of advanced vehicle technologies.vehicle technologies.

Capacity BuildingCapacity Building

Capacity building is essential for implementing clean energy Capacity building is essential for implementing clean energy technologies on a large scaletechnologies on a large scale

All nations require technical expertise. The National energy All nations require technical expertise. The National energy efficiency centers and programs form and staff public sector efficiency centers and programs form and staff public sector agencies, research institutes, local training, outreach and service agencies, research institutes, local training, outreach and service centers.centers.

Planning TechniquesPlanning Techniques

Energy Plan. It aims to reduce CO2 emissions increasing energy Energy Plan. It aims to reduce CO2 emissions increasing energy efficiency and renewable energy use. efficiency and renewable energy use.

- Contains achievable goals, measures and actions for - Contains achievable goals, measures and actions for achieving the goals, and monitoring and evaluation achieving the goals, and monitoring and evaluation procedures.procedures.

- Based on information and education efforts, grants and - Based on information and education efforts, grants and loans, financing, R&D, and regulatory measuresloans, financing, R&D, and regulatory measures

Planning TechniquesPlanning Techniques

Integrate resource planning IRP. The objective is to provide energy Integrate resource planning IRP. The objective is to provide energy consumption services as cost-effective as possible.consumption services as cost-effective as possible.

- It leads authorities and utilities to the largest and most cost-- It leads authorities and utilities to the largest and most cost- effective energy savings opportunities. effective energy savings opportunities.

- Identifies renewable energy technologies at the least cost.- Identifies renewable energy technologies at the least cost.

Integrate land use and transport planning. Leads to efficient urban Integrate land use and transport planning. Leads to efficient urban design and greater reliance on public transit systems.design and greater reliance on public transit systems.

CritiqueCritique

Overview:Overview: Author credibility and referencesAuthor credibility and references Good Points Good Points Constructive InputConstructive Input QuestionsQuestions

Author Credibility & ReferencesAuthor Credibility & References

PhD in Energy PolicyPhD in Energy Policy Director of SWEEP (Southwest Energy Director of SWEEP (Southwest Energy

Efficiency Project)Efficiency Project) Co-author of three books on Energy Co-author of three books on Energy

related Issuesrelated Issues Testified to US Congress on Energy Testified to US Congress on Energy

Issues Issues Used recent references: ’02, ’01, ’99, Used recent references: ’02, ’01, ’99,

…………

Good PointsGood Points

No ‘silver bullet’ approach for No ‘silver bullet’ approach for overcoming barriers for more overcoming barriers for more sustainable energysustainable energy

Ideas well articulated using concrete Ideas well articulated using concrete examples to drive points homeexamples to drive points home

Constructive InputConstructive Input

Most of the proposals focused Most of the proposals focused entirely on Developed countries (US, entirely on Developed countries (US, EU & Japan)EU & Japan)• Regulations: example of building codes Regulations: example of building codes

in developing countriesin developing countries• Developing countries lack technology to Developing countries lack technology to

implement new renewable energy implement new renewable energy sources and maintain already existing sources and maintain already existing onesones

• Financing in developing countriesFinancing in developing countries

Questions?Questions?