The Global Evolution of Energy Efficiency Policy and its ...eneken.ieej.or.jp/data/7309.pdf · China Wordl Energy use covered by mandatory efficiency regulations World China India

The Global Evolution of Energy Efficiency Policy and its implications for Japan Policy and its implications for Japan Brian MotherwayT k I tit t f E Effi i f JTokyo, Institute for Energy Efficiency of Japan

IEEJ：May 2017 © IEEJ2017

Overview

• Recent trends- Savings from energy efficiency- Policies

• Energy efficiency as a part of central energy policy- Climate policyp y- Energy security- Industrial competitiveness- Cost of livingCost of living

• Future developments- New business models

© IEA 2017

New business models- Digitalisation

2


Savings from energy efficiency in Japan

Energy Intensity in the G7 (TPES/GDP in PPP)0.25

DP

in P

PP 0.2Canada

US

France

TPES

/G

0.1

0.15Japan

Germany

Italy

0.052000 2005 2010 2015

Italy

UK

© IEA 2017

Japanese intensity has decreased by 24% since 2000 (15% since 2010) and is 17% less than the G7 average

3


Savings from energy efficiency in G7

Final Energy consumption and savings in G7

3000

2000

2500 Efficiency savings

Mto

e

500

1000

1500M

0

500

2000 2015

© IEA 2017

Efficiency measures introduced since 2000 saved G7 countries 15% of their energy demand in 2015; Just as one example, tighter standards for household appliances saved 85 TWh of electricity

4


Savings from energy efficiency in G20

Final Energy consumption and savings in G20

8000

6000Efficiency savings

Mto

e

2000

4000M

02000 2015

© IEA 2017

Efficiency measures since 2000 saved G20 countries 13% of their energy demand in 2015; tighter standards for household appliances saved 200 TWh of electricity

5


The impact of efficiency savings on carbon emissions

CO2 i i i f ffi i i t i 2000

3.0

3.5CO2 emissions savings from efficiency improvements since 2000

2.0

2.5

CO2

IEA countries

1.0

1.5GtC

China

0.0

0.5

2000 2005 2010 2015

© IEA 2017

In 2015, efficiency gains in IEA and China reduced their combined emissions by 15%;Efficiency policy in China has become one of the most important global actions to reduce emissions

6


Coverage of mandatory energy efficiency policies is increasing globally

EuropeanUnion

Canada

United States

Mexico

KoreaJapan

India

China

Indonesia

India

Brazil

South Africa Australia

© IEA 2017

Policy coverage in Japan extends across all end-use sectors

7


Mandatory energy efficiency regulations are a key policy driver

ChinaWorld

Energy use covered by mandatory efficiency regulations

WorldChina

IndiaEuropean Union

JapanUnited States

China2015

ChinaUnited States

JapanEuropean Union

I di

2015

I d iBrazil

MexicoKoreaIndia

2000

IndiaKorea

MexicoBrazil

2000

0% 10% 20% 30% 40% 50% 60%

Indonesia

Share of mandatory efficiency regulation coverage

Indonesia

Share of mandatory efficiency regulation coverage

0% 10% 20% 30% 40% 50% 60%

© IEA 2017

Japan is one of the top 3 nations with highest share of energy consumption covered by standards, primarily due to the Top Runner Programme

8



Final Energy consumption and savings in Japan

400

300Efficiency savings

Mto

e

100

200M

02000 2015

© IEA 2017

Efficiency measures since 2000 saved Japan 19% of its energy demand in 2015; tighter standards for household appliances saved 15 TWh of electricity

9



Breakdown of energy demand change in Japan between 2000‐201530

Mtoe

0

10

20M

‐20

‐10

0 Economi

activity

Residentstructur

Transpor

Transpservice d

Economi

structure

Efficiency

‐40

‐30

c ial re rt m

ode

port dem

and

c e y

© IEA 2017

Due to efficiency improvement Japanese TFC decreased by 27Mtoe, 10% since 2000

10


Energy efficient space cooling equipment

100%

Performance standards for space cooling

100%

60%

80%80%

60%

20%

40%40%

20%

0%Japan Canada China Korea India United States EU Mexico Saudi Arabia

MEPS <2005 MEPS increase 2005-15

0%Japan Canada China Korea India United States EU Mexico Saudi Arabia

MEPS <2005 MEPS increase 2005-15

© IEA 2017

Japan’s space cooling standards are closest to best available technologies worldwide

11


Passenger vehicle standards

Additi l l b l i t ti l f li ti f J hi l t d d3 Other

Russia

Additional global savings potential from application of Japanese passenger vehicle standardsOther

Russia

2IndiaCanadaBrazil

India

Canada

Brazil

1Middle EastEUChi

Middle East

EU

Chi

02014

ChinaUnited States

China

United States

2014

© IEA 2017

Japan’s efficiency standards for passenger vehicles are best in class and if every major vehicle market adopted them, oil demand would be reduced by an additional 2.3 million barrels per day

12


The next phase for transport efficiency standards – Freight Trucks

Gl b l ti i li ht di d h t k d b ffi i t d d

50%

60%Global energy consumption in light, medium- and heavy-trucks covered by efficiency standards60%

50%

30%

40%

2015

40%

30%

2015

10%

20%

30%

2005

30%

20%

10%2005

0%

10%

Light duty vehicles Medium and heavy duty trucksLight duty vehicles Medium and heavy duty trucks

10%

0%

© IEA 2017

Japan was the first country to implement truck standards in 2005 with full enforcement phased in from 2015. These standards aimed to improve truck efficiency by 12% over 2002 levels by 2020.

13


Market Based Instruments (MBIs) for energy efficiency

Ch t t b d t d b F bi / SChart to be updated by Fabian / Sam

© IEA 2017

Utility obligations and efficiency auctions have been developed in many countries

14


MBIs create a market for energy efficiency

25 000

30 000

Rest of the world

Investment stimulated by market-based instruments

15 000

20 000

USD

per y

ear

Other European countries

Denmark

Italy

10 000

15 000

Millio

n

France

United Kingdom

Canada

0

5 000

2005 2015

United States

© IEA 2017

Market based instruments have led to USD 26 billion in energy efficiency investment

15


MBIs ha e orked s ccessf ll in man j risdictions b t the

Importance of policy design

• MBIs have worked successfully in many jurisdictions but the evidence on their relative effectiveness is not conclusive

• Freedom for private sector to innovate and discover best delivery routes

• Risk for policy maker that – if designed or implemented badly – market participants will find ways to game the y p p y gsystem

© IEA 2017

MBIs put a premium on good policy design, including strong monitoring, verification and evaluation

16


MBI design requires attention General design features of MBIs

esign

Monitoring & verification

EvaluationEligible measuresLifetimesFuel coverage

Calculation of savingsSectors

Structural factors

Obligation‐specific design features Auction‐specific design features

ng instr

umen

t de

P i i d

Existing policies

Obligated parties

Target

Customers

Cost recoveryCompetition with energy supplyCo

ntext shapin Pricing and

payment Project size

Historical, political and cultural factors

Banking and borrowing

Trading

Penalties

© IEA 2017

Many considerations are required around instrument choice and design

17


Considerable variation in cost among programmes

Expenditure by obligated parties and payments to auction winners per unit of energy savedExpenditure by obligated parties and payments to auction winners per unit of energy saved

© IEA 2017

MBIs are saving significant amounts of energy for less than the cost of supply

18


The market for energy efficiency services appears poised for growth

Global energy service company revenues by country/region 2015Global energy service company revenues by country/region, 2015

OtherUSD 1.9 billion

United StatesChina United StatesUSD 6.3 billion

ChinaUSD 13 billion

European UnionUSD 2.7 billion

© IEA 2017

The global energy services market was USD 24 billion in 2015 and indicators point to future growth

19


Energy efficiency’s role in wider policypolicy

20


New energy efficiency policies in other countries/regions

ff• European Union – Energy Efficiency Directive- 30% reduction in energy use by 2030

Chi 13th fi l• China – 13th five year plan- 15% reduction in energy intensity by 2020

• Canada• Canada- Energy efficiency key focus of new climate policy framework

• MexicoMexico- Energy transition law

• Other countries that are progressing energy efficiency policies:

© IEA 2017

p g g gy y p- Saudi Arabia, Brazil

21


Energy efficiency as part of mainstream energy policy

GHG emissions reduction by measure in the Bridge Scenario relative to the INDC Scenario 2030GHG emissions reduction by measure in the Bridge Scenario, relative to the INDC Scenario, 2030

European Union

Russia27%

United States

European Union

China

Middle East80%9%

76%

44% 42%

Japan

India

Latin AmericaAfrica

Southeast Asia

Efficiency34%

43%

32%

Fossil‐fuel subsidies

RenewablesInefficient coal plants

Methane reductions

32%

44%

Source: IEA, World Energy Outlook Analysis

© IEA 2017

Improvements to energy efficiency in Japan represent 42% of greenhouse gas emissions reduction

22


Where do emissions savings come from?

GHG emission savings from energy efficiency, 2030

Renewablesinvestment

Savings by measure, 2030

Mt CO2‐eq

‐50 ‐40 ‐30 ‐20 ‐10

Japan42%34%

S IEA W ld E O tl k A l iEnergy

Road transportHeating and cooling Appliances and lightingIndustrial motors24%

Source: IEA, World Energy Outlook AnalysisEnergy efficiencyReducing

inefficient coal

© IEA 2017

In Japan, the majority of greenhouse gas emissions savings from energy efficiency are obtained from improvements to industrial motors and road transport

23


Energy efficiency and energy security

Avoided imports for Japan from efficiency gains, 2015

1236

5)oe

8

10

24

30

billion

(2015

Mto

4

6

12

18

USD

0

2

0

6

Coal Oil Gas

© IEA 2017

Energy efficiency savings have reduced the amount of coal, oil and gas imports required by Japan

24


Energy efficiency and reduced energy import dependency

30

35Oil import savings and dependency

25Gas import savings and dependency

UKJapan

20

25

15

20

ings(M

toe)

G

Japan

5

10

15

5

10

Impo

rt sa

vi

Korea

Germany

Germany

Korea

0

5

0% 50% 100%00% 20% 40% 60% 80% 100%

UK

© IEA 2017

If energy savings from efficiency since 2000 are treated as a domestic resource, Japanese gas import dependency would be 13% less and oil import dependency would be 14% less in 2015

25


Efficiency measures following Fukushima

2011Power outages (March)

2012Numerical targets for

2013 – 2015Requirement for

2016Electricity savings• Power outages (March)

• Large user limits (August)• Numerical targets for

electricity use

• Numerical targets for required electricity saving

• Requirement for electricity savings (no numerical targets)

• Peak demand shift

• Electricity savings measures came to an end

© IEA 201726


Energy efficiency contributing to emergency response

R l t f l t i it l f l f ll i F k hiReplacement of electricity supply from nuclear following Fukushima

100%

60%

80%DemandRenewablesC l

20%

40%

CoalGasOilNuclear

0%

20%

2010 2012 2013 2014 2015

Nuclear

© IEA 2017

Energy efficiency improvements are responsible for replacing the largest share of nuclear power electricity supply in 2015

2010 2012 2013 2014 2015

27


Avoided electricity power plant from demand side

A id d l t it f d d id f ll i F k hiAvoided power plant capacity from demand side measures following Fukushima150GWe

100 Avoided

Gas

50Oil

Coal

02010 2011 2012 2013 2014 2015

© IEA 2017

Energy efficiency and conservation avoided 21 GWe of new electricity supply capacity since 2010, equivalent to nearly half of Japan’s total nuclear power generation capacity

28


Sectoral electricity demand change since 2010

S t l l t i it d d hSectoral electricity demand change

30

35

Mtoe

20

25

10

15

0

5

Industry Residential Service2010 2014 2010 2014 2010 2014

© IEA 2017

Electricity use between 2010 and 2014 decreased more in the industry and residential sectors than the service sector, although service sector energy use decreased more in 2011 than the other sectors

29


Energy efficiency in Japanese industry

3.01618

PP

Industrial energy intensity in IEA member economies and industry energy price, 2014

1.5

2.0

2.5

810121416

illion /

ktoe

n GVA

2005

PP

Energyintensity

0 0

0.5

1.0

02468

USD

m

PJ / $

US bn

Industrial0.00 Industrialenergyprice

© IEA 2017

Japan’s higher energy prices provide a strong economic driver for industrial energy efficiency

30


Comparison of industrial energy intensity

Industrial energy intensity in IEA member economies adjusted for industry structure 2014

141618

005 P

PP

Unadjusted

Industrial energy intensity in IEA member economies adjusted for industry structure, 2014

81012

/$US

bn G

VA 20 Unadjusted

0246PJ

/

Adjusted for structure0

© IEA 2017

Variation in industrial energy intensity due to multiple factors

31


Energy efficiency contributing to industrial competitiveness

Japanese non-metallic minerals manufacturing

180

140

160

2000

= 10

0)

100

120

Indica

tor (2

Source: IEA and WIOD (2016)

802000 2002 2004 2006 2008 2010 2012 2014

© IEA 2017

Despite rising energy prices, energy efficiency improvements have contributed to a reduction in the impact on gross value added and competitiveness

32


Energy efficiency in Japanese cement manufacturing

Thermal energy intensity of clinker production in cement manufacturing 2014Thermal energy intensity of clinker production in cement manufacturing, 2014

80%

100%

4

5 Thermal energy intensity

40%

60%

80%

2

3

4

/tonn

e clin

ker intensity

Clinker ratio

0%

20%

0

1GJ

Kilns with waste heat

Source: IEA Energy Technology Perspectives (2017)

heat recovery

© IEA 201733


Energy efficiency in Japanese cement manufacturing

Thermal energy intensity of clinker production in cement manufacturing 2014Thermal energy intensity of clinker production in cement manufacturing, 2014

80%

100%

4

5 Thermal energy intensity

40%

60%

80%

2

3

4

/tonn

e clin

ker intensity

Clinker ratio

0%

20%

0

1GJ

Kilns with waste heat

Source: IEA Energy Technology Perspectives (2017)

heat recovery

© IEA 2017

Thermal energy intensity in Japan is lower than North American or European countries due in part to a higher percentage of kilns with waste heat recovery

34


Energy efficiency benefits for Japanese households

Indices of energy price, proportion of income spent on energy, and efficiency in residential buildings

120

130 Energy price

100

110

120

% of income

80

90

100 income spent on energy

Efficiency

70

80

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

effect

© IEA 2017

Energy efficiency improvements within the residential sector limited the impact of rising energy prices on household expenditure on energy

35


Future developments for energy efficiency

• New models for delivering energy efficiency- Energy as a service- Integration with renewable energyg gy

• Energy efficiency as a fuel- Demand side responsep- Capacity auctions

• Digitalisationg- Advanced metering- Improved control and optimisation of industrial processes- Real time data collection and analysis

© IEA 2017

Real time data collection and analysis

36


Increased electricity demand by connected devicesICT electricity demand by segment Networked device electricity demand

Edge devices and user‐premise

y y g

1 000

1 200

y

network equipment42%

Networks 18%Other 19% 600

800

Wh

Data centres 21%200

400

600TW 0

200

2008 2011 2014 2017 2020 2023Source: IEA More Data, Less Energy (2014)

© IEA 2017

The energy use of connected/networked devices is growing rapidly, presenting new challenges for energy efficiency

37


Shif i f f idi

Integration of energy services – efficiency and renewables

• Shifting focus from providing energy to providing a service e.g. illumination, entertainment etc.

• Opportunity to increase combination of energy efficiency and renewable energy

• Example of BBOXX:- Energy efficient appliances together

with the BBOXX home solar system enable customers to use the following gappliances for up to 6 hours:- 4 LED lights;- 15.6” TV;- Radio;

© IEA 2017

;- Portable light;- Charge 2 mobile phones;

38


Energy efficiency and renewables will be the twin drivers of the transition

Global CO emissions savings in 450 Scenario relative to the New Policies ScenarioGlobal CO2 emissions savings in 450 Scenario relative to the New Policies Scenario

Efficiency

Source: IEA World Energy Outlook (2016)

© IEA 2017

The New Policies Scenario including all the NDCs from the Paris agreement still leaves a significant amount of efficiency potential untapped.

39


© IEA 2017


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Documents

The Global Evolution of Energy Efficiency Policy and its ...eneken.ieej.or.jp/data/7309.pdf · China Wordl Energy use covered by mandatory efficiency regulations World China India