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© 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
© 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?
© 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
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Upstream oil and gas *
Coal, oil and gas electricity generation ***
Renewable electricity
generation **
Energy efficiency
Renewable energy
subsidies *
Fossil fuel subsidies *
US
D b
illio
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Estimated range of USD 147 to 300 billion
EE stands alongside supply resources
© 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?
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MtoeEJ
Coal Oil GasElectricity Other Avoided energy useTFC
Total final Consumption (TFC)
Hypothetical energy use had there been no energy efficiency
improvements Avoided energy equal to 65% of 2010 TFC
© 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
© 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
© 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
© 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,
© 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
© 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.
© 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.
© 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.
© 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
© 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,
© 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’
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