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Sustainable Energy Policy and Technology – Regional Training Seminar for Central America Session 2: Energy efficiency Governance Grayson Heffner Senior Energy Efficiency Advisor 11 June 2013
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What is energy efficiency governance?
Combinations of legislative frameworks, institutional arrangements, funding
provisions, and coordination mechanisms that enable the effective implementation of
energy efficiency policies
Outcomes of “good” energy efficiency governance
Implementation authority is clear
Accountability is established
Political consensus is built
Implementation partnerships are created
Resources are mobilized
Oversight arrangements are in place
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Enabling frameworks
Laws and decrees
Strategies and action plans
Funding mechanisms
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Energy Efficiency Laws and Decrees
Give direction to government action
Provide statutory basis for regulations and market mechanisms
Assign responsibility for implementation
Specify funding mechanisms for EE implementation
Set oversight arrangements
25% 23% 23%
4%
17%8%
37%
26% 24%
3%
8%
23%
31%
19%
8%
8% 12%
25%
17%
8%
23%
15% 12%
A specific law
focuses on energy efficiency
Energy-sector laws
include energy efficiency
Energy efficiency
included within the laws of other
sectors
No legal framework Tax legislation Other
Worldwide
IEA EBRD Latin America Non-IEA Asia, MENA and Africa
Legal Frameworks Promoting Energy Efficiency
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Issues to consider in formulating laws and decrees Scope: Comprehensive or Narrow?
Comprehensive laws can take years to enact
Narrow laws can be quickly enacted but have less impact
Soft law – hard law
Soft laws articulate objectives without specifying policies
Hard laws convey authority and specify obligations
Avoiding implementation delays
Balancing ‘carrots’ and ‘sticks
Carrots include incentives & market mechanism
Sticks include rules & regulations
Both are needed
Assigning implementation responsibility
Resources and capacity building must accompany responsibility
Taking on difficult sectors (transport, public sector)
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Energy Efficiency Laws in LAC Region
Country Title Coverage Enacted Key Provisions Reference
Brazil Law 10.295
Framework Labelling
2001 Sets out the National Policy for Conservation and Rational Use of Energy.
UNECE 2010 http://www.latinapproval.com/282
Brazil Law 9.991
Utilities 2000 Establishes a wire charge whereby a percentage of the utility’s revenues (0.5%) is earmarked for energy efficiency activities.
UNECE 2010
Costa Rica
Law 7447
Decree 25.584
Cross-sectoral
1996 Mandates the electric utility and the Ministry of Energy & Environment to execute rational energy programmes in companies with high energy consumption levels.
http://www.bioenergywiki.net/images/f/f0/Alternative_Energy_in_Costa_Rica-_Opportunies_and_Barriers.doc
Ecuador Executive Decree 1681
Public sector
2009 All Government institutions must establish an Energy Efficiency Committee to introduce energy-saving measures.
UNECE 2010
Mexico Sustainable Use/EE Law
All November 2008
Provides the legal framework for the development and implementation of strategies, policies and programmes.
http://en.wikipedia.org/wiki/Electricity_sector_in_Mexico#Energy_Efficiency_Law
Peru
Law 27,345)
Cross-sectoral
2000
Rev. 2008
This law assigns the Ministry of Energy and Mines (MINEM) as the competent authority to promote the efficient use of energy by creating a culture for the rational use of energy,consultancy services and ESCOs.
www.ieej.or.jp/aperc/CEEP/Peru.pdf
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Strategies and Action Plans
Importance Place EE policy within the broader policy context;
Prioritise energy efficiency policies;
Capture synergies between policies;
Engage stakeholders and build consensus;
Assign responsibility & establish accountability
Guidelines for effective strategies & action plans Take a long-term, high-level viewpoint
Have a strong analytic foundation;
Incorporate specific time-bound targets;
Be comprehensive and consider all sectors
Prioritise the most-promising sectors and policy measures;
Identify the resources needed to turn strategy into action;
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EE Strategies and Action Plans in LAC
Country Strategy
Brazil Brazil National Climate Change Plan
Chile Draft Action Plan
Costa Rica Programa Nacional de Conservación de Energia
México Energy Efficiency, Renewable Energies and Biofuels
Perú Reference Plan for Efficient Use of Energy 2009-2018
Brazil National Energy Plan 2030
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EE Funding Mechanisms
Reliable and adequate funding is essential
Countries with well-developed EE industries have effective EE funding mechanisms
Considerations for effective funding:
Adequacy - funding should be sufficient to finance policy implementation costs
Stability – funding should be steady and predictable
Autonomy –funding should be under the control of the implementing agency.
Origin – the funding source should be credible and contribute to overall EE policies.
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EE funding good governance
Funding mechanism Funding good governance score
Adequacy Stability Autonomy Origin Distortive
Effect
Government budgets √ √
Grants from other government agencies √ √
Energy or environmental taxes √ √ √
(if earmarked) √
System public benefit charges √ √ √ √
Stimulus funds √
Licensing and permitting fees √ √ √
Carbon finance √ √ √
Donor funding √
Fee-for-service arrangements √ √ √ √
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Discussion – enabling frameworks
Do you have an energy efficiency law or strategy in your country?
Comprehensive or narrow?
Carrots or sticks?
How are energy efficiency programmes funded in your country?
Does this funding satisfy the “good governance” criteria
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Institutional arrangements
Implementing agencies
Resourcing requirements
Role of energy providers
Stakeholder engagement
Public private sector cooperation
International assistance
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Implementing agencies
Two-thirds of countries recently surveyed indicated a
government-sponsored EE agency in place, defined as “a body
with strong technical skills, dedicated to implementing national
energy efficiency policy”.
There is considerable variety around the world
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Establishing EE Implementing Agencies
A statutory basis conveys status and permanency
Many organizational types from which to choose Generalized government energy agencies
Specialized government EE agencies
Combined EE/clean energy agencies
Independent authorities and state-owned corporations
EE NGOs
EE public/private partnerships.
EE institutional design should reflect implementation requirements and target sectors.
New types of EE institutions are emerging
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Energy efficiency agencies: a sampling
Organizational Type Examples
Country Organization
Department within a Government
energy agency
Canada
China
Indonesia
Russia
Singapore
Sweden
Thailand
Turkey
Natural Resources Canada
National Development & Reform Commission
Ministry of Energy and Mineral Resources
Russia Energy Agency
National Environment Agency
Swedish Energy Agency
Ministry of Energy
Ministry of Energy and Natural Resources
Specialized Governmental energy
efficiency and clean energy agencies
Brazil
Czech Republic
Hungary
India
New Zealand
Tunisia
Ukraine
Procel
ICE Group
The Energy Centre
Bureau of Energy Efficiency
Energy Efficiency and Conservation Authority
National Agency for Energy Management (ANME)
National Agency for Efficient Use of Resources (NAER)
Independent energy efficiency and
clean energy Statutory Authority or
Corporation
Costa Rica
Finland
Korea
Norway
ICE Group
Motiva Oy
Korea Energy Management Corporation
ENOVA
Energy efficiency and clean energy
NGO or public benefit organization
Jordan
United Kingdom
National Energy Research Centre
Energy Trust and the Carbon Trust
Energy efficiency and clean energy
Public/private partnership
Chile Agencia Chilena de Eficiencia Energética
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EE Institutional Arrangements in LAC
Country Apex Agency Energy Efficiency Agency or
Responsible Department Regulator Other Implementing Organizations
Brazil Ministry of Mines and Energy
National electrical Conservation program (PROCEL), CONPET
ANEEL Electric utilities, International Copper Association, Universidade Estadual de Campinas
Chile Ministry of Energy Programa País de Eficiencia Energética (PPEE)
National Energy Commission
Chilean Energy Efficiency Agency (Agencia Chilena de Eficiencia Energética, or ACHEE), Regional Working Tables, Empresas Electricas, Sustentank, Universidad de Chile, Ministry of Mining, Min. of Economy, Development and Reconstruction
Costa Rica Ministry of Environment, Energy and Tourism (MINAET)
Energy Sector Directorate (Dirección Sectorial de Energía or “DSE”)
ARESEP ICE, CNFL, BUN-Cam Instituto de Normas Técnicas de Costa Rica (INTECO), INCAE Business School, Centro Nacional de Producción Más Limpia, NGOs (CEGIST), Industrial chambers
Mexico Ministry of Energy (SENER)
Comisión Nacional para el Uso Eficiente de Energía (CONUEE)
Private organizations (ANFAD, AEAEE), Standards and certification organizations (ANCE, ONCEE), Public housing organizations (CONAVI and INFONAVIT), FIDE, ALESCO Consultores, PEMEX
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Choosing an implementing agency
Organizational Type Advantages Disadvantages
Government energy agency Access to decision-makers
Influence on policy & legislation
Limitations on salary and staff
Difficulty in taking decisions
Must compete for attention
Turnover of officials
Government energy efficiency and clean
energy agencies
Credibility with other public agencies
Ability to specialize and focus
Often have a firm basis in law
Cultural benefits
Limitations on salary and staff
Potential opposition from elsewhere
within government
Independent energy efficiency and
clean energy Statutory Authority or
Corporation
Linkages to private sector
Access to multiple public & private
funding sources
Independence and autonomy
Firm basis in law
Cultural benefits
Cannot directly access donor funding
Energy efficiency and clean energy
Public/private partnership
Independence and autonomy
Access to private sector resources,
Cultural benefits
Only indirect access to policy makers
Difficulty in policy coordination
May not be permanent arrangement
Energy efficiency and clean energy NGO
or public benefit organization
Independence and autonomy
Credibility with stakeholders and
consumers
Cultural benefits
Only indirect access to policy makers
Must compete for resources
Lack of authority
Difficulty in policy coordination
May not be permanent arrangement
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Other institutional arrangements Energy providers as implementers
Ready access to capital and energy consumers
Need to overcome the incentive to sell, not save, energy
Stakeholder engagement
Useful in building consensus
Improves policy quality
Often leads to energy efficiency legislation
Public-private cooperation
Public-private partnerships
Voluntary energy efficiency agreements
ESCOs
International donor assistance
Useful in creating interest in energy efficiency
Creating regional networks is an effective approach
Creating sustainable results
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Discussion: institutional arrangements
Which is the most common type or EE implementing organization in your country?
Is there scope for public-private partnerships?
Are donors active and effective in promoting energy efficiency policies?
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Coordination
Coordination mechanisms
Targets and goals
Evaluation
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Intra-
Governmental
(Horizontal)
Inter-Governmental
(Vertical) Cooperation across levels of
government, including
national, regional and local
government entities
Cooperation among national
government ministries and
agencies
One Several Many
Useful horizontal
coordination
Internal coordination
Inter-agency agreements
Coordinating committees
Number of institutions with energy efficiency responsibilities
One Several Many
Useful vertical
coordinationPartnerships Demonstrations
Programmatic (Block Grants)
Levels of Government or number of Government Entities
Coordination Mechanisms
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Targets and goals
Value of EE targets
Motivate, challenge and direct EE policy
Facilitate results monitoring & policy adjustments
A concrete basis for planning programs, mobilizing funding, & staffing-up agencies.
Targets should be carefully developed and formulated
Strong analytic foundation
Should not stretch credibility
Should not be too long-term w/o interim targets
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Formulating EE (or Carbon) Targets
Type of
Target Description Aggregation Time frame
Defined
improvement
Energy consumption or
emissions (GWh, MtCO2)
Jurisdiction
Sector
Industry
Enterprise
Facility
End-use
Long term
Medium term
Short term
Intensity Energy consumption or
emissions per unit of
economic activity
Elasticity Ratio of growth in energy
consumption or
emissions to growth in
GDP or output
Benchmark Energy consumption or
emissions relative to
others
Transactional Buildings weatherized or
CFLs installed
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Energy efficiency target examples
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EE targets in LAC region
Country Target Notes Association with Intl. Agreement
Brazil Decrease of 12-15 MtCO by 2020 Actions voluntary; use of CDM not excluded; actions expected to result in reduction of 36.1-38.9% from BAU projected emissions by 2020.
Copenhagen Accord
Costa Rica Energy conservation goal of 15-18% by 2021. Part of the energy conservation strategy.
Actions outlined in Copenhagen Accord
México Reduce CO2 emissions up to 30% below the BAU scenario in 2020; reduce total annual emissions 51 MtCO2 by 2012.
Perú 15% energy savings among the residential, industry (productive and services), public and transport sectors; base year 2005, goal year 2018.
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Evaluation
Evaluation is crucial as EE impacts are difficult to measure
Evaluation is important in all phases of EE policy:
Learning from previous EE policy and programs
Process and market evaluation during implementation helps assists EE managers to make needed corrections;
Checking progress towards overall targets and goals
Although critically important, evaluation is often not done
Evaluation remains superficial in most countries
Evaluation and data collection capacity is critically low
Evaluation is often considered an “overhead” cost
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Evaluation
Success factors: Include evaluation within policy & program design
Adopt and require common methodologies and protocols
Invest in accurate data and statistics
Assure adequate funding, including evaluation set-asides
Develop and retain high calibre staff
Create an “evaluation culture”
Require evaluation as part of oversight arrangements
Adopt “good governance” especially for evaluation: Data credibility
Independence and objectivity of analysis
Transparency of results
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EE governance elements interact
EE Governance Mechanisms
EE Governance Outcome Objectives
Confer authority
Build consensus
Establish partnerships
Assign responsibility
and create accountability
Mobilise resources
Establish oversight of results
Laws and decrees
Strategies and action plans
Funding mechanisms
Implementing agencies
Resourcing
Role of energy providers
Stakeholder engagement
Public-private sector co-operation
International assistance
Governmental co-ordination
Targets
Evaluation
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Small Group Exercise: Formulate an energy efficiency law
You have been assigned to develop an energy efficiency law
Discuss and decide what are the three most important things to include in your law
Which sectors would your law target?
What type of policies would it include?
List the steps required to enact the law
Who should be consulted in developing the law?
Report out to the entire class
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Group Exercise: Design an energy efficiency agency
You have been assigned to establish a new energy efficiency agency in your country
Discuss and decide:
What functions would the agency perform?
What kind of institution would be most effective?
Where should your agency be located?
What kind of institution would be most effective?
Discuss:
Which other agencies would you need to coordinate with?
What would be a a stable funding mechanism?
Report out to the entire class
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Small group exercise: Establish an energy savings target and tracking mechanism
What purpose would a target serve?
Which agency should take the lead to develop a target?
How would you express the target?
Energy, GHG
Target year and baseline year
Sectoral or economy-wide?
How would you measure progress?
What data would you collect?
What if progress falls short of the target?
Report back to the entire class
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Small group exercise: develop an inter-governmental coordination strategy
You work for the ministry but would like to involve sub-national governments (provinces, municipalities) in delivery energy efficiency
Discuss the pros and cons of involving local jurisdictions in delivering energy efficiency. What role should they play?
What kind of incentives could you offer?
How would you monitor progress and coordinate across local jurisdictions?
Report your strategy back to the entire group