Responding to the Energy Efficiency Challenge

Panel PresentationDOE Energy Efficiency Conference

Istanbul June 3-4

Dr. Marianne Moscoso-OsterkornREEEP Director General

2

Source: BP Yearbook, IEA

The rise in energy demand will be driven primarily by emerging markets

China accounts for 15% of world energy demand, with 19% of the world’s population.

3

3 reasons for modern economies to focus on energy efficiency

Competitiveness

•Reduce emissions•Improve life quality•Contribute to international climate responsibilities

• Reduce dependency of energy imports • Reduce exposure to oil price volatilities

•Improve productivity•Enhance industrial competiveness

Sustainable Development Security of supply

Using proven technologies

4

Actual energy use

Additional energy use without

savings

0

20

40

60

80

100

120

140

160

1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997

ex

ajo

ule

s

50%

The hidden benefit: 50% of increase in energy demand in the last 20 years has been absorbed by energy savings

IEA-11

Source: IEA

5

There is still huge savings potential: today 80% of primary energy is wasted

Source: ABB 2007

6

"China attaches great importance to energy conservation. We … give top priority to conservation."

Recognizing that the cleanest source of energy is more efficient energy use, the Presidents committed the relevant agencies … to accelerate energy efficiency improvements …

"If I were emperor of the world, I would put the pedal to the floor on energy efficiency and conservation …"

President

Hu Jintao

US Secretary of Energy

Steven Chu

PresidentBarack Obama

and

PresidentFelipe Calderón

Today’s leaders are aware of the importance of saving energy

"We recognise that we have to act on climate change in our own interest … we have adopted an ambitious National Action Plan ... We are committed to ambitious time-bound outcomes that will increase the energy efficiency of our economy … "

Prime Minister

Manmohan Singh

7

In many countries, green stimulus packages were used to target energy efficiency

Source: HSBC 2009

5.8%

6.9%

8.3%

9.3%

12.0%

13.2%

21.2%

37.8%

58.7%

80.5%

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Spain

UK

Canada

Australia

US

Germany

France

China

EU

S. Korea

2.1

2.5

2.6

7.1

12.4

13.8

22.8

30.7

112.3

221.3

0 50 100 150 200 250

UK

Australia

Canada

France

Japan

Germany

EU

S. Korea

US

China

Green stimulus regional ranking in USD bn Green stimulus ranking as a % of total stimulus

8

Energy intensity continues to decline around the world

Source: IEA

9

Japan scores best already, but aims to further improve energy efficiency by at least 30% by 2030

Source: IEA 2006, METI

World

South Korea

Russia

India

China

Indonesia

Middle

EastThailand

Canada

Australia

US

EU-27

Japan

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0Primary energy supply per GDP

Index: Japan=1

10

Total Final Consumption: 342 Mtoe

Residential14%

Commercial19%

Non-Specified0%

Agriculture and Fishing

1%

Non-Energy Use12%

Industry30%

Transport24%

Japan has showcased that EE transcends simple government policy;it requires a whole mindset

Source: METI, IEA 2007

Industry Improve EE by 1% annually in 13000 factories, annual reports Currently 30000 energy managers certified Tax reductions and subsidies Petroleum and coal tax (accounts for 533 billion Yen per year)

Transport EE program for large carriers Top-Runner-Program for vehicles Green taxation for vehicles

Residential EE housing standards and annual reporting on efficiency mesaures Top-Runner-Program (includes 21 products) EE labeling, includes TRP, another 16 products

Public Nationwide institutional system for EE promotion (Energy Conservation Centre, NEDO) Intensive education and information program at all levels of society

11

0

1000

1980 1990 2000

0

2000

Total Primary EnergyConsumption in Mtoe

GDP in million USD

0

3000

1980 1990 2000

0

6000

0

7500

1980 1990 2000

0

15000

0

3000

1980 1990 2000

0

6000

0

500

1980 1990 2000

0

1000

Decoupling growth and energy consumption is challenging for emerging markets

Source: EIA, World Bank

China India

TurkeyJapan US

12

Total Final Consumption: 1248 Mtoe

Residential25%

Commercial4%

Non-Specified2%

Agriculture3%

Non-Energy Use9%

Industry46%

Transport11%

China aims to reduce energy intensity per unit of GDP by 20% below 2005 levels by 2010

Source: IEA 2007

Industry Export taxes for energy intensive products (up to 15%) Top-1000-Enterprise-Program (2007: 38.7 Mtce saved) Introduction of energy management systems, audits, capacity building

Utilities Retiring 50 GW of small and inefficient power plants (coal and oil)

Transport High vehicle emission standards (40% above US) and excise taxes

Residential Building codes aiming at up to 65% reductions of consumption Mandatory standards and labels for appliances, lighting products etc. Expand heat supply from CHP Green Lighting Initiative

Public Public procurement focus energy efficient products Strong institutional support Energy Conservation Law

13

370

714

153

104.3

986

1314

301

610

127

73

629

1000

Coal consumption forpower supply (gce/kW h)

Energy consumption forsteel (kgce/t)

Energy consumption forcement (kgce/t)

Energy consumption forcrude oil processing

(kgce/t)

Energy consumption forethylene (kgce/t)

Energy consumption forsynthetic ammonia

(kgce/t)

Average in China W orld Average

Industry efficiency in China is significantly below world average

Above world average

+ 20 %

+ 17 %

+ 23 %

+ 43 %

+ 57 %

+ 31 %

Source: National Energy Bureau

14

China is the third largest construction market in the world:One half of global cement production occurs in China

The construction sector’s values:

India2007: USD 65 billionAccounting for 6.9% of GDP

China2007: USD 165 billionAccounting for 5.6% of GDP

US2007: USD 1200 billionAccounting for 8.7% of GDP

Source: Asia Development Bank, Solidiance

The chart compares the growth of the construction market in India and China (this compares to growth in the USA of <1%).

15

REEEP assists Chinese government in introducing special fiscal support to promote energy efficiency in buildings

Aim: Promote suitable financing models for energy efficiency interventions for building sector

Objectives:

Conduct market survey and barrier analysis on current financing mechanisms that promote EE in existing buildings in China

Develop two Chinese case studies on energy conservation projects in existing large-scale public and residential buildings

Submit new recommendations to the Chinese government for financing mechanisms to accelerate EE in buildings

Implementing Partner: Energy Research Institute of National Development Reform Commission

16

REEEP has started a comprehensive training program for Chinese architects

Aim: Provide comprehensive overview on energy efficiency solutions for the building sector – in cooperation with universities and private sector

Audience:Architects and representatives of construction sector policy makers, manufacturers and industry

The training will be held 4 times a year and includes follow up after one year

Content:Legal frameworks, standards, building envelop, lighting, cooling/heating, interior standards, information technology

REEEP- Private sector cooperation:Program was developed between Himin Solar Group and REEEP in close collaboration with LQLAB Shenzhen

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Importance of energy efficient standards: REEEP supports LED standards in China

Aim: Support the inclusion of Light Emitting Diodes (LEDs) in the Chinese government’s promotion of energy efficient lighting solutions by developing standardized test methods and evaluation criteria for LED lighting products

Objectives:Market assessment of current LED industry in China, including existing national and international testing methods and evaluation criteria for LED lighting products

Develop appropriate LED testing methods and evaluation criteria for meeting current needs in China

Test the feasibility of the newly developed LED testing methods and evaluation criteria within China

Implementing Partner: National Lighting Test Center

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Total Final Consumption: 393 Mtoe

Residential42%

Commercial3%

Non-Specified2%

Agriculture4%

Non-Energy Use10%

Industry29%

Transport10%

India’s Efficiency Bureau provides a strong and unique institutional basis for most of its national energy efficiency programs

Industry National Energy Conservation Awards Strong DSM programs in particular for energy intensive SME clusters Energy data reporting and benchmarking Certification of energy managers and auditors

Utilities Promotion of ESCOs Pre-payment electricity metering

Residential Mandatory building codes for new commercial buildings from 2010 onwards Mandatory standards and labels for appliances (vans 27% of energy savings) EE in municipalities through ESCOs CFL program (replacement of 400 million light bulbs)

Public Conservation in school education Mandatory public EE procurement DSM programs for municipalities and agriculture Energy Conservation Act 2001

Source: IEA 2007

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REEEP support of SME’s: There are more than 380 clusters of SMEs in India, and industry accounts for more than a third of the country’s electricity consumption

Aim: Improve energy efficiency of small and medium enterprise (SME) industrial clusters through carbon trading

Objectives:Conduct pilot energy audits on 3-5 industries within a selected, energy-intensive SME cluster

Design mechanisms that enable affordable, bulk purchasing of EE equipment

Build a liaison with a carbon trading mechanism, e.g. CDM, to trade collective carbon emissions

Disseminate model to other SME clusters through publications and local workshops

Implementing Partner: Alliance to Save Energy

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Source: IEA WEO 2008

As an example: The number of countries applying mandatory energy standards for buildings increased over 60% between 1994 and 2009 , currently 61 countries have such codes implemented

Market forces alone don’t deliver cost effective savings –supportive policies / incentives are needed

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Effective Energy saving programs must consist of a whole package of measures

Standards and Labels Industry processes & equipment / household appliances Building codes Vehicles & fuel standards

Mandatory and/or voluntary tax incentives or penalties (such as export tax), direct

subsidies/rebates Financial support through public funds Special support for ESCOs

Targeted power industry programs Targeted EE improvements in generation and transport Improved metering (smart meters) Increase renewables and CHP

Education and Management Special education programs at all levels Introduction of management procedures (KAIZEN) Certification of energy managers and auditors Targeted awards

Public sector energy efficiency programs Green public procurement and investments DSM programs for municipalities and public sector Data collection and provision

Public and sectoral programs Special incentives for training and capacity building Publicly accepted certification

Mandatory and/or voluntary Regulatory measures, quotas/certificates (white

certificates, EERS) and Revenue Stability Mechanism Fiscal incentives Promotion of ESCOs

Mandatory and/or voluntary Special budget positions Public reporting

REEEP International Secretariat

Vienna International CentreRoom D1732

Vienna, Austria

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