Where to place the saving obligation

1

Where to place the saving obligation: end-users or suppliers?

Beta Paramita 2011DBB402Chau Thi Cam Hong 2012WACO16Qiong Wu 2012 DBB001

2

CONTENT

ProblemResearch AreaAim of Study

BACKGROUND

Energy Saving Obligation to Utilities Obligation to large end-users Where to place the obligation?

DISCUSSION

The best scheme for energy saving in residential and commercial + industrial sector

CONCLUSION

3

Background

Climate change

mitigation

Reduce energy demand

Who will be subject to the obligation

Energy Savings (ES) without technology-- behavioural aspect

Energy Efficiency (EE)-- technological aspect

What is the total obligation

How is the obligation defined

Cheapest

Fastest

Decision of the Setting of an obligation

To overcome the barriers

Labels and standards, building codes, information campaigns, voluntary agreements, taxation, investment subsides, suppliers’ obligations and financial incentives.

Market based mechanisms

BACKGROUND

4

Aim of this paper

EUROPE (EU) : ITALY, FRANCE, FLEMISH REGION UNITED KINGDOM UNITED STATES AUSTRALIA JAPAN

RESEARCH AREA

To explore several innovative policies and measures implemented worldwide, identify the obliged parties and the reasoning behind that, and come up with useful suggestions for policymakers.

MAIN OBJECTIVE

5


BACKGROUND


DISCUSSION


CONCLUSION

6

Energy saving obligations to utilities

obligations to utilities

USAustralia

Energy Saving Obligation to Utilities

7

A new policy instrument introduced in the EU to support energy efficiency is introducing

obligations on some categories of energy market operators to deliver a certain

amount of energy savings.

A tradable savings certificates

white certificates

Energy saving obligations to utilities in EU

8

White certificates in EU

Establishing energy saving obligation on some category of market actors;

Technical processes to support the scheme and the market backed by a reputable body authorising that the claimed energy savings are valid;

Tradable instrument as well as rules and, if deemed necessary, infrastructure for trading;

Cost recovery mechanism in some cases;

Enforcement mechanisms and sanctions.

White Certificate in EU

A kind of documents White certificates certify that a certain reduction of energy consumption has been attained;Based on suppliers’ obligationAn obligation to achieve a certain target of energy savings, if energy producers do not meet the mandated target for energy consumption they are required to pay a penalty;Tradable The white certificates are given to the producers whenever an amount of energy is saved whereupon the producer can use the certificate for their own target compliance or can be sold to (other) parties who cannot meet their targets

Concept of White Certificates

Core elements of white certificates

9

In Europe several countries have implemented a white certificate scheme or are seriously considering doing so.

Italy started a scheme in January 2005; France and Denmark a year later. Great Britain has combined its obligation system for energy savings with the possibility to trade obligations and savings. The Netherlands and Poland are seriously considering the introduction of a white certificate scheme in the near future.

White Certificate in EU

Energy Efficiency in US

Energy saving obligation in US: Target referred to EERSs

(Energy Efficiency Resource Standards)

Combined with renewable energy obligation

referred to RPSs (Renewable Portfolio Standards)

Texas was legislated for distributors to offset a certain percentage of their load growth through end-use energy efficiency.

Five states have incorporated tradable certificates in their portfolio standards ,but only Connecticut is actively.

Some states energy efficiency has been introduced as a target delivery option within renewable energy obligation.

An important structural feature of combined renewable and efficiency portfolios in the US are the resource tiers, which specify the type of resources that are expected to contribute to a certain share of the overall target

Resource tiers

Separate tiers for efficiency and renewable energy allow capturing energy saving opportunities and are likely to provide more certainty to

market.

Combined efficiency and renewable portfolio targets are mostly adopted

US Experience

Texas is the first state introduce a certain percentage of their load growth through end-use EF

scheme was introduce before 2005 and came into force in 2007-2008 5 states incorporated tradable certificates in their portfolio standards, but only Connecticut is actively trading, North Carolina and Illinois are gathering input on certificate trading

before 2005

2006

The end of 2010 26states have energy efficiency by target as EERSs combined with renewable energy as RPSs

2010

Apart from supplier/distributor obligation, include obligation borne by a state agency called Energy Efficiency UtilityEx. Vermont

Trading GHG Emissions in US

A mandatory scheme that enables trading of GHG emissions for power generation in the US is the Regional Greenhouse Gas Initiative (RGGI) 10 states : Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont have capped and will reduce CO2 10% by 2018

The main characteristic of this scheme is that auctioning of allowances is predominant and the main projects that can be financed by the revenues collected through auctioning refer to energy efficiency and renewable energy

Energy Efficiency in Australia

Greenhouse Abatement Certificates (GGAS) introduce since 2003 in NSW, Australia To achieve the required reduction in emissions, eligible parties purchase and surrender tradable certificates called New South Wales Greenhouse Abatement Certificates (NGACs).

2003

Separate scheme :1. The energy Saving Scheme (EES)

in NSW2. The Energy Efficient Target in

Victoria (VEET)3. The Residential Energy Scheme

in South Australia (REES)

2009

Australian Bureau of Agricultural and Resource Economics and Sciences, Energy in Australia 2010, Table F: Australian energy consumption, by industry and fuel type


BACKGROUND


DISCUSSION


CONCLUSION

The Tokyo Emission Trading Scheme

Tokyo Metropolitan Government (TMG) start Tokyo CO2 Emission Reduction Program, prioritized from large-scale business and building, which emit 40% of all CO2 in this sector

2000

1st phase resulted average about 2% emission reduction then change the aim at a 25% in the city baseline carbon emission by 2020

2002 - 2005

1. Category 1-A: 8 % for office buildings, public facilities, commercial buildings, lodging, educational facilities, medical facilities, etc. that do not fall under Category 1-B;

2. Category 1-B : 6 % for buildings in which air conditioning/heating from district cooling/heating plants make up more than 20 % of energy consumption; and

3. Category 2 : 6 % for factories that do not apply to Category 1

2010 - 2015

Emission Trading Scheme (ETS)

1. Excess emission reductions trading between companies

2. SMF credits

3. Credits from outside the city

4. Renewable energy credits

5. Green Electricity Certification

6. City Solar Energy Bank

Trading in different forms, such as:

18

The UK carbon reduction commitment

(recently renamed the CRC energy efficiency scheme)

The CRC is a mandatory scheme aimed at improving energy efficiency and cutting emissions in large public and private sector organizations.

These organizations are responsible for around 10% of the UK’s emissions.

19

The CRC energy efficiency scheme

20

Converting fuel types to CO2 Gross CV Basis

Fuel Type Measurement 　 Unit Emissions Factor kgCO2 / per

measurement unit

Aviation Spirit tonnes 3128

Aviation Turbine Fuel tonnes 3150

Basic Oxygen Steel (BOS) gas kWh 0.996

Blast furnace gas kWh 0.996

Burning Oil/Kerosene/Paraffin litres 2.532

Cement industry coal tonnes 2373

Coke Oven Gas kWh 0.146

Commercial/Public Sector Coal tonnes 2577

Coking Coal tonnes 2932

Colliery Methane kWh 0.184

Diesel litres 2.639

Electricity kWh 0.541

Fuel Oil tonnes 3216

Gas Oil litres 2.762

Industrial Coal tonnes 2314

Lignite tonnes 1203

Liquid Petroleum Gas (LPG) litres 1.495

Peat tonnes 1357

Naphtha tonnes 3131

Natural Gas* kWh 0.1836

Other Petroleum Gas kWh 0.2057

Petrol litres 2.3035

Petroleum coke tonnes 2981

Scrap tyres tonnes 1669

Solid smokeless fuel tonnes 2810

Sour gas kWh 0.2397

Waste (other than waste oil or

waste solvents)

tonnes 275.0

Waste oils tonnes 3026

Waste solvents tonnes 1613

Table of Conversion Factors

21

The CRC energy efficiency scheme

Participants in the CRC will also be able to purchase (but not sell) emission allowances from the EU Emission Trading Scheme at a price that is higher of the EU ETS price or the minimum CRC floor price.

The floor price was set at £16/t (= 1973.76 ¥) CO2 for 2013, gradually rising to £30/t (= 3700 ¥) by 2020

22


BACKGROUND


DISCUSSION


CONCLUSION

23

Where to place the obligations?

There are many diverse policy options for formulating energy saving obligations.

Their efficiency is likely to be correlated with local framework conditions and influential historically grown structures in the energy sectors of each country

24

Obligation Scheme on large end – users

Table of comparison of Energy Saving Obligation Scheme on large end – users Tokyo Emissions Trading Scheme UK CRC Energy Efficiency Scheme

Obligated actors Large end-users (~1,300 facilities & office buildings)

Large end-users (~5,000 private and public sector organizations)

Period 2010-2014 (2nd period: 2015-2019) 2010-2012 (2013 onwards: first capped period)

Target Cap based on 6% reduction to baseline 2000 (2nd period 17% compared to emissions in 2000)

Reducing around 1.2 million of CO2 per year by 2020

Coverage 40% of commercial & industrial sector emissions, mostly electricity

Around 25% of business sector emissions, electricity

Unit CO2 – emissions reductions CO2 – emissions reductions

Allocation Grandfathering Auctioning

Compliance Reducing electricity consumption through installing efficient equipment at own sites, or buying credits on the market (Eligibility of renewable energy credits, green electricity certification, credits stemming from city solar energy bank)

No individually specified target but incentive to reduce electricity consumption by becoming more efficient

Measurement reporting and verification

Self reporting according to Guideline from the municipal government

Self-certification of emissions (spot audits)

Penalty/incentive mechanism

Increase of target by 1.3 Public league table revealing comparative emissions reduction performance

25

Are overall final or primary energy savings to be achieved and in which sectors?

Shall energy saving be reached via network-bound energy only?

Shall only the untapped potential in the residential sector be addressed?

Shall all measures be tailored so that they reduce the maximum amount of carbon dioxide?

Overall design and target setting

26

Source: Based on the information from “The Digest of United Kingdom Energy Statistics 2006”.

Obligation of energy saving to distribution companies

Stable regulated companies Have no strong link to end-user

have no interest to develop energy service as added value

supplier obligation are imposed to retailers

possibility of conflict with their main resources

regulated end-user tariffs

EN

ER

GY

MA

RK

ET

ST

RU

CT

UR

E

ITALY + FLEMISH REGION

UK + FRANCE

alternative to deliver energy saving target, like Vermont as state-wide provider of energy efficiency, it is run by a competitively selected contractor

UNITED STATES

27

obligation of energy saving to distribution companiesstable regulated companiessupplier have an interest in delivering them selves placing obligation on distribution company may

stimulate third actor involvement

FRANCE, GREAT BRITAIN, ITALY AND FLEMISH REGION)

distribution companies under obligation are requested to contract our part of efficiency project to independent companies

DENMARK

have no supplier obligation, not directly triggered by the white certificate

SPAIN, GERMANY, SWEDEN

ENERGY SAVING OBLIGATION ARE NOT REALLY CHANGING THE UTILITIES BUSINESS MODELS TO ENERGY SERVICE COMPANY

ELIG

IBLE

AC

TO

R

28

BARRIERS

It will directly get full credit for implemented action economic and public image benefits

Private end-user tend to be more cost cautious recovery mechanism burden into every actor on the chain, which is takes its profit margins

Direct end-use obligations may be expected to bring lower transaction costs for obliged parties

Easier to integrate the transport sector into end-user obligations to cover emission/energy consumption for transportation

PLACING THE OBLIGATION ON LARGE END-USER

TRADING MECHANISM WILL BRING WIDER BENEFITS TO A SYSTEM WITH OBLIGATIONS IMPOSED ON END-USERS.

29

Energy market structure less important when the obligation to is put on large end-user

Such as Tokyo ETS and CRC , they define a minimum threshold for eligibility which is called personal carbon allowance

Energy efficiency in residential sector more easier to delivered by mechanism of supplier and often dominated by standard, straightforward and well-understood technologies such as efficient product

Energy efficiency operator like VERMONT model, also an alternative mechanism

Supplier VS Large End-user:

30

CONCLUSION

Putting an obligation on an actor allocates responsibility and will lead to the delivery of energy efficiency measures

Separates obligations may be establish in order to reach certain targets

The most important type of potential sector will be harnessed by saving obligation residential vs industrial and commercial sector

For residential sector the utilities (mainly supplier) could be place to deliver the saving

ESCO play an important role in delivering saving for industrial and commercial sector

31

どうも　ありがとうございます

Where to place the saving obligation

Education

Transcript of Where to place the saving obligation