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
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
Enabling frameworks Laws and decrees Strategies and action plans Funding mechanisms
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 Legal Frameworks Promoting Energy Efficiency 25% 23% 37% 17% 31% 8% 19% 26% 24% 25% 23% 23% A specific law focuses on energy efficiency Energy-sector laws include energy efficiency Worldwide 23% 8% 4% 15% 12% 8% 3% 12% 17% 8% 8% Energy efficiency No legal framework Tax legislation Other included within the laws of other sectors IEA EBRD Latin America Non-IEA Asia, MENA and Africa
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)
Energy Efficiency Laws in LAC Region Country Title Coverage Enacted Key Provisions Reference Brazil Brazil Costa Rica Ecuador Mexico Law 10.295 Law 9.991 Law 7447 Decree 25.584 Executive Decree 1681 Sustainab le Use/EE Law Framework Labelling 2001 Sets out the National Policy for Conservation and Rational Use of Energy. Utilities 2000 Establishes a wire charge whereby a percentage of the utility s revenues (0.5%) is earmarked for energy efficiency activities. Crosssectoral Public sector All 1996 Mandates the electric utility and the Ministry of Energy & Environment to execute rational energy programmes in companies with high energy consumption levels. 2009 All Government institutions must establish an Energy Efficiency Committee to introduce energy-saving measures. November 2008 Provides the legal framework for the development and implementation of strategies, policies and programmes. UNECE 2010 http://www.latinapproval.com/28 2 UNECE 2010 http://www.bioenergywiki.net/im ages/f/f0/alternative_energy_in_ Costa_Rica- _Opportunies_and_Barriers.doc UNECE 2010 http://en.wikipedia.org/wiki/elect ricity_sector_in_mexico#energy_ Efficiency_Law Peru Law 27,345) Crosssectoral 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
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;
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
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.
EE funding good governance Funding mechanism Funding good governance score Government budgets Grants from other government agencies Adequacy Stability Autonomy Origin Distortive Effect Energy or environmental taxes (if earmarked) System public benefit charges Stimulus funds Licensing and permitting fees Carbon finance Donor funding Fee-for-service arrangements
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
Institutional arrangements Implementing agencies Resourcing requirements Role of energy providers Stakeholder engagement Public private sector cooperation International assistance
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
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
Energy efficiency agencies: a sampling Organizational Type Department within a Government energy agency Specialized Governmental energy efficiency and clean energy agencies Independent energy efficiency and clean energy Statutory Authority or Corporation Energy efficiency and clean energy NGO or public benefit organization Energy efficiency and clean energy Public/private partnership Examples Country Canada China Indonesia Russia Singapore Sweden Thailand Turkey Brazil Czech Republic Hungary India New Zealand Tunisia Ukraine Costa Rica Finland Korea Norway Jordan United Kingdom Chile Organization 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 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) ICE Group Motiva Oy Korea Energy Management Corporation ENOVA National Energy Research Centre Energy Trust and the Carbon Trust Agencia Chilena de Eficiencia Energética
EE Institutional Arrangements in LAC Country Brazil Apex Agency Ministry of Mines and Energy Energy Efficiency Agency or Responsible Department National electrical Conservation program (PROCEL), CONPET ANEEL Regulator Other Implementing Organizations Electric utilities, International Copper Association, Universidade Estadual de Campinas Chile Ministry of Energy Programa País de Eficiencia Energética (PPEE) Costa Rica Ministry of Environment, Energy and Tourism (MINAET) Energy Sector Directorate (Dirección Sectorial de Energía or DSE ) National Energy Commission ARESEP 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 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
Choosing an implementing agency Organizational Type Advantages Disadvantages Government energy agency Government energy efficiency and clean energy agencies Independent energy efficiency and clean energy Statutory Authority or Corporation Energy efficiency and clean energy Public/private partnership Energy efficiency and clean energy NGO or public benefit organization Access to decision-makers Influence on policy & legislation Credibility with other public agencies Ability to specialize and focus Often have a firm basis in law Cultural benefits Linkages to private sector Access to multiple public & private funding sources Independence and autonomy Firm basis in law Cultural benefits Independence and autonomy Access to private sector resources, Cultural benefits Independence and autonomy Credibility with stakeholders and consumers Cultural benefits Limitations on salary and staff Difficulty in taking decisions Must compete for attention Turnover of officials Limitations on salary and staff Potential opposition from elsewhere within government Cannot directly access donor funding Only indirect access to policy makers Difficulty in policy coordination May not be permanent arrangement Only indirect access to policy makers Must compete for resources Lack of authority Difficulty in policy coordination May not be permanent arrangement
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
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?
Coordination Coordination mechanisms Targets and goals Evaluation
Coordination Mechanisms Intra- Governmental (Horizontal) Cooperation among national government ministries and agencies Useful horizontal coordination Internal coordination Inter-agency agreements Coordinating committees Inter-Governmental (Vertical) Useful vertical coordination One Several Many Number of institutions with energy efficiency responsibilities Partnerships Cooperation across levels of government, including national, regional and local government entities Demonstrations Programmatic (Block Grants) One Several Many Levels of Government or number of Government Entities
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
Formulating EE (or Carbon) Targets Type of Target Defined improvement Intensity Elasticity Description Aggregation Time frame Energy consumption or emissions (GWh, MtCO 2 ) Energy consumption or emissions per unit of economic activity Ratio of growth in energy consumption or emissions to growth in GDP or output Jurisdiction Sector Industry Enterprise Facility End-use Long term Medium term Short term Benchmark Energy consumption or emissions relative to others Transactional Buildings weatherized or CFLs installed
Energy efficiency target examples
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.
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
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
EE governance elements interact EE Governance Mechanisms Confer authority Build consensus EE Governance Outcome Objectives Assign Establish responsibility partnerships 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
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
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
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
Small group exercise: develop an intergovernmental 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