government action to accelerate adoption of energy efficiency

ExCo 05 // 20-22 September 2011

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Market Penetration of Energy Efficient

Technology: Role of Government Action

Amit Bando Executive Director, IPEEC


Government Action can

Accelerate Progress

on EE Technology Deployment

& Market PenetrationGovernment Action Can

Provide R&D Support Promote Public Awareness Provide Policy Stability

Support markets and industry Provide predictable regime

Establish Regulations, Standards & LabelsMonitor, verify & enforce standardsUse labels - promote awareness and branding

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ExCo 05 // 20-22 September 2011Government Action: Japan’s Top

Runner Program

Energy conservation law prescribes energy efficiency standards for appliances/vehicles Standards are set higher than the best

performance value of each product currently on sale in the market

Standard setting takes into account technological development 21 products are included 3


Government Action: Japan’s

Top Runner Program

(continued)Example: passenger vehicle standards were set in

1999 Target: By 2010, fuel economy improvement

would be 22.8% Fuel economy of passenger vehicles improved

by 22.8% during 1999-2005Example: air conditioners saw EE improvement of

67.4% between 1999-2004 Companies utilized technologies that they may

otherwise have waited to commercialize Improved consumer and retailer awareness –

using labels, etc. - accelerated pace of market penetration

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Government Action: USA’s

Refrigerator Standards,

Labels & Incentives Program

Between 1945 and 2010, the average refrigerator volume has increased from 8 cubic ft. to 21 cubic ft.

Government action on standards, labels and incentives led to sustained EE improvement During 1945-1978 the annual energy used by a

typical refrigerator quadrupled In 1978, refrigerator standards were introduced in

California – other states followed Since 1978, the annual energy used by a typical

refrigerator has declined steadily - reached 1945 levels in 2010 This has not interrupted the long-term decline in real

purchase price – declined from $1,000 to $600 (2009$) 5


Government Action: USA’s

Refrigerator Standards,

Labels & Incentives Program

(cont.)

Government Action on Standards, Labels and Incentives has accelerated the decline in life cycle costs (LCC) of refrigerators During 1945-1978, refrigerator LCC remained

steady at $5,000 (2009$) During 1978-2010, refrigerator LCC declined

steadily to $1,000 ((2009$)

Government Action has led to savings of about $20 billion/year in 2010 and $300 billion cumulative since 1978

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ExCo 05 // 20-22 September 2011Transition Technologies, Products and Services Follow Parallel Journeys

Technology Journey

Company Journey

Market Journey

Regulation Journey

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The Technology Journey

Basic Research - Proof of PrincipleApplied Research - Proof of ConceptEarly Demonstration – Proof of

ValidityFull Demonstration – Proof of ViabilityMarketed Product – Proof of ValueWarranted Product – Proof of Quality

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The Company Journey

Individual Innovators – Own CapitalSmall Group - Venture Capital

Start-up Company Unit Within a Company

Medium Size Company - RevenuesLarge Scale Operation - Profits

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The Market JourneyDemonstration & Sample Distribution

Creating Awareness & Testing Potential

Early Adopters and Niches Positive Potential

Rational Economic Purchase Market Pull

Technology and Market Evolution Feedback

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The Regulation Journey

General Regulation - Negative Often Unintended

General Regulation - NeutralSpecific Regulation - PositiveGeneral Regulation - PositiveGeneral Regulation - Neutral or

Positive

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Effective Government Action Recognizes the Stage of Each Journey

A “policy package” constitutes effective action In Japan, government action enhanced market

pull by using specific (positive) regulation to provide proof of value and positive profits

In the US, progress on the regulation journey from specific (positive) to general (neutral) has been accompanied by movement on the market journey from early adopters to market evolution

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Thank you

For more information, contact the IPEEC Secretariat:

Amit Bando: [email protected]

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mailto:[email protected]