session 4a energy efficiency governance sara …© oecd/iea 2010 session 4a energy efficiency...
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© OECD/IEA 2010
Session 4A Energy Efficiency Governance Sara Bryan Pasquier, David Morgado
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Outcomes of “Good” EE Governance
Implementation authority is clear
Implementation partnerships are created
Accountability is established
Political consensus is built
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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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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Flash quiz
1. Do you have an energy efficiency strategy or action plan in your country?
2. Describe it:
Comprehensive or narrow?
Carrots or sticks?
Who is responsible?
Is it working?
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EE Funding Mechanisms
Reliable and adequate funding is essential
No coincidence: countries with well-developed EE industries have effective EE funding mechanisms
Key considerations for effective funding include:
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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Guidelines for EE Funding
Funding from budget appropriations puts EE implementation at risk of short-term fluctuations
Earmarked energy/environmental taxes and system public benefit charges pay a double-dividend: generate revenue;
discourage energy consumption by raising prices.
A mix of different funding sources contributes to overall funding reliability
System public benefit charges (such as in Brazil) are a close-to-ideal funding mechanism
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Flash quiz – How are energy efficiency programmes funded in your country?
1. List the main programmes
2. List the sources of funding
3. Does this funding approach satisfy the “good funding governance” criteria?
4. Bonus questions:
Have there been ups-and-downs in funding?
How could more funding be mobilized?
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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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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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Energy Providers as Implementers
Advantages:
Ready access to capital
Commercial relationship with end users
A familiar brand name
Widespread service and delivery network within their jurisdiction
Responsible for meeting energy demand growth.
Disadvantages:
Overlap in commercial and societal interests
Incentive to sell, not conserve, energy
Need for regulatory oversight
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Other institutional arrangements
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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Flash quiz: Institutional arrangements
Which is the most common type of EE implementing organization in your country?
What role do energy utilities play and could they do more?
How about new types of EE organizations?
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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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Flash quiz
How is energy efficiency policy coordinated in your country?
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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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Issues and complexities
Political utility Mobilising stakeholders
Creating accountability in government
Target horizon
balancing ambition and practicality without straining credibility
Proven approach: long-term goal accompanied by interim targets
Economy vs. sector targets
Variations in efficiency improvement potential and costs across sectors
Proven approach: Economy-wide goals with sectoral targets
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Flash quiz
Do you have energy savings or GHG emissions reduction targets in your country?
How are they expressed?
How is progress towards the target measured?
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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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Exercise
a) Formulate an energy efficiency law
b) Design an energy efficiency agency
c) Establish an energy savings target
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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