Market Transformations Summary By Samuel Parker. Introduction Market Transformation Goal: Make energy efficiency or renewable energy technology or practice.

Market TransformationsMarket Transformations

SummarySummary

By Samuel ParkerBy Samuel Parker

IntroductionIntroduction

Market Transformation Goal:Market Transformation Goal: Make energy efficiency or renewable energy Make energy efficiency or renewable energy

technology or practice the norm through coordinated technology or practice the norm through coordinated market interventionsmarket interventions

This approach has been developed, tested, and This approach has been developed, tested, and evaluated over the past ten yearsevaluated over the past ten years

China: National Energy China: National Energy Efficiency ProgramEfficiency Program

Program began in early ’80s to prevent energy from Program began in early ’80s to prevent energy from becoming a brake on economic growthbecoming a brake on economic growthProgram included:Program included:

Financial incentivesFinancial incentives New Government agenciesNew Government agencies Regulations and standardsRegulations and standards Energy researchEnergy research Training and technical assistanceTraining and technical assistance

Program Outcome:Program Outcome: China’s energy intensity fell by 50% between 1980 and 1997China’s energy intensity fell by 50% between 1980 and 1997 Overall energy consumption dropped in 1998-99 despite continued Overall energy consumption dropped in 1998-99 despite continued

economic growtheconomic growth

Success due in part to structural changes, but largely to Success due in part to structural changes, but largely to technological advancestechnological advances

United States: Appliance and United States: Appliance and Vehicle Efficiency ImprovementsVehicle Efficiency ImprovementsPrograms included:Programs included: State and Federal mandatory efficiency standards State and Federal mandatory efficiency standards Government funded R&DGovernment funded R&D Utility incentive programsUtility incentive programs Taxes on inefficient vehiclesTaxes on inefficient vehicles

Outcome:Outcome: Efficiency of common appliances increased Efficiency of common appliances increased

dramatically since 1970’sdramatically since 1970’s Fuel efficiency of vehicles rose steadily until it Fuel efficiency of vehicles rose steadily until it

reached a plateau in the mid 1980sreached a plateau in the mid 1980s

Brazil: More Efficient Electricity UseBrazil: More Efficient Electricity Use

PROCEL: national electricity conservation PROCEL: national electricity conservation programprogram Promotes end use electricity conservation as well as Promotes end use electricity conservation as well as

transmission and distribution system loss reductiontransmission and distribution system loss reduction

Tripled electricity saving from 1995 to 1998Tripled electricity saving from 1995 to 1998 Accomplished through:Accomplished through:

Increasing efficiency of appliances and electric machinesIncreasing efficiency of appliances and electric machines

Increasing market for efficient lightingIncreasing market for efficient lighting

Reducing electricity wasteReducing electricity waste Overall benefit-cost ratio of around 12:1Overall benefit-cost ratio of around 12:1

Netherlands: Industrial Energy Netherlands: Industrial Energy Efficiency ImprovementEfficiency Improvement

Long Term Agreements (LTA) between Long Term Agreements (LTA) between government and industrial sectors (1990)government and industrial sectors (1990) Contained legally binding targets calling for Contained legally binding targets calling for

20% increase in energy efficiency by 200020% increase in energy efficiency by 2000 In return, industries received tax incentives In return, industries received tax incentives

and protection from new regulationsand protection from new regulations

Goal of 20% met or exceeded by all Goal of 20% met or exceeded by all sectors by 1999sectors by 1999

China: Improved Cookstoves China: Improved Cookstoves DeploymentDeployment

Replaced 130 million inefficient, environmentally Replaced 130 million inefficient, environmentally hazardous cookstoves with improved modelshazardous cookstoves with improved modelsProgram accomplished throughProgram accomplished through

R&DR&D Decentralized training, promotion, monitoringDecentralized training, promotion, monitoring Training of rural companies and technicians to manufacture, install, Training of rural companies and technicians to manufacture, install,

and service improved stovesand service improved stoves Loans, tax incentives, and subsidies to help companies and low Loans, tax incentives, and subsidies to help companies and low

income householdsincome households

Resulted in 25% average fuel savings and improved air Resulted in 25% average fuel savings and improved air quality.quality.Showed that rural households are willing to pay for Showed that rural households are willing to pay for improved energy technology if the benefits are significant improved energy technology if the benefits are significant and costs are reasonableand costs are reasonable

United States: More Efficient United States: More Efficient Electricity Use in CaliforniaElectricity Use in California

Leading State in adopting:Leading State in adopting: Appliance efficiency standardsAppliance efficiency standards Building energy codesBuilding energy codes Utility energy efficiency programsUtility energy efficiency programs

Cut electricity use per unit of economic output by Cut electricity use per unit of economic output by nearly 30% from 1997 to 1999, compared to nearly 30% from 1997 to 1999, compared to relatively constant electricity intensity in other 49 relatively constant electricity intensity in other 49 statesstatesLowered pollutant emissions and increased Lowered pollutant emissions and increased economic outputeconomic output

India: Renewable Energy India: Renewable Energy ImplementationImplementation

Ministry of non-conventional energy sources est. Ministry of non-conventional energy sources est. 19921992 Supports both rural energy technologies and modern Supports both rural energy technologies and modern

wind power and solar photovoltaic (PV) systemswind power and solar photovoltaic (PV) systems One of the largest users of PV systems and fifth in the One of the largest users of PV systems and fifth in the

world for wind power capacityworld for wind power capacity 3 million biogas digesters installed with plans to build 3 million biogas digesters installed with plans to build

3 million more by 20123 million more by 2012

India has made tremendous strides in India has made tremendous strides in developing renewable energy energy markets developing renewable energy energy markets and supply infrastructureand supply infrastructure

Brazil: Ethanol FuelBrazil: Ethanol FuelBrazil leads the world in reliance on renewable energy: Brazil leads the world in reliance on renewable energy: 57% of total energy supply57% of total energy supplyProduction of ethanol fuel from sugarcane began in 1975Production of ethanol fuel from sugarcane began in 1975

Stimulated by a wide range of fiscal policiesStimulated by a wide range of fiscal policies

Greatly expanded ethanol fuel use in 1980sGreatly expanded ethanol fuel use in 1980s Neat ethanol and ethanol-gasoline blend for vehiclesNeat ethanol and ethanol-gasoline blend for vehicles Saved $33 billion in oil imports between 1976 and 1996Saved $33 billion in oil imports between 1976 and 1996 Reduced lead, sulfur, hydrocarbon, and carbon monoxide Reduced lead, sulfur, hydrocarbon, and carbon monoxide

emissions and played a significant role in improving urban air emissions and played a significant role in improving urban air qualityquality

Ethanol fuel programs waned in the 1990s, but the Ethanol fuel programs waned in the 1990s, but the Brazilian government began new initiatives in 1998Brazilian government began new initiatives in 1998

Denmark: Wind Power Denmark: Wind Power DeploymentDeployment

Initiated wind energy development program in 1976Initiated wind energy development program in 1976 Aimed at cutting oil and other energy imports and at protecting Aimed at cutting oil and other energy imports and at protecting

the environmentthe environment 30% subsidy on wind turbine investments beginning in 197930% subsidy on wind turbine investments beginning in 1979

Obtained 15% of its electricity from wind power in Obtained 15% of its electricity from wind power in

2000-012000-01

Danish wind power companies continue to develop new Danish wind power companies continue to develop new technologies including large, high output, offshore unitstechnologies including large, high output, offshore units

Wind power industry contributes significantly Danish Wind power industry contributes significantly Danish economyeconomy

UK: Shift from Coal to Natural UK: Shift from Coal to Natural Gas-Based ElectricityGas-Based Electricity

Starting in 1990, UK power industry was largely Starting in 1990, UK power industry was largely privatized and restructuredprivatized and restructured

Competition steadily increased while incentives Competition steadily increased while incentives for coal production were cut and regulations on for coal production were cut and regulations on acid rain precursors were implementedacid rain precursors were implemented Resulted in dramatic market swing toward natural gas Resulted in dramatic market swing toward natural gas

burning power plants – 34% market share as of 1999 burning power plants – 34% market share as of 1999

Opposite of what occurred in US, where electric Opposite of what occurred in US, where electric sector restructuring resulted in higher reliance sector restructuring resulted in higher reliance on low cost, coal burning power generationon low cost, coal burning power generation

Corporate TransformationCorporate Transformation

Many large corporations have pledged to Many large corporations have pledged to cut emissions and increase energy cut emissions and increase energy efficiencyefficiency British PetroleumBritish Petroleum Royal Dutch/ShellRoyal Dutch/Shell DuPontDuPont AlcoaAlcoa IBMIBM United Technologies Corp.United Technologies Corp.

ConclusionConclusion

““These case studies show that substantial These case studies show that substantial energy efficiency improvement and renewable energy efficiency improvement and renewable energy implementation can be achieved at the energy implementation can be achieved at the national or regional scale by adopting a national or regional scale by adopting a complementary set of policies”complementary set of policies” Rates of improvement in the countries studied are Rates of improvement in the countries studied are

significantly higher than in countries with few or no significantly higher than in countries with few or no policiespolicies

Cases show importance of long term (10-20+ Cases show importance of long term (10-20+ years) commitments to energy futureyears) commitments to energy future

Market TransformationsMarket Transformations - Critique - - Critique -

Jimmy MullinsJimmy Mullins02/27/0402/27/04

Areas of DiscussionAreas of Discussion

CAFE StandardsCAFE Standards

Residential Energy Regulations in CAResidential Energy Regulations in CA

Biomass Gasifiers and Biogas DigestersBiomass Gasifiers and Biogas Digesters

CAFE StandardsCAFE Standards

““The adoption of mandatory efficiency standards The adoption of mandatory efficiency standards was the main policy that caused these efficiency was the main policy that caused these efficiency improvements. The U.S. experience improvements. The U.S. experience demonstrates the importance of updating demonstrates the importance of updating efficiency standards” efficiency standards” [1] [1]

[1]. Gellar, Energy Revolution, p.103

Are Higher CAFE Standards the Answer?Are Higher CAFE Standards the Answer?

Higher CAFE standardsHigher CAFE standards

May reduce consumer welfare and motorist safetyMay reduce consumer welfare and motorist safety[1][1]

Compliance with stricter standards means that automakers lighten Compliance with stricter standards means that automakers lighten

their cars -- lighter, smaller cars can mean more fatalities from their cars -- lighter, smaller cars can mean more fatalities from

automobile accidentsautomobile accidents

Harm the environmentHarm the environmentPollution from a car is a direct function of the number of miles it is Pollution from a car is a direct function of the number of miles it is

drivendriven

Do not save gasoline very effectivelyDo not save gasoline very effectively The standards lower the per-mile cost of operating a carThe standards lower the per-mile cost of operating a car

The CAFE program has increased fuel economy The CAFE program has increased fuel economy of the nation's light-duty vehicle fleet during the of the nation's light-duty vehicle fleet during the past 22 yearspast 22 years[2][2].. Gasoline consumption would be about 14% or 2.8 Gasoline consumption would be about 14% or 2.8

million barrels per day higher than it is todaymillion barrels per day higher than it is today

Finding 1.Finding 1.

[2]. Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards, Transportation Research Board National Research Council, NATIONAL ACADEMY PRESS

Washington, D.C.

Finding 2.Finding 2.

Downsizing due to CAFE standards during the Downsizing due to CAFE standards during the late 1970s and early 1980s, may have resulted late 1970s and early 1980s, may have resulted in an additional 1,300 to 2,600 traffic fatalities in in an additional 1,300 to 2,600 traffic fatalities in 19931993[2][2]

Finding 3.Finding 3.

Multi-fuel vehicle creditsMulti-fuel vehicle credits Have a negative effect on fuel economy Have a negative effect on fuel economy

consumption and greenhouse gas emissionsconsumption and greenhouse gas emissionsEnable automakers to increase their production of less fuel Enable automakers to increase their production of less fuel efficient vehiclesefficient vehicles[2][2]

The distinction between a car for personal use and a truck for The distinction between a car for personal use and a truck for work use/cargo transport has broken down work use/cargo transport has broken down [2][2]

Finding 4.Finding 4.

Auto manufacturers offer technologies that Auto manufacturers offer technologies that significantly reduce fuel consumption in other significantly reduce fuel consumption in other marketsmarkets Europe and JapanEurope and Japan

Higher fuel prices ($4-5/gal) have justified their developmentHigher fuel prices ($4-5/gal) have justified their development

A Better Solution…A Better Solution…

Raising current CAFE standards doesn’t fight the Raising current CAFE standards doesn’t fight the problem of energy consumptionproblem of energy consumption

To combat energy consumption, policy makers shouldTo combat energy consumption, policy makers should Tax gasoline consumption Tax gasoline consumption Modify and update current CAFE standardsModify and update current CAFE standards

Electricity Use in CaliforniaElectricity Use in California

“…“…[An] energy agency that has adopted leading-[An] energy agency that has adopted leading-edge codes and standards.edge codes and standards.[1][1]””

Energy Efficient LightingEnergy Efficient Lighting Required in kitchens, bathrooms, laundry rooms and Required in kitchens, bathrooms, laundry rooms and

garages. garages. Fluorescent, metal halide and high-pressure sodium satisfy Fluorescent, metal halide and high-pressure sodium satisfy the lumen requirementsthe lumen requirements

Lighting with 40 lumens/watt efficiency must be installed in all Lighting with 40 lumens/watt efficiency must be installed in all permanently mounted outside lighting (unless equipped with permanently mounted outside lighting (unless equipped with a motion sensor)a motion sensor)

California Energy Commission and City Building Divisions

Biomass-based power systemsBiomass-based power systems

Biomass GasifiersBiomass Gasifiers[3][3]

Uses wood and sandUses wood and sand Low nitrogen and sulfur content, the controlled emissions are Low nitrogen and sulfur content, the controlled emissions are

extremely lowextremely low Emissions of greenhouse gases (COEmissions of greenhouse gases (CO22) are greatly reduced) are greatly reduced

Biogas DigestersBiogas Digesters Organic Waste is combined with water in a 1:1 ratio and left to Organic Waste is combined with water in a 1:1 ratio and left to

ferment. Produces methane gas that can be burned for ferment. Produces methane gas that can be burned for energy.energy.

[3] www.eren.doe.gov/biopower

Limitations to Biomass GasifiersLimitations to Biomass Gasifiers

Existing biomass technologies are relatively inefficientExisting biomass technologies are relatively inefficient

Furthermore, most biomass energy today comes from Furthermore, most biomass energy today comes from natural forests, contributing to deforestation in some natural forests, contributing to deforestation in some countries.countries.

Because populations are growing, an important question Because populations are growing, an important question is whether there are sufficient land resources to both is whether there are sufficient land resources to both feed future populations and sustain the magnitude of feed future populations and sustain the magnitude of biomass energy development biomass energy development [4][4]

[4]. Eric D. Larson and Robert H. Williams, Energy as an Instrument for Socio-Economic Development

Case StudiesCase Studies

Brazilian utility companiesBrazilian utility companies Eucalyptus PlantationsEucalyptus Plantations[4][4]

India and land allocationIndia and land allocation High population densitiesHigh population densities[4][4]

Limitations to Biogas DigestersLimitations to Biogas Digesters

High Invest CostsHigh Invest Costs Fixed-dome and floating-drum digesters are between $800 & Fixed-dome and floating-drum digesters are between $800 &

$1,700$1,700[5][5]

Feedstock and water necessitiesFeedstock and water necessities

[5]. Energy for Sustainable Development (ESD) Limited, http://igadrhep.energyprojects.net/Links/Profiles/Biogas/Biogas.html

Questions or CommentsQuestions or Comments

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