Global policymaking to open opportunities for energy efficiency

Image: Financial Times

Policymaking is highlighted as the major driver for the effective implementation of energy efficiency according to a report titled Energy Efficiency 2018, released by the International Energy Agency (IEA) last week.

In the report, the IEA’s Executive Director, Dr Fatih Birol says the agency is working with governments across the globe to enact the right policies to enhance energy efficiency.

“Energy efficiency is at the heart of the modernisation agenda at the IEA. Our expanding work in bringing together policymakers and practitioners from across the globe is deepening our collective understanding of energy efficiency and best practice policy,” he said.

Trends in Efficiency Policy

The Energy Efficiency 2018 report monitors the global progress when it comes to the implementation of:

  • Mandatory policies and regulations with minimum energy efficiency performance requirements: These include mandatory minimum energy performance standards for appliances, equipment, building codes, fuel economy standards and targets for industry. Progress is measured using the Efficiency Policy Progress Index (EPPI).
  • Energy utility obligation programs: These programs require companies to meet an energy efficiency target, which is set to the amount of energy they save. Policy progress is measured by monitoring changes in policy coverage, which is the share of the total final energy use supplied by obligated parties. Policy progress is also measured by policy strength, which is the share of the total final energy use required to be saved under obligations in a given year. Obligations are not included in EPPI.
  • Incentives: These are policies used to encourage the take-up of energy efficient technologies and fiscal rewards. It can be anything from grants and subsidies to tax relief and on-bill finance.

Global trends have shown that there has been a drop in policymaking, resulting in slow progress in energy efficiency. This was apparent in 2017, when the drop in policymaking was more evident than ever. The Energy Efficiency 2018 report highlighted that the coverage of new policies has seen the most significant drop. In 2016, policymaking increased at a faster rate.

The report also notes that coverage and strength of energy utility programs remained largely unchanged last year, with the data gathered by the IEA showing that while some of world’s largest energy-consuming countries have large incentives for energy efficiency, the value of the incentives still remain far below the subsidies of energy consumption.

Global coverage of mandatory policies rose in 2017

2017 saw a two percent increase in mandatory policies and regulations, up from 32 percent in 2016. However, this increase was due to the replacement of vehicles, appliances and equipment to suit energy efficiency policies – the same as in 2016.

China has again contributed to a large proportion of the global growth in policy, with its mandatory policies and regulations increasing from 13.5 percent to 13.9 percent. This was not due to new policies but rather stock turnover – upgrading vehicles, appliances and equipment.

Other countries that have seen an increase in coverage due to new polices include India with vehicle regulations; and Peru, Singapore and Zimbabwe, with appliance regulations.

The IEA has an efficient world strategy that showcases strategic opportunities for efficiency improvements across all sectors.

Their most effective strategies include:

  • enact ambitious policies and measures with appropriate follow-up and enforcement
  • ensure market readiness to deliver
  • evolve policy measures, using data to increase ambition as technology develops and costs fall.

Dr Birol reiterated the IEA’s commitment to policymaking and working with governments across the globe. “I know from my discussions with governments around the world that awareness of the importance of energy efficiency is greater than ever. This is particularly true in major emerging economies.”