The existence of 'no-regrets' - zero or negative cost - options to improve energy efficiency and hence reduce C02 emissions has long been recognised. Climate policies have stimulated renewed interest in the nature of the market barriers and failures which prevent these options from being taken up. Partly through the Intergovernmental Panel on Climate, efforts have been made to improve the conceptual framework which describes these barriers. Yet, empirical work based on this improved conceptualisation has been lacking.
This project will collect empirical data concerning market barriers and failures from a range of organisations, using a methodology rigorously defined by state-of-the-art conceptual understanding.
The market barriers to be investigated include: lack of information on energy-saving opportunities; the existence of 'hidden' costs within the organisation which are not normally taken into account; and financial risks associated with energy saving investments. The project will assess critically: the existence of such barriers; the form which they take; and their relative importance. 'Hidden costs' and financial risks will be subject to quantitative analysis where possible.
The project will also assess the effectiveness of different mechanisms for delivering energy efficiency.
These mechanisms include: activity undertaken solely by the energy-using organisation; activity involving energy service companies (ESCOs); utility demand side management (DSM) programmes; and government information/investment support schemes. This will allow the effectiveness of different policy measures to be assessed and will cast light on the implications of current developments in the energy sector, including liberalisation of gas and electricity markets and the use of integrated resource planning (IRP) techniques. Three types of organisation will be investigated: firms with modest process energy use; light industry which largely uses generic energy end-use technologies; and public sector organisations which have distinctive decision-making frameworks. The work will be carried out in three EU Member States - Germany, Ireland and the UK - in which energy sector liberalisation is at different stages, climate policy has different levels of ambition and different means are used to promote energy efficiency.
The findings would: a) assist in designing and targetting policy instruments to more effectively overcome market barriers and increase uptake of profitable energy efficiency investments; and b) identify means of characterising market barriers in energy-economic models which will result in realistic estimates of the market potential for energy efficiency.
Funding SchemeCSC - Cost-sharing contracts