Modeling the Economics of Greenhouse Gas Mitigation Summary of a Workshop (2011) / Chapter Skim
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Energy Efficiency Cost Curves: Empirical Insights for Energy-Climate Modeling--Jayant Sathaye and Amol Phadke
Energy Efficiency Cost Curves: Empirical Insights for Energy-Climate Modeling--Jayant Sathaye and Amol Phadke
Pages 52-68
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From page 52... ...
Our analysis of California utilities' efficiency policies and programs exemplifies a cost effective approach to overcoming these barriers. The analysis of energy efficient clothes washers shows the importance of including water savings as an invaluable co-benefit, and the examples of iron and steel and cement show significant reduction in costs of energy efficiency options from inclusion of multiple co-benefits.
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From page 53... ...
Representation of Energy Efficiency: Cost Curves and Energy-Climate Models In this section, we first review the use of cost curves, one of the commonly used approaches to represent and compare various GHG mitigation options including energy efficiency improvements. We then broadly review how energy efficiency improvement options are represented in energy climate models.
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From page 54... ...
For example, most bottom-up models calibrate the adoption of energy efficiency measures predicted by the model to that observed in reality by arti ficially increasing the discount rate (also known as the hurdle rate) used by consumers to evaluate these invest ments or by introducing artificial limits to cost effective technology updates.
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From page 55... ...
In the following sections, we discuss how the analysis of energy efficiency as a mitigation option can be improved in analyses performed using energy climate models or other methods, by addressing some of the issues raised above. Energy Efficiency as a No-Regrets Option The Intergovernmental Panel on Climate Change defines no-regrets options in its Third Assessment as "…those options whose benefits such as reduced energy costs and reduced emissions of local and regional pollution equals or exceeds their cost to the society, excluding the benefits of avoided climate change" (IPCC 2001, p.
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From page 56... ...
Ameliora tion of this class of market imperfections would increase GHG mitigation towards the level that is labeled as the economic potential. The economic potential represents the level of GHG mitigation that could be achieved if all technologies that are cost-effective from consumers' point of view were implemented.
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From page 57... ...
Should the tariff be higher, then more of these savings would be cost effective than would be the case otherwise. Barriers, Policies, and Programs: Insights from Empirical Analysis As discussed above, various barriers cause the market potential for energy efficiency improvements to be smaller than its economic potential.
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From page 58... ...
Further, it is important to analyze the impact of policies and programs to estimate how the impact of energy efficiency gets adopted. We report the results of our empirical analysis of utility energy efficiency programs in California, which are one of the largest and most comprehensive energy efficiency programs in the world.
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From page 59... ...
Its results show that, controlling for household income and other household characteristics, renters are significantly less likely to have energy efficient refrigerators, clothes washers and dishwashers. Can this type of information be included in the types of EC models that were discussed above?
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From page 60... ...
Many energy climate models, which focus on analyzing the role of various mitigation options in climate stabilization scenarios, can consider these program costs and model accelerated adoption of cost effective measures due to these programs. Most energy-climate models do not undertake this exercise given the lack of empirical information on program costs especially at the measure level.
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From page 61... ...
The non-rebate utility expenditure on incentives and other program implementation items such as providing informa tion and installation services, which address some of the barriers to adoption of energy efficiency measures, are substantially lower than their benefits indicating that such programs are a cost effective way of addressing barriers to adoption of energy efficiency measures. These numbers are consistent with findings of other studies of the cost effectiveness of energy efficiency programs.
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From page 62... ...
Such models can utilize the information available on the rebates provided in energy efficiency programs and their impact of increasing penetration levels. Further, bottom-up models can incorporate empirical information on other program costs to accurately model the cost, benefit, and impact of energy efficiency programs.
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From page 63... ...
(2003) reported cost effective annual primary energy savings of 1.9 GJ/tonne for the U.S.
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From page 64... ...
While no analysis exists of extrapolating these changes over future time periods, it is evident that their inclusion will significantly impact the estimated cost of future emissions reductions if static cost curves are used in EC models. One of the popular approaches to take into account the future changes in the cost of technologies (including energy efficiency technologies)
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From page 65... ...
bitmap One potential approach to better understand the factors contributing to improvement of energy efficiency (decline in specific energy consumption) is to evaluate the trends in the incremental cost of various component technologies that contribute to efficiency improvement options.
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From page 66... ...
This is the focus of our ongoing research focused on understanding various factors contributing to changes in the cost and potential of efficiency improvement options in key energy consuming appliances and equipment. Summary and Conclusions It is important to evaluate what role improvements in energy efficiency can play in GHG mitigation espe cially when it has been demonstrated that significant efficiency improvements that lead to GHG mitigation can be realized at a net societal benefit unlike many other GHG mitigation options.
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From page 67... ...
We present our analysis of the trends in incremental cost of various efficiency improvement opportunities in component technologies and systems for some key energy consuming industries and appliances in the form of cost curves and find that efficiency improvement opportunities have increased and costs of the same have decreased over time. We conclude that analysis of energy efficiency as a mitigation option, undertaken using energy climate models or any other methods or tools, needs to consider the issues identified in this paper to improve its assessment.
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From page 68... ...
2000. "Incorporating Behavioral, Social, and Organizational Phenomena in the Assessment of Climate Change Mitigation Options." Society, Behavior, and Climate Change Mitigation, edited by Eberhard Jochem, Jayant Sathaye, and Daniel Bouille.
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