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

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Presentation on theme: "Market Transformations Summary By Samuel Parker. Introduction Market Transformation Goal: Make energy efficiency or renewable energy technology or practice."— Presentation transcript:

1 Market Transformations Summary By Samuel Parker

2 Introduction Market Transformation Goal: Make energy efficiency or renewable energy technology or practice the norm through coordinated market interventions Make energy efficiency or renewable energy technology or practice the norm through coordinated market interventions This approach has been developed, tested, and evaluated over the past ten years

3 China: National Energy Efficiency Program Program began in early ’80s to prevent energy from becoming a brake on economic growth Program included: Financial incentives Financial incentives New Government agencies New Government agencies Regulations and standards Regulations and standards Energy research Energy research Training and technical assistance Training and technical assistance Program Outcome: China’s energy intensity fell by 50% between 1980 and 1997 China’s energy intensity fell by 50% between 1980 and 1997 Overall energy consumption dropped in 1998-99 despite continued economic growth Overall energy consumption dropped in 1998-99 despite continued economic growth Success due in part to structural changes, but largely to technological advances

4 United States: Appliance and Vehicle Efficiency Improvements Programs included: State and Federal mandatory efficiency standards State and Federal mandatory efficiency standards Government funded R&D Government funded R&D Utility incentive programs Utility incentive programs Taxes on inefficient vehicles Taxes on inefficient vehiclesOutcome: Efficiency of common appliances increased dramatically since 1970’s Efficiency of common appliances increased dramatically since 1970’s Fuel efficiency of vehicles rose steadily until it reached a plateau in the mid 1980s Fuel efficiency of vehicles rose steadily until it reached a plateau in the mid 1980s

5 Brazil: More Efficient Electricity Use PROCEL: national electricity conservation program Promotes end use electricity conservation as well as transmission and distribution system loss reduction Promotes end use electricity conservation as well as transmission and distribution system loss reduction Tripled electricity saving from 1995 to 1998 Accomplished through: Accomplished through: Increasing efficiency of appliances and electric machines Increasing market for efficient lighting Reducing electricity waste Overall benefit-cost ratio of around 12:1 Overall benefit-cost ratio of around 12:1

6 Netherlands: Industrial Energy Efficiency Improvement Long Term Agreements (LTA) between government and industrial sectors (1990) Contained legally binding targets calling for 20% increase in energy efficiency by 2000 Contained legally binding targets calling for 20% increase in energy efficiency by 2000 In return, industries received tax incentives and protection from new regulations In return, industries received tax incentives and protection from new regulations Goal of 20% met or exceeded by all sectors by 1999

7 China: Improved Cookstoves Deployment Replaced 130 million inefficient, environmentally hazardous cookstoves with improved models Program accomplished through R&D R&D Decentralized training, promotion, monitoring Decentralized training, promotion, monitoring Training of rural companies and technicians to manufacture, install, and service improved stoves Training of rural companies and technicians to manufacture, install, and service improved stoves Loans, tax incentives, and subsidies to help companies and low income households Loans, tax incentives, and subsidies to help companies and low income households Resulted in 25% average fuel savings and improved air quality. Showed that rural households are willing to pay for improved energy technology if the benefits are significant and costs are reasonable

8 United States: More Efficient Electricity Use in California Leading State in adopting: Appliance efficiency standards Appliance efficiency standards Building energy codes Building energy codes Utility energy efficiency programs Utility energy efficiency programs Cut electricity use per unit of economic output by nearly 30% from 1997 to 1999, compared to relatively constant electricity intensity in other 49 states Lowered pollutant emissions and increased economic output

9 India: Renewable Energy Implementation Ministry of non-conventional energy sources est. 1992 Supports both rural energy technologies and modern wind power and solar photovoltaic (PV) systems Supports both rural energy technologies and modern wind power and solar photovoltaic (PV) systems One of the largest users of PV systems and fifth in the world for wind power capacity One of the largest users of PV systems and fifth in the world for wind power capacity 3 million biogas digesters installed with plans to build 3 million more by 2012 3 million biogas digesters installed with plans to build 3 million more by 2012 India has made tremendous strides in developing renewable energy energy markets and supply infrastructure

10 Brazil: Ethanol Fuel Brazil leads the world in reliance on renewable energy: 57% of total energy supply Production of ethanol fuel from sugarcane began in 1975 Stimulated by a wide range of fiscal policies Stimulated by a wide range of fiscal policies Greatly expanded ethanol fuel use in 1980s Neat ethanol and ethanol-gasoline blend for vehicles Neat ethanol and ethanol-gasoline blend for vehicles Saved $33 billion in oil imports between 1976 and 1996 Saved $33 billion in oil imports between 1976 and 1996 Reduced lead, sulfur, hydrocarbon, and carbon monoxide emissions and played a significant role in improving urban air quality Reduced lead, sulfur, hydrocarbon, and carbon monoxide emissions and played a significant role in improving urban air quality Ethanol fuel programs waned in the 1990s, but the Brazilian government began new initiatives in 1998

11 Denmark: Wind Power Deployment Initiated wind energy development program in 1976 Aimed at cutting oil and other energy imports and at protecting the environment Aimed at cutting oil and other energy imports and at protecting the environment 30% subsidy on wind turbine investments beginning in 1979 30% subsidy on wind turbine investments beginning in 1979 Obtained 15% of its electricity from wind power in 2000-01 Danish wind power companies continue to develop new technologies including large, high output, offshore units Wind power industry contributes significantly Danish economy

12 UK: Shift from Coal to Natural Gas-Based Electricity Starting in 1990, UK power industry was largely privatized and restructured Competition steadily increased while incentives for coal production were cut and regulations on acid rain precursors were implemented Resulted in dramatic market swing toward natural gas burning power plants – 34% market share as of 1999 Resulted in dramatic market swing toward natural gas burning power plants – 34% market share as of 1999 Opposite of what occurred in US, where electric sector restructuring resulted in higher reliance on low cost, coal burning power generation

13 Corporate Transformation Many large corporations have pledged to cut emissions and increase energy efficiency British Petroleum British Petroleum Royal Dutch/Shell Royal Dutch/Shell DuPont DuPont Alcoa Alcoa IBM IBM United Technologies Corp. United Technologies Corp.

14 Conclusion “These case studies show that substantial energy efficiency improvement and renewable energy implementation can be achieved at the national or regional scale by adopting a complementary set of policies” Rates of improvement in the countries studied are significantly higher than in countries with few or no policies Rates of improvement in the countries studied are significantly higher than in countries with few or no policies Cases show importance of long term (10-20+ years) commitments to energy future

15 Market Transformations - Critique - Jimmy Mullins 02/27/04

16 Areas of Discussion CAFE Standards Residential Energy Regulations in CA Biomass Gasifiers and Biogas Digesters

17 CAFE Standards “The adoption of mandatory efficiency standards was the main policy that caused these efficiency improvements. The U.S. experience demonstrates the importance of updating efficiency standards” [1] [1]. Gellar, Energy Revolution, p.103

18 Are Higher CAFE Standards the Answer? Higher CAFE standards May reduce consumer welfare and motorist safety [1] May reduce consumer welfare and motorist safety [1] Compliance with stricter standards means that automakers lighten their cars -- lighter, smaller cars can mean more fatalities from automobile accidents Harm the environment Harm the environment Pollution from a car is a direct function of the number of miles it is driven Do not save gasoline very effectively Do not save gasoline very effectively The standards lower the per-mile cost of operating a car

19 The CAFE program has increased fuel economy of the nation's light-duty vehicle fleet during the past 22 years [2]. Gasoline consumption would be about 14% or 2.8 million barrels per day higher than it is today Gasoline consumption would be about 14% or 2.8 million barrels per day higher than it is today 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.

20 Finding 2. Downsizing due to CAFE standards during the late 1970s and early 1980s, may have resulted in an additional 1,300 to 2,600 traffic fatalities in 1993 [2]

21 Finding 3. Multi-fuel vehicle credits Have a negative effect on fuel economy consumption and greenhouse gas emissions Have a negative effect on fuel economy consumption and greenhouse gas emissions Enable automakers to increase their production of less fuel efficient vehicles [2] The distinction between a car for personal use and a truck for work use/cargo transport has broken down [2]

22 Finding 4. Auto manufacturers offer technologies that significantly reduce fuel consumption in other markets Europe and Japan Europe and Japan Higher fuel prices ($4-5/gal) have justified their development

23 A Better Solution… Raising current CAFE standards doesn’t fight the problem of energy consumption To combat energy consumption, policy makers should Tax gasoline consumption Tax gasoline consumption Modify and update current CAFE standards Modify and update current CAFE standards

24 Electricity Use in California “…[An] energy agency that has adopted leading- edge codes and standards. [1] ” Energy Efficient Lighting Required in kitchens, bathrooms, laundry rooms and garages. Required in kitchens, bathrooms, laundry rooms and garages. Fluorescent, metal halide and high-pressure sodium satisfy the lumen requirements Lighting with 40 lumens/watt efficiency must be installed in all permanently mounted outside lighting (unless equipped with a motion sensor) California Energy Commission and City Building Divisions

25 Biomass-based power systems Biomass Gasifiers [3] Uses wood and sand Uses wood and sand Low nitrogen and sulfur content, the controlled emissions are extremely low Low nitrogen and sulfur content, the controlled emissions are extremely low Emissions of greenhouse gases (CO 2 ) are greatly reduced Emissions of greenhouse gases (CO 2 ) are greatly reduced Biogas Digesters Organic Waste is combined with water in a 1:1 ratio and left to ferment. Produces methane gas that can be burned for energy. Organic Waste is combined with water in a 1:1 ratio and left to ferment. Produces methane gas that can be burned for energy. [3] www.eren.doe.gov/biopower

26 Limitations to Biomass Gasifiers Existing biomass technologies are relatively inefficient Furthermore, most biomass energy today comes from natural forests, contributing to deforestation in some countries. Because populations are growing, an important question is whether there are sufficient land resources to both feed future populations and sustain the magnitude of biomass energy development [4] [4]. Eric D. Larson and Robert H. Williams, Energy as an Instrument for Socio-Economic Development

27 Case Studies Brazilian utility companies Eucalyptus Plantations [4] Eucalyptus Plantations [4] India and land allocation High population densities [4] High population densities [4]

28 Limitations to Biogas Digesters High Invest Costs Fixed-dome and floating-drum digesters are between $800 & $1,700 [5] Fixed-dome and floating-drum digesters are between $800 & $1,700 [5] Feedstock and water necessities Feedstock and water necessities [5]. Energy for Sustainable Development (ESD) Limited, http://igadrhep.energyprojects.net/Links/Profiles/Biogas/Biogas.html

29 Questions or Comments ?


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