Skip to main content

Advertisement

SpringerLink
Log in

Implications of an energy efficiency obligation scheme for the Swedish energy-intensive industries: an evaluation of costs and benefits

  • Original Article
  • Published:
Energy Efficiency Aims and scope Submit manuscript

Abstract

The EU Energy Efficiency Directive (EED) aims at improving energy efficiency by implementing actions in all sectors of the economy in the EU. Article 7 of the EED sets the target of 1.5 % cumulative annual energy end-use savings. An energy efficiency obligation scheme (EEO) is one of the policy mechanisms proposed to reach this target. This paper assesses the impact of implementing a Swedish EEO and the implications that such a scheme may have for Swedish energy-intensive industries. The assessment was based on cost-benefit analysis (CBA) methodology. The benefit-to-cost ratio (BCR) ranges from 1.56 to 2.17 and the break-even cost ranges from 83.3 to 86.9 €/MWh with sensitivity analyses performed for the emission allowance prices and eventual costs of the EEO. The annual energy savings potential is estimated to be 1.25 TWh/year. A Swedish EEO could motivate investments in energy efficiency measures and thus help Sweden reach the energy efficiency targets set in the EED.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2

Similar content being viewed by others

Notes

  1. According to the Swedish Energy Agency, energy-intensive industries are whole companies or parts of companies active in industrial manufacturing that use on average at least 190 MWh of electricity per million SEK (eq. to 116.550 €) of value added in their industrial production processes (Swedish Energy Agency 2012d).

  2. The electricity certificate system aims at increasing the electricity production of renewable energy in Sweden. Electricity produced from renewables (wind, solar, wave, geothermal, some biomass, and some hydro sources) are awarded green certificates. Electricity suppliers and some electricity users are then obligated to buy electricity certificates equivalent to 17 % of their electricity use (Swedish Energy Agency 2010).

References

  • Ackerman, F. (2008). Critique of cost-benefit analysis, and alternative approaches to decision-making (Vol. 4). Medford: Friends of the Earth. http://www.ase.tufts.edu/gdae/Pubs/rp/Ack_UK_CBAcritique.pdf.

    Google Scholar 

  • Altmann, M., Zerhusen, J., Maio, P., Lanoix, J. C., Trucco, P., Egenhofer, C., et al. (2013). Energy efficiency and ETS (No. IP/A/ITRE/ST/2012-11). http://onlinelibrary.wiley.com/doi/10.1002/cbdv.200490137/abstract.

  • Bertoldi, P., Rezessy, S., Lees, E., Baudry, P., Jeandel, A., & Labanca, N. (2010). Energy supplier obligations and white certificate schemes: comparative analysis of experiences in the European Union. Energy Policy, 38(3), 1455–1469. doi:10.1016/j.enpol.2009.11.027.

    Article  Google Scholar 

  • Bertoldi, P., Labanca, N., Rezessy, S., Steuwer, S., & Oikonomou, V. (2013). Where to place the saving obligation: energy end-users or suppliers? Energy Policy, 63, 328–337. doi:10.1016/j.enpol.2013.07.134.

    Article  Google Scholar 

  • Bertoldi, P., Castellazzi, L., Spyridaki, N. A., & Fawcett, T. (2015). How is Article 7 of the Energy Efficiency Directive being implemented ? An analysis of national energy efficiency obligation schemes. ECEEE 2015 Summer Study proceedings, 455–465.

  • Bundgaard, S. S., Dyhr-Mikkelsen, K., Larsen, A. E., & Togeby, M. (2013). Energy efficiency obligation schemes in the EU—lessons learned from Denmark. IAEE Energy Forum, 2013(3), 43–47.

    Google Scholar 

  • Cellini, S. R., & Kee, J. E. (2010). Cost-effectiveness and cost-benefit analysis. In J. S. Wholey, H. P. Hatry, & K. E. Newcomer (Eds.), Handbook of practical program evaluation (3rd ed., pp. 493–530). Hoboken: Wiley:Jossey-Bass.

    Google Scholar 

  • Clinch, J. P., & Healy, J. D. (2001). Cost-benefit analysis of domestic energy efficiency. Energy Policy, 29(January 2000), 113–124.

    Article  Google Scholar 

  • De Bruyn, S., Nelissen, D., & Koopman, M. (2013). Carbon leakage and the future of the EU ETS market: impact of recent developments in the EU ETS on the list of sectors deemed to be exposed to carbon leakage. Delft: CE Delft.

    Google Scholar 

  • Ea Energy Analyses. (2014). Best practices in designing and implementing energy efficiency obligation schemes. Copenhagen: Ea Energy Analyses. http://www.ea-energianalyse.dk/reports/1436_best_practises_energy_efficiency_obligation_schemes.pdf.

    Google Scholar 

  • Ecorys & ECN. (2012). The energy efficiency investment potential for the building environment. Rotterdam: Directorate General for Energy of the European Commission.

    Google Scholar 

  • Energy EU. (2013). LPG and heating oil prices. http://www.energy.eu/.

    Google Scholar 

  • European Commission. (1997). Guide to cost-benefit analysis of major projects. Brussels: European Commission.

    Google Scholar 

  • European Commission. (2008). Guide to cost-benefit analysis of investment projects. Brussels: European Commission.

    Google Scholar 

  • European Commission. (2010). How to develop a Sustainable Energy Action Plan (SEAP)—guidebook. Luxembourg: Publications Office for the European Union.

    Google Scholar 

  • European Commission. (2011). Impact assessment accompanying the document Directive of the European Parliament and of the Council on energy efficiency and amending and subsequently repealing Directives 2004/8/EC and 2006/32/EC. Commission Staff Working Paper. https://ec.europa.eu/energy/sites/ener/files/documents/sec_2011_0779_impact_assessment.pdf

  • European Commission. (2014). 2030 framework for climate and energy policies. http://ec.europa.eu/clima/policies/2030/index_en.htm

  • European Commission. (2015a). COMMISSION REGULATION (EU) No 176/2014 of 25 February 2014 amending Regulation (EU) No 1031/2010 in particular to determine the volumes of greenhouse gas emission allowances to be auctioned in 2013–20. Brussels. http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014R0176&from=EN

  • European Commission. (2015b). DECISION (EU) 2015/1814 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 6 October 2015 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and amending Directive 2003/87/EC. Brussels. http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32015D1814&from=EN

  • European Commission/Directorate-General for Regional and Urban Policy. (2014). Guide to cost-benefit analysis of investment projects. Luxembourg: European Union Publications Office. http://ec.europa.eu/regional_policy/sources/docgener/studies/pdf/cba_guide.pdf.

    Google Scholar 

  • European Parliament. (2012). Directive 2012/27/EU of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC. Official Journal of the European Union EN L, (October), 1–56.

  • Eurostat. (2013). Statistics Database/Energy statistics—supply, transformation, consumption. http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_database

  • Eyre, N., Pavan, M., & Bodineau, L. (2009). Energy company obligations to save energy in Italy, the UK and France: what have we learnt? In ECEEE 2009 Summer Study (pp. 429–439). Stockholm,Sweden: eceee - European Council for an Energy Efficient Economy.

  • Fraunhofer ISI, ECOFYS, and Öko-Institut e.V. (2012). Cost / benefit analysis of the introduction of market-oriented instruments for realizing final energy savings in Germany: final report to the Federal Ministry of Economics and Technology—executive summary. Karlsruhe: Fraunhofer ISI.

    Google Scholar 

  • Fraunhofer ISI, ENERDATA, ISIS, Technical University of Vienna, & Wuppertal Institute for Climate Environment and Energy. (2009a). Database on energy saving potentials. http://www.eepotential.eu/esd.php.

  • Fraunhofer ISI, ENERDATA, ISIS, Technical University of Vienna, & Wuppertal Institute for Climate Environment and Energy. (2009b). Study on the energy savings potentials in EU Member States, candidate countries and EEA countries. Karlsruhe/Grenoble/Rome/Vienna/Wuppertal: Fraunhofer ISI. https://ec.europa.eu/energy/sites/ener/files/documents/2009_03_15_esd_efficiency_potentials_final_report.pdf

  • Fraunhofer ISI, TU Vienna, & PwC. (2014). Study evaluating the current energy efficiency policy framework in the EU and providing orientation on policy options for realising the cost-effective energy efficiency/saving potential until 2020 and beyond. Karlsruhe/Vienna/Rome: Report on behalf of DG ENER. https://ec.europa.eu/energy/sites/ener/files/documents/2014_report_2020-2030_eu_policy_framework.pdf

  • Gillingham, K., Newell, R., & Palmer, K. (2006). Energy efficiency policies: a retrospective examination. Annual Review of Environment and Resources, 31(1), 161–192. doi:10.1146/annurev.energy.31.020105.100157.

    Article  Google Scholar 

  • Giraudet, L.-G., & Finon, D. (2015). European experiences with white certificate obligations: a critical review of existing evaluations. Pre-print, Economics of Energy & Environmental Policy. https://hal.archives-ouvertes.fr/hal-01016110.

  • Giraudet, L. G., Bodineau, L., & Finon, D. (2012). The costs and benefits of white certificates schemes. Energy Efficiency, 5(2), 179–199. doi:10.1007/s12053-011-9134-6.

    Article  Google Scholar 

  • Glachant, M. (1999). The cost efficiency of voluntary agreements for regulating industrial pollution: a Coasean approach. In C. Carraro & F. Lévêque (Eds.), Voluntary approaches in environmental policy SE - 5 (Vol. 14, pp. 75–89). Dordrecht: Springer. doi:10.1007/978-94-015-9311-3_5

  • Hirst, E., & Brown, M. (1990). Closing the efficiency gap: barriers to the efficient use of energy. Resources, Conservation and Recycling, 3(4), 267–281. doi:10.1016/0921-3449(90)90023-W.

    Article  Google Scholar 

  • IEA. (2014). Capturing the multiple benefits of energy efficiency. Paris: International Energy Agency.

    Google Scholar 

  • Intercontinental Exchange. (2016). EUA 2013–2016. EUA FUTURES. https://www.theice.com/homepage.jhtml. Accessed 9 Feb 2016

  • IVA. (2013). Energieffektivisering av Sveriges Industri - Hinder och möjligheter att nå en halverad energianvändning till 2050. Stockholm: Kungl. Ingenjörsvetenskapsakademien (IVA). http://www.iva.se/Documents/Publikationer/Projekt/201308-IVA-Energieffektivisering-rapport3-H.pdf

  • Jernkontoret. (2014). Energi- och energiförsörjning. http://www.jernkontoret.se/energi_och_miljo/energi_energiforsorjning/index.php

  • Joshi, B. (2012). Best practices in designing and implementing energy efficiency obligation schemes. Stockholm: Regulatory Assistance Project (RAP), IEA DSM Secretariat. http://www.ieadsm.org/Files/AdminUpload/(1)RAP_IEADSM Best Practices in Designing and Implementing Energy Efficiency Obligation Schemes 2012 June(6).pdf

  • Kaufman, N., & Palmer, K. L. (2011). Energy efficiency program evaluations: opportunities for learning and inputs to incentive mechanisms. Energy Efficiency, 5(2), 243–268. doi:10.1007/s12053-011-9130-x.

    Article  Google Scholar 

  • Lees, E. (2010). European and South American experience of white certificates. Paris: World Energy Council-ADEME.

    Google Scholar 

  • Lees, E. (2012). Energy efficiency obligations—the EU experience. Stockholm: ECEEE—European Council for an Energy Efficient Economy.

    Google Scholar 

  • Mansikkasalo, A., Michanek, G., & Söderholm, P. (2011). Industrins energieffektivisering - styrmedlens effekter och interaktion. Stockholm: Naturvårdsverket.

    Google Scholar 

  • Mantzos, L., & Capros, P. (2006). European energy and transport trends to 2030—update 2005. Luxembourg: Office for Official Publications of the European Communities.

    Google Scholar 

  • Mikkelsen, K. M. (2012). Why obligation schemes are the solution for European Member States during the financial crisis. Copenhagen: Danish Energy Association. http://www.danishenergyassociation.com/EU.aspx.

    Google Scholar 

  • Ministry of Enterprise Energy and Communications. (2013). Plan for implementation of Article 7 of the Energy Efficiency Directive. Sweden: Stockholm.

    Google Scholar 

  • Mundaca, L., & Neij, L. (2009). A multi-criteria evaluation framework for tradable white certificate schemes. Energy Policy, 37(11), 4557–4573. doi:10.1016/j.enpol.2009.06.011.

    Article  Google Scholar 

  • Oikonomou, V., Rietbergen, M., & Patel, M. (2007). An ex-ante evaluation of a white certificates scheme in The Netherlands: a case study for the household sector. Energy Policy, 35(2), 1147–1163. doi:10.1016/j.enpol.2006.02.017.

    Article  Google Scholar 

  • Oikonomou, V., Flamos, A., & Grafakos, S. (2010). Is blending of energy and climate policy instruments always desirable? Energy Policy, 38(8), 4186–4195. doi:10.1016/j.enpol.2010.03.046.

    Article  Google Scholar 

  • Pearce, D., Atkinson, G., & Mourato, S. (2006). Cost-benefit analysis and the environment: recent developments. Paris: OECD Publishing.

    Google Scholar 

  • Rosenow, J., Platt, R., & Flanagan, B. (2013). Fuel poverty and energy efficiency obligations—a critical assessment of the supplier obligation in the UK. Energy Policy, 62, 1194–1203. doi:10.1016/j.enpol.2013.07.103.

    Article  Google Scholar 

  • SPBI. (2013). Statistik/Skatter årsvis. http://spbi.se/statistik/skatter/

  • Stenqvist, C., & Nilsson, L. J. (2011). Energy efficiency in energy-intensive industries—an evaluation of the Swedish voluntary agreement PFE. Energy Efficiency, 5(2), 225–241. doi:10.1007/s12053-011-9131-9.

    Article  Google Scholar 

  • Suerkemper, F., Thomas, S., Osso, D., & Baudry, P. (2011). Cost-effectiveness of energy efficiency programmes—evaluating the impacts of a regional programme in France. Energy Efficiency, 5(1), 121–135. doi:10.1007/s12053-011-9112-z.

    Article  Google Scholar 

  • Sweco. (2014). Kvantitativ utvärdering av marknadsmisslyckanden och hinder. En rapport till Näringsdepartementet 19 december 2014. Stockholm: Sweco.

    Google Scholar 

  • Swedish Energy Agency. (2010). Energiläget (The energy situation). Eskilstuna: Statens Energimyndigheten.

    Google Scholar 

  • Swedish Energy Agency. (2012a). Konsekvenser av kvotplikt för energieffektivisering (No. ER 2012:07). Eskilstuna: Statens Energimyndigheten.

    Google Scholar 

  • Swedish Energy Agency. (2012b). Energiläget i siffror 2012. Eskilstuna: Statens Energimyndigheten.

    Google Scholar 

  • Swedish Energy Agency. (2012c). Energy efficiency policies and measures in Sweden. Eskilstuna: Statens Energimyndigheten.

    Google Scholar 

  • Swedish Energy Agency. (2012d). Energiläget 2012. Eskilstuna: Statens Energimyndigheten.

    Google Scholar 

  • Swedish Energy Agency. (2013a). Energiläget 2013. Eskilstuna: Statens Energimyndigheten.

    Google Scholar 

  • Swedish Energy Agency. (2013b). Långsiktsprognos 2012. Eskilstuna: Statens Energimyndigheten.

    Google Scholar 

  • Swedish National Audit Office. (2013). Energy efficiency in industry—effects of central government action (RiR 2013:8) (executive summary). Stockholm: Riksrevisionen.

    Google Scholar 

  • Thollander, P., & Ottosson, M. (2010). Energy management practices in Swedish energy-intensive industries. Journal of Cleaner Production, 18, 1125–1133.

    Article  Google Scholar 

  • Thollander, P., Rohdin, P., Moshfegh, B., Karlsson, M., Söderström, M., & Trygg, L. (2013). Energy in Swedish industry 2020—current status, policy instruments, and policy implications. Journal of Cleaner Production, 51, 109–117. doi:10.1016/j.jclepro.2013.01.021.

    Article  Google Scholar 

  • Tol, R. S. J. (2012). A cost–benefit analysis of the EU 20/20/2020 package. Energy Policy, 49, 288–295. doi:10.1016/j.enpol.2012.06.018.

    Article  Google Scholar 

  • Transue, M., & Felder, F. a. (2010). Comparison of energy efficiency incentive programs: rebates and white certificates. Utilities Policy, 18(2), 103–111. doi:10.1016/j.jup.2009.12.003.

    Article  Google Scholar 

  • U.S. Environmental Protection Agency. (2008). Understanding cost-effectiveness of energy efficiency programs: best practices, technical methods, and emerging issues for policy-makers. Washington: U.S. Environmental Protection Agency. http://www.epa.gov/cleanenergy/documents/suca/cost-effectiveness.pdf.

    Google Scholar 

  • VITO, University of Oxford, Italian Federation for Rational Use of Energy, Agency, P. N. E. C., Danish Energy Association, & French Environment and Energy Management Agency. (2015). Energy saving policies and energy efficiency obligation scheme. Joint Implementation Network—JIN Work. http://enspol.eu/sites/default/files/results/D2.1.1 Report on existing and planned EEOs in the EU—Part I Evaluation of existing schemes.pdf

  • Xylia, M. (2013). Cost-effectiveness assessment of energy efficiency obligation schemes—implications for Swedish industries. Stockholm: KTH Royal Institute of Technology.

    Google Scholar 

Download references

Acknowledgments

The authors would like to thank the anonymous reviewers of the original manuscript for their valuable comments and suggestions, which helped us develop it to this final version.

Author information

Authors and Affiliations

  1. Energy and Climate Studies Unit, Department of Energy Technology, School of Industrial Engineering and Management, KTH Royal Institute of Technology, Stockholm, Sweden

    Maria Xylia, Semida Silveira & Johannes Morfeldt

Authors
  1. Maria Xylia
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Semida Silveira
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Johannes Morfeldt
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Maria Xylia.

Appendix

Appendix

Table 5 Corrected average annual potential energy savings (TWh/year) under the HPI scenario for the EII of Sweden based on secondary data from Eurostat (2013) and Fraunhofer ISI et al. (2009b)
Full size table
Table 6 Average share of investigated energy carriers in total energy usage of the Swedish EII for the years 2002–2011 (Eurostat 2013)
Full size table
Table 7 Average fuel prices for the years 2010–2020 for reference fuel prices scenario (SPBI 2013; Swedish Energy Agency 2013b)
Full size table
Table 8 Average fuel prices for the years 2010–2020 for higher fossil fuel prices scenario (SPBI 2013; Swedish Energy Agency 2013b)
Full size table
Table 9 Standard CO2 emission factors (European Commission 2010)
Full size table

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Xylia, M., Silveira, S. & Morfeldt, J. Implications of an energy efficiency obligation scheme for the Swedish energy-intensive industries: an evaluation of costs and benefits. Energy Efficiency 10, 151–169 (2017). https://doi.org/10.1007/s12053-016-9446-7

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s12053-016-9446-7

Keywords

Search

Navigation