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Market-based instruments for energy efficiency: a global review

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Across the world, an increased uptake of the so-called market-based instruments (MBIs) for energy efficiency, such as energy efficiency obligations and auctions, can be witnessed. So far, a global assessment of those instruments is absent. In this paper, we analyse the most recent data across the world for all MBIs for energy efficiency. Whilst most of the 52 instruments identified can be found in the USA and in Europe, they are now operational on all continents. We estimate that globally around $26 billion of investment in energy efficiency is delivered through these instruments—this equates to more than 10% of the global annual investment in energy efficiency. There is considerable variation in costs among programmes. The available data show that expenditure by obligated parties and payments to auctions winners (programme costs) average around 0.013 USD/kW and are below the typical costs of producing a kWh in most sectors and locations.

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  1. Germany has an energy and climate fund part-funded by revenues from the EU Emissions Trading System. This is used to finance the auction mechanism (BMWI n.d.a.).

  2. For example, by avoiding the cost of transmission and distribution upgrades that would be paid for by all consumers or by lowering the cost of capacity payments and other reliability services, which are also rolled into the power costs that all customers, including low-income customers, must pay.

  3. We considered the technologies promoted by a specific instrument and used standardised lifetimes from CEN (2007) for deriving an average lifetime. This is the case for China (10 years), Portugal (10 years), and South Africa (8 years).

  4. We used the IEA unit converter (

  5. South Australia is the State with the highest renewable energy share in the electricity production and keeping the measurement in CO2 savings would not fully reflect the energy savings.


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The authors gratefully acknowledge funding received for this research from the International Energy Agency.

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Correspondence to Jan Rosenow.

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Table 2 Data used for the USA
Table 3 Data used for Europe
Table 4 Data used for Australia
Table 5 Data used for rest of the world

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Rosenow, J., Cowart, R. & Thomas, S. Market-based instruments for energy efficiency: a global review. Energy Efficiency 12, 1379–1398 (2019).

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