Accelerating investments in industrial energy efficiencyAccelerating investments in industrial...

Accelerating investments in industrial energy efficiency

A demand side view on barriers and solutions

Stefan M. BuettnerHead of International Affairs & Strategy

Institute for Energy Efficiency in Production / EEP

Overcoming Barriers to Investing in Energy EfficiencyIntensive Learning Session

EE Global Forum 2018UN City, Copenhagen

21 May, 2018

Distribution of Final Energy Consumption in EU-28

Source: Eurostat/ EEP, 2017

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%Boxplot %-share of sectoral Final

Energy Consumption (EU-28, 2016)

Large variation across countries

8%12%15%17%16%18%16%19%20%19%20%21%23%23%23%24%25%26%25%27%27%28%30%28%30%34%34%35%

43%44%

14%19%

31%12%

36%28%

33%26%27%28%

30%23%

28%18%

30%34%

26%24%24%16%

23%26%

20%33%

28%22%22%23%19%

21%

0% 20% 40% 60% 80% 100%

MT:Malta

CY:Cyprus

DK:Denmark

LU:Luxembourg

HR:Croatia

UK:United Kingdom

EE:Estonia

EL:Greece

FR:France

LT:Lithuania

LV:Latvia

IE:Ireland

IT:Italy

ES:Spain

PL:Poland

HU:Hungary

EU28:EU (28 countries)

EA19:Euro area (19 countries)

SI:Slovenia

PT:Portugal

BG:Bulgaria

DE:Germany

NL:Netherlands

RO:Romania

CZ:Czech Republic

BE:Belgium

AT:Austria

SE:Sweden

SK:Slovakia

FI:Finland

Industry

Transport

Services

Residential

AgriFor

Other*

Final Energy Consumption EU-28, 2016 (by sector)

Stef an M. Buettner | 21 May 2018 | Slide 2

Example: German Industry‘s Electricity & Energy Consumption

Big influence on electricity sector, but still also depending on fossil fuels

17;2%

251;34%

246.7, 33%

48;7%

31;4%

21; 3%

122;17%

Energy Consumption in Industry 2016 736,7 TWh

Mineralöl

Gase

Strom (inkl. EE)

Fernwärme

EE-Wärme

Sonstige

Kohle

11;3; 2%

138.7, 26%

246.7, 47%

128.5, 25%

Electricity Consumption in Germany 2016

525,2 TWh

Verkehr

GHD

Industrie

Haushalte

Source: AGEB Source: UBA

Oil

Gas

Electricity

incl. RE

District

Heating

Heating RE

Others

Coal

Trade and

Services

Transport

Industry

Households

Industry consumes 47% of German electricity (246,7 TWh). This is just 1/3rd of industrial end energy use addressing heat important, too.

Stef an M. Buettner | 21 May 2018 | Slide 3

Stef an M. Buettner | 21 May 2018 | Slide 4

Stef an M. Buettner | 15.05.2018 | Slide 5

Source: OECD/IEA (2017)

30%

10%

6%12%

8%

8%

15%

1%

10%

Building envelope

Heating, ventilation, cooling

and controlsAppliances

Lighting

Energy-intensive industry

Other industry

Premium paid for energy

efficient vehicleElectric vehicle subsidy

Global investment in energy efficiency by sector, 2016

58%16%

26%

BuildingsTransport

Industry

4 x !

50+% of them

in industry

sectors2,5 x !

USD 231

billion

Annual

investment into

industrial EE

needs to

increase by

factor 10

Source: OECD/IEA (2017)

Stef an M. Buettner | 21 May 2018 | Slide 6

WE NEED TO LOOK MUCH CLOSER AT THEINDUSTRIAL SECTOR

Understanding Industrial Energy Efficiency

Stef an M. Buettner | 21 May 2018 | Slide 7

Which incentive is most wanted

36%41%

46%53%

5%

5%

8%

6%

8%

16%

12%9%

8%

5%3% 1%

8%

7%8% 5%10%

12%11% 14%

23%14% 8%

11%1% 2% 5% 2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Micro Companies Small Companies Medium-sized Companies Large Companies

Which type of incentive could motivate you most likely to invest in energy efficiency measures? (multiple choice: max. 2, n=319, n'=454)

none

other

relief of approval procedures /

deregulation

reduced VAT rate on energy

efficient goods sales

deduction of special expenses for

single companies

anticipated / degressive

depreciation

investment allowance

investment grant / investment

premium

Direct investment grant are favoured across the board

© EEP | 9 Nov ember 2017 | Stef an M. Buettner | Page 8

Source: EEP Energy Efficiency

Barometer 1nd half year 2015

Planned Future Investments

46%38%

32%27%

5%

6%

7% 19%

8% 18%18%

15%

22% 20%24% 21%

19% 18% 18% 18%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Micro Company Small Company Medium-sized Company Large Company

In the coming 12 months, what percentage of your total investments can be attributed to improving energy efficiency? If you don’t know the exact figure, please estimate. (n=474)

>=20%

10% to <20%

5% to <10%

>0% and <5%

0%

40% of companies plant to invest at least 10% in EE

Source: EEP Energy Efficiency

Barometer 2nd half year 2016

Source: EEFIG, 2017

3) Internal Corporate PolicyThe strategic value of EE-projects in companies is setaccording EU & national policy priorities.

2) Energy AuditsInadequate standardisation, opportunities detected but not obligatory implemented.

1) Core & non-core industrial processesHigh return investments in periphery processes.

Moving towards Energy Efficiency Investment

Steps to be taken – Where to focus on (I)

Stef an M. Buettner | 21 May 2018 | Slide 10

Source: EEFIG, 2017

6) Risk InsuranceAn enhance of technical rating of transactions.

5) Specific Internal Energy Efficiency FundsA way to identify pipelines of EE-projects and other sourcesof financing.

4) Energy Efficiency NetworksA potential strategic instrument for EE project delivery.

7) Better Standards & TrainingA need to reinforce the supply chain of EE projectinvestment and execution.

Moving towards Energy Efficiency Investment

Steps to be taken – Where to focus on (II)

Whatnext?

Stef an M. Buettner | 21 May 2018 | Slide 11

more details in issues paper and chairman‘s conclusions

Stef an M. Buettner | 21 May 2018 | Slide 12

Current technologies, evaluated as severe barrier by energy-intensive companies

Low energy-intensive companies see economic and behavioural barriers less severe thanmore energy-intensive companies.

1.5

1.6

1.7

1.8

1.9

2

2.1

… competence-related

… technical

… information-related

… economical

… awareness-related

… organisational

… behaviour-related (other priorities)

… other

Barriers by energy intensity (n = 735)

20% of companies with low energyintensity

20% of companies with large energyintensity

80% of companies with low energyintensity

Source: EEP Energy Efficiency Index 2017/1

© EEP | June 2018 | Dipl.-Vw. Stef an M. Buettner et al. | Page 8

Industrial sector

Mid-Cap Companies andSMEs

Custom-fit financeproducts

Large Energy Intensive Companies

Energy Management Systems as a core value

Large Non-Energy Intensive Companies

Energy Efficiency Awareness

Moving towards Energy Efficiency Investment

Tailored measures

Source: EEFIG, 2015 A common issue: decision process for EE

Stef an M. Buettner | 21 May 2018 | Slide 14

Barriers, perceived more severe by micro and small companies.

Large companies rate competence-related barriers relative severe.

Awareness raising, the most deviating.

2.1

2.2

2.3

2.4

2.5

2.6

2.7

2.8

2.9

3

3.1

3.2

awar

enes

s-re

late

d

info

rmat

ion-

rela

ted

beh

avio

r-re

late

d

orga

niza

tio

nal

com

pete

nce

-re

late

d

tech

nic

al

eco

no

mic

al

oth

er

1 = not relevant; 4 = very relevant

Barriers by company size (n=739)

Micro companies(1-9 employees)

Small companies(10-49 employees)

Medium-sizedcompanies(50-249 employees)

Large companies(>250 employees)

Source: EEP Energy Efficiency Index 2017/1

© EEP | June 2018 | Dipl.-Vw. Stef an M. Buettner et al. | Page 9

Staff awareness - what do companies do so far?

25% of micro companies make their staff aware mainly through other activities.

Most of the companies do not increase their staff awareness due to the lack of knowledge.

20%

18%

20%

19%

17%

6%

Do you increase your staff‘s awareness of energy efficiency?

Yes, by.. (Multiple choice) (n=632, n‘=2510)

… convincing employees in one-on-one discussions

… info sessions, trainings or other means of communication

… making the topic part of the company’s employee suggestion system

… setting out clear provisions on energy saving behaviour

… planned energy efficiency measures (as cause)

… other activities

56%

21%

23%

Do you increase your staff‘s awareness of energy efficiency?

No, because … (Multiple choice) (n=185, n‘=267)

… the s teps to be taken are not clear

… this is not of interest

… of other reasons

Source: EEP Energy Efficiency Index 2017/1 Source: EEP Energy Efficiency Index 2017/1

© EEP | June 2018 | Dipl.-Vw. Stef an M. Buettner et al. | Page 11

few copies available today:

Stef an M. Buettner | 21 May 2018 | Slide 17

Awaiting results from ~ 1,000 companies of 27 sectors

How are energy efficiency measures financed?

Source: EEP Energy Efficiency

Barometer 2nd half year 2016

How do you finance energy efficiency measures? Normal investment budget

Dedicated budget for energy efficiency

How do you finance energy efficiency measures? Through… Equity

Loan

LeasingHire-purchaseEnergy Efficiency Mortgage

Energy Efficiency Project Loan

Energy Efficiency Fund

Crowdfunding Energy Services ContractAnother, please describe

The Energy Efficiency Barometer of Industry (#EEBarometer)

Open until 31 July: www.eep.uni-stuttgart.de/eeei

• Reduce unknowns, risks and uncertainties

• informs decision makers about actual situation and needs of the economy

• analyses the impact and effectivity of pilot and development schemes

• informs finance sector and service providers about feasible approaches and

mechanisms

• shows were companies stand in relation to others

• delivers evidence on where and how to act to increase energy productivity

• allows, in the medium-term, cross-country, sector-specific analyses -> TOP-Runner

www.eep.uni-stuttgart.de/eeei

United States:

Canada:

Mexico:

Spain:

Poland:

World:

Sweden:

Latvia:

English ∙ Spanish ∙ French ∙ Russian ∙ German

Barometer established

Target country group B

Country partners

Partnership under investigation

Language partners

Target country group A (G20+EEA)

The #EEBarometeris covering 88 countries in their 10

native languages

United Kingdom: Germany:Italy:

Slovenia:

Link: https://ilias3.uni-stuttgart.de/goto_Uni_Stuttgart_svy_1478166.html?lang=en

Asset Class Energy Efficiency (ACE) - Survey

In cooperation with:

Dipl.-Volkswirt

Stefan M. Buettner

Head of International Affairs & StrategyInstitute for Energy Efficiency in ProductionNobelstraße 12 │ 70569 Stuttgart | Germany

Telefon +49 711 970-1156

stefan.buettner@ipa.fraunhofer.destefan.buettner@eep.uni-stuttgart.de

www.ipa.fraunhofer.dewww.eep.uni-stuttgart.de

Thank you!

Any Questions?

Stef an M. Buettner | 21 May 2018 | Slide 22