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Dr Didier bosseboeuf ; ADEME; France Dr jean –Sébastien Broc , Ecole des mines, France

Regional workshop WEC-ADEME “Evaluation of Energy Efficiency Policies in the MENA Region” organised by ANME with the support of UNDP Tunis, 15-16 March 2010. The WEC project on energy efficiency policies evaluation: Case study on policies targeted for low income households.

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Dr Didier bosseboeuf ; ADEME; France Dr jean –Sébastien Broc , Ecole des mines, France

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  1. Regional workshop WEC-ADEME “Evaluation of Energy Efficiency Policies in the MENA Region” organised by ANME with the support of UNDP Tunis, 15-16 March 2010 The WEC project on energy efficiency policies evaluation: Case study on policies targeted for low income households Dr Didier bosseboeuf ; ADEME; France Dr jean –Sébastien Broc , Ecole des mines, France

  2. Measures focused on low income households Issues what are the general key factors? what policy instruments? (+ specific to low income HH?) eligibility to specific measures/policies what target end-uses? who funds? who implements? what approach for what scale? evaluation

  3. Case studies under progress/consideration

  4. Issue 1: what are the general key factors? Three main axes (see EPEE project, www.fuel-poverty.org) • energy prices  social tariffs • households’ incomes  general social policies, empowerment • level of energy consumption  energy efficiency Interactions [social tariffs  energy efficiency] • potential barrier at the individual level • but also an incentive at the regulation level, in order to limit the amount of related subsidies

  5. Measures focused on low income households Issue 2(1): what policy instruments? Example of approaches (+ specific to low income HH?): • Setting obligations on energy distributors/suppliers: e.g., 50% of energy savings obligations in UK, 50% of energy end-use efficiency investments in Brazil • Public goods charge (or special energy tax): actions are not necessarily mandatory, but low-income programs’ costs can be recovered after regulators’ approval (e.g., in the US) • Applying bonus on general incentives: better rates for soft loans (France ?), higher subsidies for CFL (India ?), higher amount of Whites Certificates (France) (all schemes under consideration) • Dedicated subsidies/grants scheme (e.g., England) or leasing proportional to the income level

  6. Measures focused on low income households Issue 2(2): what policy instruments? • Free energy audits, information, etc.  often components of larger programs (e.g., 1st step before weatherization or appliances’ replacements) • Supporting the development of local companies in rural areas delivering affordable energy technologies: e.g., SELCO (Solar Electric Light) and THRIVE (LED lighting) (India) • Other instruments under consideration: renting of efficient appliances, energy-microfinance, sales of carbon credits, etc.  mainly looking for innovative funding mechanisms

  7. Measures focused on low income households Issue 2(3): what policy instruments? Two main objectives/difficulties: TARGETING How to focus efforts on these who need it the most? And what are the target end-uses? FUNDING Stakes are large and potential of public funding is decreasing

  8. Measures focused on low income households Issue 3: eligibility to specific measures/policies General definition of fuel/energy poverty: “when the basic energy needs can not be met safely” Not concrete enough, to define who can beneficiate from specific measures  more practical definitions: • Example of UK: definition based on the share (10%) of income used for the energy bills • Example of Brazil: definition mainly based first on consumption levels and connection type, and now also on registration to social programs

  9. Measures focused on low income households Issue 4: what target end-uses? Mainly related to essential needs and climatic conditions • OECD countries  priority = heating (insulation, boilers), but actions also on lighting (CFL) and appliances • non-OECD countries  cooking (cookstoves), lighting (CFL, solar LEDs), and refrigerators (when access to electricity) + when the objective is first to provide an access to energy, energy efficiency may come in complement to renewable (mainly solar and biomass) energies

  10. Measures focused on low income households  Different contexts: (1) energy poverty in non-OECD rural areas Around the world, about 1.6 billion people do not have access to electricity. Moreover, the World Health Organisation has estimated in 2002 that about 1.6 million people are dying each year due to air pollution related to the use of solid fuels for heating or cooking

  11. Measures focused on low income households  Different contexts: (2) fuel poverty in OECD urban areas In the UK, 3 million people are living in a condition of fuel poverty, and a fall of 1°C in the average winter temperature may cause 8,000 additional deaths

  12. Measures focused on low income households Issue 5: who funds? who implements? • Funding: • centralized (national) funding to minimize transaction costs • households contribution (even if symbolic) = key for involvement and empowerment • Implementation: • partnerships (energy companies, social workers/NGOs, banks, manufacturers) + involvement of community leaders • coordination (national / local ; energy / water / waste ; energy / health / employment)

  13. Measures focused on low income households Issue 6: what approach for what scale? Three complementary levels Local for the implementation (cf. partnerships) National for the regulation (cf. funding, incentives) International for complementary funding and experience sharing: like climate change, poverty alleviation = global issue  international support (e.g., CDM, World Bank, UNDP) available  see also Energy Poverty Action (WEF-WEC) for access to modern energy: why not including energy efficiency actions?

  14. Measures focused on low income households Issue 7: evaluation • specific approaches and methods are needed (informal neighborhoods, “rebound” effect, etc.) • new look at the costs/benefits analysis: • higher costs: door-to-door visits, grants’ level, etc. • but larger benefits: • household side: ↓energy bills, ↑life conditions • utility side: ↓collection expenses, ↑paying customers • society side: ↓social tariff & health cost, ↑integration • Example of Paraisopolis pilot test (Brazil): +$920 000 (annual billing) ; - 67% non-paying consumers simple payback on project investment = around 1.4 years

  15. Measures focused on low income households Case example: Brazil (1)  Context • social tariff for around 18 million (37%) residential consumers =$650 million of subsidies/year + “commercial” losses = 17% of residential electricity sales • urban poverty: around 19% of population living in favelas  General frame • Brazilian Electricity Public Benefits Fund (obligations set by the regulator • energy distributors have to invest 0,5% of their net revenues in energy end-use efficiency, whose 50% should be for low-income programs

  16. Measures focused on low income households Case example: Brazil (2)  Results • around $80 million invested/year • 5 million CFL, 60 000 refrigerators (2005-2007), 18 000 solar water heaters, rewiring of 130 000 dwellings (2005/2006)  Example of two successful local projects • COELBA project (17 000 refrigerators): program by a Brazilian utility, submitted to the CDM process • Paraisopolis pilot project of the Slum Electrification and Loss Reduction (SELR) Program launched by US AID

  17. Measures focused on low income households Case example: UK (1)  Context • 3 million people are living in a condition of fuel poverty • health consequences of fuel poverty ~£1 billion costs per year to National Health Service  General frame • UK Fuel Poverty Strategy (2001) (global, not only energy efficiency) • Government’s programs, like the Warm Front Scheme in England (from 2000, free audits + grants for heating systems and insulation) • Energy Efficiency Commitment (from 2002, now Carbon Emissions Reduction Target): energy savings obligations set by the regulator (OFGEM) on energy suppliers, whose 50% should be achieved among low income households

  18. Measures focused on low income households Case example: UK (2)  General results • around 6.5 million fuel poor in 1996 vs. around 3.5 million in 2006 (-54%) (but recently increasing again due to energy prices) • energy savings difficult to assess due to “rebound” effect  Warm Front results (England) • 2000-2008: 1.7 million low income households received grants; • 2007/2008: £350 million funding, 100 000 heating systems, 30 000 cavity wall insulations, 58 000 loft insulations; • EEC1 (2002-2005) (cf. Lees, 2006) • 23.7 million CFL, 1.2 million appliances, 230 000 cavity wall insulations • contributions = £178 million (energy suppliers) + £26 million (HH) • Net Present Value for the priority group: around £1.6 billion • around 22 TWh (electricity) and 30 TWh (fossil) lifetime savings

  19. Thank you for your attention Other issues? Ideas for case studies?

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