Lena Neij and Kirsi Mäkinen International Institute for Industrial Environmental Economics (IIIEE) Lund University

1. ADEME-WEC Workshop on Energy Efficiency Policies London, 17-18 June 2010 Evaluation of good practices in the public sector Lena Neij and Kirsi Mäkinen International Institute for Industrial EnvironmentalEconomics (IIIEE) Lund University, Sweden

2. International Institute for Industrial Environmental Economics (IIIEE) Lund University P.O. Box 196 (Tegnérsplatsen 4) SE-221 00 LUND Phone: +46 46 222 02 00 Fax: +46 46 222 02 30 http://www.iiee.lu.se

3. Public sector energy use • Local, regional and national authorities & public services (e.g. schools, hospitals) • Multiple end-use sectors, e.g. • Buildings • Office equipment • Transport • Street lighting • Variations in scope across countries (actors and end-use sectors)

4. Public sector share of energy use • Public sector share of GDP: 10-25% globally • Public sector employment: • Industrialised countries: 22% • Transition economies: 40% (↓ trend) • Developing countries: 8-30% (Van Wie McGrory, L. et al., 2002) • EU public sector energy use: 5-10% of total (PROST, 2003)

5. Benefits of public sector EE • Cost savings from reduced energy bills • Responsible use of public money • Exemplary role relative to other sectors • Demand-pull creation of markets for energy efficient products and services (public sector purchasing power 20% or more of national economies)

6. Examples of EE potential Office equipment up to 35% Buildings up to 30% Transport up to 20%

7. Barriers to public sector EE • Lack of awareness among public officials and purchasing agents • Lack of information about EE solutions and their evaluations • Insufficient data (e.g. baselines) • Complexity of procurement rules • Lack of financial autonomy • Insufficient priority and lack of clear mandates • Split incentives • Lack of available financing for EE investments

8. Financing of public sector EE • Direct finance from public budgets (redirecting) • Performance contracts: • Energy Service Companies (ESCO) • Public Internal Performance Contracting (PICO) • Public-private partnerships • Carbon finance • External finance from IFIs (e.g. WB-GEF, EBRD)

9. Overview of tertiary sector policies and measures in EU-27 *) multi-sector policies, often with sector-specific provisions Source: MURE II database 2009

10. Typical policies and measures • Cross-cutting programmes • Procurement initiatives • Demonstration (e.g. building and lighting) • Labelling schemes (e.g. energy performance labels and voluntary building rating systems)

11. Cross-cutting programmes • National or public-sector specific • Combination of measures • improved coordination • barriers addressed more effectively • synergy benefits • Early experiences: Switzerland, US • More recently: EU countries, Australia, Japan

12. Public procurement • Environmental criteria included in public purchasing processes • Rules for tendering process and detailed criteria for different product groups (focus on main environmental impacts) • Criteria normally based on established standards e.g. ecolabelling criteria or energy label criteria • 1990s early adopters: US (FEMP) • Spread to: Mexico (2000), EU (2003), China (2005)...

13. Case example: European Union • EU level and national policies, first introduced in 2003 • 2010 target: 50% of public purchases in EU to incorporate environmental criteria, many member states have more ambitious targets • Purchasing criteria developed for 10 priority product groups • Energy savings targeted in product groups with high use-phase energy consumption e.g. computers and office equipment (criteria are based on Energy Star label)

14. Demonstration Building retrofits • Existing building stock in public ownership • Measures target primarily heating, cooling and lighting • Significant technical potential for energy savings • Achieved energy savings depend on financial aspects of selected measures and institutional capacity

15. Demonstration (cont.) Lighting programmes • Significant energy savings potential from technology retrofits • Lighting controls and sensor technologies can deliver additional demand-side savings • Proven, cost effective solutions • Easy implementation and short payback periods • Challenges include local availability of technology and reliable suppliers

16. Case example: Educational sector energy efficiency in Russia • 50-70% energy savings technically possible • 20-25% savings available using low cost measures • On average 30% energy savings achieved in demonstration schools and universities • Additional energy efficiency gains from educational programme aimed at secondary school students  increased long term cost efficiency • Lack of budgetary autonomy limits incentives for local authorities

17. Case example: Municipal retrofits in South Africa • Lighting and hot water supply in municipal buildings in the city of Ekurhuleni • Overall, 53% energy savings achieved in selected facilities • Primary energy savings resulted from lighting retrofits • Programme was built on strong political commitment to energy efficiency, exhibited in policies and strategies on energy efficiency • Success factors included sufficient time devoted to planning and a motivated team involving representatives from all relevant departments

18. Labelling schemes: Voluntary building standards • BREEAM, LEED, AU Green Star... • Increase environmental and energy performance requirements for public buildings above building code requirements (both publicly owned & leased facilities) • Significant potential for market creation and transformation towards more energy efficient building practices • Potential to demonstrate strong public sector leadership

19. Case example: LEED Green Building Rating System in US • Policies at federal, state and local levels in place from 2003 onwards • Public buildings constitute up to 30% of LEED certified square footage in the US • LEED buildings are designed to achieve 20-30% energy savings compared to minimum legal requirements and average national building stock • Evaluations indicate that LEED buildings perform to their design level or better • Challenges from varying local conditions and regional priorities

20. Thank you! Questions or comments? Contact professor Lena Neij lena.neij@iiiee.lu.se