2014/18 88700 k nKonw A A weldegdeg e ol n oNtoet e s eSrei r e ise s f ofro r p r&a c t hteh e nEenregryg y Etx itcrea c t i v e s G l o b a l P r a c t i c e The bottom line Electric utilities are key actors in Exploiting Market-Based Mechanisms to Meet Utilities’ the quest to induce large-scale energy savings among end Energy Efficiency Obligations users. But often it is not enough simply to mandate utilities to Why is this issue important? What has been the conventional practice? achieve a specific target. Three new market-based mechanisms Electric utilities are well-positioned to help raise Utilities have been required to spur their customers are available for utilities to use energy efficiency to greater energy efficiency in promoting energy efficiency. New policies and regulatory practices are reshaping approaches to Demand-side management by electric utilities, as used successfully energy efficiency around the world. Regulations of various kinds that in various forms for decades, is designed to induce customers to act require energy utilities (chiefly electric utilities) to help their custom- in ways that change the volume or timing of electric loads for the ers save energy have been used successfully in many jurisdictions benefit of the electricity service system. Mechanisms of demand-side to achieve large-scale improvements in energy efficiency. Alongside management may be classified as regulatory, policy-based, mar- the commonly used regulatory approaches, several market-based ket-based, and load-targeting (table 1). All alter electricity demand approaches are now available. These include certified energy savings by raising energy efficiency among end users, managing load, and (so-called white certificates), already being tried in many places; taking advantage of distributed generation resources, including competitive bidding for energy savings, a newer phenomenon; and intermittent renewables like wind and solar. energy efficiency feed-in tariffs (FITs), a promising model that has The oldest energy efficiency mechanisms implemented through yet to be tested. Shaping these mechanisms to elicit energy savings utilities are of the regulatory type. Examples include decoupling involves a variety of challenges—among them identifying target utility revenue from sales volume, mandating utilities to include “all markets; determining pricing and payment structures (cost recovery); available” cost-effective demand-side measures when acquiring evaluating, measuring, and verifying savings; and administering the resources to meet electricity demand, and imposing energy effi- programs. ciency obligations (EEOs) on the utility or other provider or handler of The sections below briefly introduce these mechanisms, with electricity (Crossley 2013). emphasis on the newer market-based approaches, while providing An EEO is a requirement that the utility meet a quantitative Jonathan Sinton is a references to a burgeoning literature. energy-savings target by delivering or procuring cost-effective end- senior energy specialist use energy savings. EEOs are variously termed “energy efficiency in the World Bank’s resource standards,” “energy efficiency portfolio standards,” or Energy Practice. “energy efficiency commitments.” In regulated electricity markets, Joeri de Wit is an energy economist in the same practice. 2 E x p l o i t i n g M a r k et- B a s e d M e c h a n i s m s t o M eet U t i l i t i e s ’ E n e r g y E f f i c i e n c y Ob l i g at i o n s Table 1. Four categories of demand-side mechanisms for raising energy efficiency Competitive Vertically Markets with wholesale integrated utilities unbundled generation Fully competitive with regulated electricity markets with generation and “Market-oriented EEOs markets providers regulated retailers retail markets Regulatory mechanisms such as white certificates, Impose obligation to evaluate alternative methods of meeting energy efficiency auctions, forecasted system load (integrated resource planning) E Y* Y* and energy efficiency FITs Decouple electricity provider revenue from sales volume E E+ Y+ Y+ can help utilities meet their Require published information on opportunities for using demand-side Y Y Y Y resources to reduce loads efficiency obligations.” Mandate implementation of all cost-effective demand-side measures Y Y Y Y Impose energy efficiency obligations E E E E Mandate implementation of time-varied electricity pricing Y Y Y Policy mechanisms Establish a public energy-saving fund with which to finance energy E E E E efficiency measures Market-based mechanisms Enable demand-side bidding in electricity markets (customers offer to E E modify demand return for payment) Enable bidding of demand-side measures to relieve network Y Y Y Y constraints Value and provide payments for demand-side measures that provide Y Y Y Y network benefits and services Establish a white certificates scheme Y Y Establish energy efficiency auctions Y Y Y Y Establish energy efficiency feed-in tariffs (conceptual) Y Y Y Y Load-targeting mechanisms Use load control to address system needs and integrate intermittent Y Y Y Y generation sources Implement load scheduling to time-target changes in end-user loads Y Y Y Y Operate energy storage to time-target changes in system load Y Y Y Y Implement geographic targeting of demand-side measures to address Y Y Y Y local network constraints Y: Mechanism can be applied in this market structure E: Mechanism is particularly effective in this market structure *: Electricity retailers only +: Electricity transmission and distribution service providers only Source: Adapted from Crossley (2013). 3 E x p l o i t i n g M a r k et- B a s e d M e c h a n i s m s t o M eet U t i l i t i e s ’ E n e r g y E f f i c i e n c y Ob l i g at i o n s they are typically imposed upon vertically integrated utilities, fix the quantity of energy savings and allow a market to determine whereas in competitive markets they may be placed on retailers or their price, whereas energy efficiency FITs fix the price of a unit of on operators of the transmission and distribution system. Existing energy savings and leave a market to determine the total quantity EEOs typically set annual savings targets over a long time horizon purchased. While experience to date shows that market-based and require the obligated entity to achieve specified annual per- approaches can elicit real energy savings, careful design, effective centage reductions in energy use. A summary of best practices in oversight, and adaptation to overcome inevitable challenges in “White certificate and designing energy efficiency obligations can be found in Crossley and implementation are needed. auction schemes fix the others (2012). White certificates. White certificates (sometimes termed quantity of energy savings EEOs have been used successfully in Australia, Brazil, Canada, “energy savings certificates,” “energy efficiency credits,” or “white China, Europe, the Republic of Korea, and the United States. Although tags”) attest that specified reductions in energy use have been and allow a market to all EEOs oblige utilities or other providers of electricity to induce their attained, with the attestation being made by a body set up and determine their price, customers to save energy, how this is to be done—how the efficien- authorized for the purpose. In all applications thus far, white whereas energy efficiency cies are to be “procured”—is not always spelled out. For example, certificate schemes have been combined with EEOs. They track FITs fix the price of a unit of the European Union’s 2012 Energy Efficiency Directive requires energy savings, monitor compliance with the EEO, and provide for energy savings and leave member states to impose EEOs on energy distributors and retailers trading of energy savings. With tradable certificates, the certificate is (or to adopt alternative measures to achieve equivalent energy unbundled from the energy savings that it represents and takes on a market to determine the savings), but the directive leaves it up to each country to choose how a value that is determined by demand for and supply of certificates. total quantity purchased.” to apply the EEOs. The demanders are the obligated entities, while the suppliers may be Broadly, utilities can pursue energy savings through a variety of other obligated entities, nonobligated entities, or a mix of both. Trade channels, including implementing energy efficiency projects directly can occur bilaterally or through markets. or contracting with other entities (such as energy savings compa- Certificate trading can reduce the cost of complying with an EEO nies) to do so. Some utilities contribute to funds that support the where the costs of achieving an equivalent amount of energy saving implementation of efficiency projects or purchase credits for energy vary across the entities that are eligible to trade. In practice however, savings that have been achieved by others. lowering the cost of compliance is subject to several preconditions and challenges. The market for certificates needs to be sufficiently How is the field evolving? liquid, the EEO needs to be sufficiently binding, and the gains from trading need to be weighed against the administrative and transac- Market-based options to implement EEOs are gaining tion costs of a white certificate scheme. traction Among the European governments that are employing white Under the right circumstances, market-oriented approaches to certificates are Denmark, Flanders (Belgium), France, Italy, Poland, meeting EEOs such as white certificates, energy efficiency auctions, and the United Kingdom. As of early 2014, white certificate programs and energy efficiency FITs can help utilities meet their efficiency were in the pipeline in Ireland and were being considered in Bulgaria, obligations. Growing interest in the use of such market-based The Netherlands, Portugal, and Romania. In the United States mechanisms has undoubtedly spilled over from the success of and Australia, there has been some experience with subnational counterparts instruments in the renewable energy field: green certifi- schemes. cates, renewable energy auctions, and renewable energy FITs. These Giraudet, Bodineau, and Finon (2012) summarize the costs and mechanisms allow markets to determine the price or the quantity benefits of white certificate schemes. Giraudet and Quirion (2008) of certified energy savings. White certificate and auction schemes compare white certificates to other instruments for increasing 4 E x p l o i t i n g M a r k et- B a s e d M e c h a n i s m s t o M eet U t i l i t i e s ’ E n e r g y E f f i c i e n c y Ob l i g at i o n s energy efficiency. Oikonomou and others (2008) and Child and others auctions and markets for tradable certificates, a FIT lacks a price-dis- (2008) explore the interaction between white certificates and other covery mechanism, so it can easily be set too high or too low. energy efficiency instruments. Case studies and cross-country So-called standard offer programs for energy efficiency (also comparisons of white certificate schemes are available in Crossley known as “performance contracting” and “pay-for performance”) and others (2012), Bertoldi and others (2010), Lees (2007), Lees used in several states in the United States resemble FITs, but they (2010), and Heffner and others (2013). MacGill (2013) details pitfalls are typically part of a portfolio of programs designed to meet an EEO. “The key challenges of to be avoided in constructing markets for trading energy-savings Unlike FITs, there is usually no long-term commitment to standard auctions are reducing the certificates. offers, and the prices are at or below the market clearing price for barriers to participation Energy efficiency auctions. Energy efficiency auctions elicit energy (Neme and Cowart 2012). A standard offer program has also competitive bidding between prequalified bidders to meet energy been introduced in South Africa (World Bank 2011). and ensuring that bidders savings goals at minimum costs. The bidding can focus on one For an introduction to energy efficiency FITs from the perspec- actually compete.” dimension of the proposed projects (such as price per kWh of energy tives of renewable energy procurement and a discussion of the saved) or on several project dimensions, in which case the auction debate between instruments that focus on price and those that is referred to as multidimensional. The auction typically proceeds as focus on quantity see Bertoldi and Rezessy (2007). For the design, follows: The procurer defines a project, calls for proposals, evaluates operation, infrastructure, and potential difficulties of an energy the proposals based on single or multiple criteria, and “scores” the efficiency FIT in the household sector, see Bertoldi and others (2009). proposal by weighting the criteria. In a multidimensional auction one Neme and Cowart (2012) and Cowart and Neme (2013) summarize of the criteria is price. All other criteria are often grouped under the policy issues and design options for energy efficiency FITs. term “quality” (everything but price). Bidders have private information about the costs of supplying quality, which they use in combination What have we learned? with the scoring criteria to design a profit-maximizing proposal. The key challenges of auctions are reducing the barriers to Market-based approaches can be useful additions to participation and ensuring that bidders actually compete. Additional a utility’s toolbox for procuring energy savings challenges of multidimensional auctions are that the products Electric utilities are key actors in the quest to encourage large- are not homogenous, that information asymmetry exists between scale energy savings among end users and to make the switch bidders and the auctioneer on quality, and, typically, that there is a to a low-carbon energy system. But often it is not enough simply trade-off between price and quality. to mandate utilities to achieve a given target or to implement Examples of energy efficiency auctions are those run by several “all measures deemed to be cost-effective.” At least three new power companies in the United States (AEP Ohio 2013; MidAmerican market-based models are available for utilities to use in promoting Energy 2013), the ProKilowatt auction in Switzerland launched by energy efficiency, in concert with other means of procurement. The the Swiss Federal Office in 2010 (BFE 2013), and the Public Energy choice among them and the details of the chosen approach will Service Company (ESCO) auction in Japan (Iimi 2013). depend on the goals to be reached, the consumer groups targeted, Energy efficiency FITs. An approach that has generated administrative requirements, equity, and other factors. Whatever the interest but that has yet to be tried is an energy efficiency FIT—that design, program effectiveness will depend on technically competent is, a fixed payment per kWh for documented energy savings by and trusted verification of energy savings and their costs, long-term customers of energy service companies. The main challenge, as commitment to maintaining the efficiency program, and flexibility in with FITs generally, is determining the right payment amount. Unlike adjusting it over time to ensure that programs keep performing. 5 E x p l o i t i n g M a r k et- B a s e d M e c h a n i s m s t o M eet U t i l i t i e s ’ E n e r g y E f f i c i e n c y Ob l i g at i o n s References Giraudet, L.-G., and P. Quirion. 2008. Efficiency and Distributional Impacts of Tradable White Certificates Compared to Taxes, AEP Ohio. 2013. “Bid to Win.” Retrieved from https://aepohio.com/ Subsidies and Regulations. Revue d’Économie Politique 118: save/programs/EnergyEfficiencyAuction/Default.aspx?ctype=b. 885–914. Bertoldi, P ., and S. Rezessy. 2007. “A Step into the Unknown: Feed-In Giraudet, L.-G., L. Bodineau, and D. Finon. 2012. The Costs and Tariff for Energy Saving.” Proceedings of the 2007 Summer study Benefits of White Certificates Schemes. Energy Efficiency 5: “An approach that has of the European Council for Energy Efficient Economy, Stockholm: 179–99. generated interest but that European Council for Energy Efficient Economy. Golove, W. H., and J. H. Eto. 1996. “Market Barriers to Energy Bertoldi, P ., S. Rezessy, E. Lees, P. Baudry, A. Jeandel, and N. Labanca. has yet to be tried is an Efficiency: A Critical Reappraisal of the Rationale for Public 2010. “Energy Supplier Obligations and White Certificate Policies to Promote Energy Efficiency.” LBL-38059. Lawrence energy efficiency FIT—that Schemes: Comparative Analysis of Experiences in the European Berkeley National Laboratory, Berkeley, CA. is, a fixed payment per kWh Union.” Energy Policy 38: 1455–69. Heffner, G., P . du Pont, G. Rybka, C. Paton, L. Roy, and D. Limaye. 2013. for documented energy Bertoldi, P ., S. Rezessy, V. Oikonomou, and B. Boza-Kiss. 2009. “Feed-In “Energy Provider–Delivered Energy Efficiency: A Global Stock- Tariff for Energy Saving: Thinking of the Design.” European savings by customers of Taking Based on Case Studies.” Insights Series. International Council for Energy Efficient Economy (ECEEE) Summer Study energy service companies.” Energy Agency, Paris. Proceedings, Nice, France. http://www.wind-works.org/cms/ Iimi, A. 2013. Multidimensional Auctions for Public Energy Efficiency uploads/media/FITsforEnergEfficiency1235_Bertoldi_01.pdf. Projects: Evidence from the Japanese ESCO Market. Policy BFE. 2013. “ProKilowatt.” Retrieved from http://www.bfe.admin.ch/ Research Working Paper 6485, World Bank, Washington, DC. prokilowatt/. http://hdl.handle.net/10986/15845. Child, R., O. Langniss, J. Klink, and D. Gaudioso. 2008. Interactions Jaffe, A. B., and R. N. Stavins. 1994. The Energy-Efficiency Gap: What of White Certificates with other Policy Instruments in Europe. Does It Mean? Energy Policy 22: 804–10. Energy Efficiency 1: 283–95. Lees, E. 2007. “European Experience of White Certificates.” WEC Cowart, R., and C. Neme. 2013. Can Competition Accelerate Energy ADEME project on energy efficiency policies. World Energy Savings? Options and Challenges for Efficiency Feed-In Tariffs. Council, London. Energy & Environment 24: 57–82. Lees, E. 2010. European and South American Experience of White Crossley, D. 2013. Effective Mechanisms to Increase the Use of Certificates. WEC-ADEME case study on energy efficiency Demand-Side Resources. , International Energy Agency Demand measures and policies. World Energy Council, London. Side Management Programme, Regulatory Assistance Project, MacGill, I., S. Healy, and R. Passey. 2013. White Certificate Schemes: Montpelier, Vermont. Can Commodification and Financialisation of Energy Efficiency Crossley, D., J. Gerhard, C. Kadoch, E. Lees, and many others. 2012. Solve Energy Market Failure, or Risk Just Adding to It? European Best Practices in Designing and Implementing Energy Efficiency Council for Energy Efficient Economy (ECEEE) Summer Study Obligation Schemes. Task XXII Research Report, International Proceedings, Nice, France. Energy Agency Demand Side Management Programme, MidAmerican Energy. 2013. “Efficiency Bid.” http://www.midameri- Regulatory Assistance Project, Montpelier, Vermont. canenergy.com/ee/include/pdf/ia_ebid.pdf Gillingham, K., R. G. Newell, and K. Palmer. 2009. “Energy Efficiency Neme, C., and R. Cowart. 2012. “Energy Efficiency Feed-In-Tariffs: Key Economics and Policy.” Discussion paper, Resources for Policy and Design Considerations.” Regulatory Assistance Project, the Future, Washington, DC. http://www.rff.org/documents/ Montpelier, Vermont. RFF-DP-09-13.pdf 6 E x p l o i t i n g M a r k et- B a s e d M e c h a n i s m s t o M eet U t i l i t i e s ’ E n e r g y E f f i c i e n c y Ob l i g at i o n s Oikonomou, V., C. Jepma, F. Becchis, and D. Russolillo. 2008. White Preparation of this note benefited from presentations at a seminar on energy Make further Certificates for Energy Efficiency Improvement with Energy Taxes: efficiency procurement by utilities given at the World Bank on November A Theoretical Economic Model. Energy Economics 30: 3044–62. 15, 2013, by Chris Neme (principal, Energy Futures Group), Anne Arquit connections Niederberger (principal, Policy Solutions), and Claudia Vasquez (energy Staniaszek, D., and E. Lees. 2012. “Determining Energy Savings for economist in the World Bank’s Europe and Central Asia Region). The peer Live Wire 2014/12. “Promoting Energy Efficiency Obligation Schemes.” Regulatory Assistance reviewers for this note were Morgan Bazilian (lead energy specialist, Energy Renewable Energy through Project, Montpelier, Vermont. Anchor, World Bank) and Claudia Vasquez. Auctions,” by Gabriela Elizondo- World Bank. 2011. “Implementing Energy Efficiency and Demand Azuela and Luiz Barroso. Side Management: South Africa’s Standard Offer Model.” Energy Sector Management Assistance Program, World Bank, Washington, DC. Get Connected to Live Wire Live Wires are designed for easy reading on the screen and for downloading The Live Wire series of online knowledge notes is an initiative of the World Bank Group’s Energy and self-printing in color or “Live Wire is designed and Extractives Global Practice, reflecting the emphasis on knowledge management and solu- black and white. tions-oriented knowledge that is emerging from the ongoing change process within the Bank for practitioners inside Group. For World Bank employees: and outside the Bank. 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Once a year, the Energy and Extractives Global Practice takes stock of all notes that appeared, reviewing their quality and identifying priority areas to be covered in the following year’s pipeline. Please visit our Live Wire web page for updates: http://www.worldbank.org/energy/livewire e Pa c i f i c 2014/28 ainable energy for all in easT asia and Th 1 Tracking Progress Toward Providing susT TIVES GLOBAL PRACTICE A KNOWLEDGE NOTE SERIES FOR THE ENERGY & EXTRAC THE BOTTOM LINE Tracking Progress Toward Providing Sustainable Energy where does the region stand on the quest for sustainable for All in East Asia and the Pacific 2014/29 and cenTral asia energy for all? in 2010, eaP easTern euroPe sT ainable en ergy for all in databases—technical measures. This note is based on that frame- g su v i d i n had an electrification rate of Why is this important? ess Toward Pro work (World Bank 2014). SE4ALL will publish an updated version of 1 Tracking Progr 95 percent, and 52 percent of the population had access Tracking regional trends is critical to monitoring the GTF in 2015. to nonsolid fuel for cooking. the progress of the Sustainable Energy for All The primary indicators and data sources that the GTF uses to track progress toward the three SE4ALL goals are summarized below. consumption of renewable (SE4ALL) initiative C T I V E S G L O B A L P R A C T I C E ENERGY & EXTRA • Energy access. Access to modern energy services is measured T E S E R I E S F O R T H EIn declaring 2012 the “International Year of Sustainable Energy for energy decreased overall A KNO W L E D G E N Oand 2010, though by the percentage of the population with an electricity between 1990 All,” the UN General Assembly established three objectives to be connection and the percentage of the population with access Energy modern forms grew rapidly. d Providing Sustainable accomplished by 2030: to ensure universal access to modern energy energy intensity levels are high to nonsolid fuels.2 These data are collected using household Tracking Progress Towar services,1 to double the 2010 share of renewable energy in the global surveys and reported in the World Bank’s Global Electrification but declining rapidly. overall THE BOTTOM LINE energy mix, and to double the global rate of improvement in energy e and Central Asia trends are positive, but bold Database and the World Health Organization’s Household Energy for All in Eastern Europ efficiency relative to the period 1990–2010 (SE4ALL 2012). stand policy measures will be required where does the region setting Database. The SE4ALL objectives are global, with individual countries on that frame- on the quest for sustainable to sustain progress. is based share of renewable energy in the their own national targets databases— technical in a measures. way that is Thisconsistent with the overall of • Renewable energy. The note version energy for all? The region SE4ALL will publish an updated their ability energy mix is measured by the percentage of total final energy to Why is this important ? spirit of the work initiative. (World Bank Because2014). countries differ greatly in has near-universal access consumption that is derived from renewable energy resources. of trends is critical to monitoring to pursue thetheGTF in 2015. three objectives, some will make more rapid progress GTF uses to Data used to calculate this indicator are obtained from energy electricity, and 93 percent Tracking regional othersindicators primary will excel and data sources that elsewhere, depending on their the while the population has access le Energy for All in one areaThe goals are summarized below. balances published by the International Energy Agency and the the progress of the Sustainab respective track starting progress pointstowardand the three SE4ALL comparative advantages as well as on services is measured to nonsolid fuel for cooking. access. Accessthat they modern to are able to energy marshal. United Nations. despite relatively abundant (SE4ALL) initiative the resources and support Energy with an electricity connection Elisa Portale is an l Year of Sustainable Energy for To sustain percentage of by the momentum forthe the population achievement of the SE4ALL 2• Energy efficiency. The rate of improvement of energy efficiency hydropower, the share In declaring 2012 the “Internationa energy economist in with access to nonsolid fuels. three global objectives objectives, andathe means of charting percentage of the population global progress to 2030 is needed. is approximated by the compound annual growth rate (CAGR) of renewables in energy All,” the UN General Assembly established the Energy Sector surveys and reported access to modern universalAssistance The World TheseBank and data are the collected International using household Energy Agency led a consor- of energy intensity, where energy intensity is the ratio of total consumption has remained to be accomplished by 2030: to ensure Management Database and the World of theenergy intium of 15 renewable international in the World Bank’s Global agencies toElectrification establish the SE4ALL Global primary energy consumption to gross domestic product (GDP) energy the 2010 share of Program (ESMAP) relatively low. very high energy services, to double Database. measured in purchasing power parity (PPP) terms. Data used to 1 t ’s Household provides Energy a system for regular World Bank’s Energy the global rate of improvemen and Extractives Tracking Framework Health (GTF), which Organization in the energy intensity levels have come and to double the global energy mix, Global Practice. (SE4ALL 2012). based on energy. of renewable The sharepractical, rigorous—yet energy given available calculate energy intensity are obtained from energy balances to the period 1990–2010 global reporting, Renewable down rapidly. The big questions in energy efficiency relative setting by the percentage of total final energy consumption published by the International Energy Agency and the United evolve Joeri withde Wit is an countries individual mix is measured Data used to are how renewables will The SE4ALL objectives are global, economist in with the overall from renewable energy when every resources. person on the planet has access Nations. picks up a way energy that is consistent 1 The universal derived that isaccess goal will be achieved balances published when energy demand in from energy their own national targets through electricity, clean cooking fuels, clean heating fuels, rates the Bank’s Energy and countries differ greatly in their ability calculate this indicator are obtained to modern energy services provided productive use and community services. The term “modern solutions” cookingNations. again and whether recent spirit of the initiative. Because Extractives Global rapid progress and energy for Energy Agency and the United liquefied petroleum gas), 2 Solid fuels are defined to include both traditional biomass (wood, charcoal, agricultural will make more by the refers to solutions International that involve electricity or gaseous fuels (including is pellets and briquettes), and of decline in energy intensity some t of those of efficiency energy and forest residues, dung, and so on), processed biomass (such as to pursue the three objectives, Practice. depending on their or solid/liquid fuels paired with Energy efficiency. The rate stoves exhibiting of overall improvemen emissions rates at or near other solid fuels (such as coal and lignite). will excel elsewhere, rate (CAGR) of energy will continue. in one area while others liquefied petroleum gas (www.sustainableenergyforall.org). annual growth as well as on approximated by the compound and comparative advantages is the ratio of total primary energy respective starting points marshal. where energy intensity that they are able to intensity, measured in purchas- the resources and support domestic product (GDP) for the achievement of the SE4ALL consumption to gross calculate energy intensity Elisa Portale is an To sustain momentum terms. Data used to charting global progress to 2030 is needed. ing power parity (PPP) the International energy economist in objectives, a means of balances published by the Energy Sector International Energy Agency led a consor- are obtained from energy The World Bank and the SE4ALL Global Energy Agency and the United Nations. Management Assistance agencies to establish the the GTF to provide a regional and tium of 15 international for regular This note uses data from Program (ESMAP) of the which provides a system for Eastern Tracking Framework (GTF), the three pillars of SE4ALL World Bank’s Energy and Extractives on rigorous—yet practical, given available country perspective on Global Practice. global reporting, based has access Joeri de Wit is an will be achieved when every person on the planet The universal access goal heating fuels, clean cooking fuels, clean energy economist in 1 agricultural provided through electricity, biomass (wood, charcoal, to modern energy services The term “modern cooking solutions” to include both traditional and briquettes), and Solid fuels are defined the Bank’s Energy and use and community services. biomass (such as pellets 2 and energy for productive petroleum gas), and so on), processed fuels (including liquefied and forest residues, dung, involve electricity or gaseous at or near those of Extractives Global refers to solutions that overall emissions rates other solid fuels (such as coal and lignite). with stoves exhibiting Practice. or solid/liquid fuels paired (www.sustainableenergyforall.org). liquefied petroleum gas Contribute to If you can’t spare the time to contribute to Live Wire, but have an idea for a topic, or case we should cover, let us know! 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ERGY PRACTICE work (World Bank 2014). E G E N O T E S E R I E S F O R T H E E N to electricity, and 93 percent of A K N O W L g regiona l trends is critical monitoring the GTF in 2015. data sources that the GTF uses to Trackin The primary indicator s and the population has access s of the Sustain able Energy for All the three SE4ALL goals are summari zed below. the progres track progress toward Understanding CO Emissions from the Global Energy Sector nonsolid fuel for cooking. is measured to modern energy services THE BOTTOM LINE to Your Name Here t (SE4ALL) initiativ e Energy access. Access connection despite relatively abundan 2 population with an electricity ional Year of Sustainab le Energy for by the percentage of the access to nonsolid fuels. 2 hydropower, the share the energy sector contributes In declaring 2012 the “Internat objectives percenta ge of the population with establish ed three global and the and reported about 40 percent of global of renewables in energy All,” the UN General Assembly using household surveys Why is this issue important? access to modern These data are collected 2030: to ensure universal and the World Become an author has remained emissions of CO2. three- consumption to be accomplished by of renewable energy in in the World Bank’s Global Electrification Database high energy knowledge the share of the 2010 . energy requires very relatively low. Mitigating climate change services, to 1 double ld Energy Database quarters of those emissions rate of improvement Organization’s Househo CO2 intensity levels have come and to double the global Figure 1. CO2 emissions Health Figure 2. energy-related The share of renewable energy in the energy come from six major the global energy mix, sources of CO question s2 emissions to the period 1990–201 0 (SE4ALL 2012). by sector Renewab le energy. emissions by country consumption down rapidly. The big economies. although coal-fired in energy efficiency relative countries setting percenta ge of total final energy mix is measured by the of Live Wire and global, with individual LICs evolve les will opportunities to cut emissions of greenhouse aregases used to plants account for just are how renewab Identifying The SE4ALL objectives le energy resources. Data 0.5% picks upunderstanding of the main sources ofin those a way that is consistent with emis- the overall that is derived from renewab energy balances published 40 percent of world energy when energy demand requires a clear their own national targets in their ability are obtained from calculate this indicator Other Carbonrates for more than 80 percent of differ greatly countries Residential production, they were again and whethersions.recent dioxide (CO2) accounts spirit of the initiative. Because 6% sectors progress Other MICs nal Energy Agency and the United Nations. will make more rapid 15% intensity gas emissions globally, 1 primarily from the burning s, some 10% by the Internatio China improvement of energy efficiency is contribute to your responsible for more than of decline in energytotal greenhouse to pursue the three objective on their Other HICs . The rate of energy sector—defined include toexcel elsewhere, depending Energy efficiency 30% growth rate (CAGR) of energy will continue. of fossil fuels (IFCC 2007). The will 8% in one area while others by the compound annual Energy 70 percent of energy-sector as well as on 41% approxim and heat generation—contributed and compara tive advantages 41 ated Japan 4% energy the ratio of total primary Industry emissions in 2010. despite fuels consumed for electricity respective starting points 20% Russia energy intensity is that they are able to marshal. in 2010 (figure 1). Energy-related intensity, where USA product (GDP) measured in purchas- improvements in some percent of global CO2 emissions the resources and support 7% gross domestic practice and career! up the bulk of such ent of the SE4ALL Other consump tion to India 19% intensity is an at the point of combustion make for the achievem calculate energy countries, the global CO2 Elisa 2 emissions COPortale To sustain momentum transport Road 7% EU terms. Data used to andinare generated by the burning of fossil is needed. global progress to 2030 6% transport fuels, industrial ing power parity (PPP) the International economist objectives, a means of charting balances published by emissions 11% emission factor for energy energy 16% EnergyandSector nonrenewable municipal waste to generate nal Energy Agency led electricity Internatio a consor- are obtained from energy The World Bank and the thewaste, generation has hardly changed United Nations. ent Assistance venting and leakage to establish the emissions SE4ALL Global Energy Agency and the sector at the point and over the last 20 years. and heat. Black carbon and methane Managem tium of 15 international agencies Notes: Energy-related CO2 emissions are CO2 emissions from the energy from the GTF to provide a regional of the for regular This note usesanddata domestic Program (ESMAP) are not included in the analysis presented in this rk note. which provides a system (GTF), of combustion. Other Transport includes international marine aviation bunkers, of SE4ALL for Eastern Extractives Tracking Framewo available Other Sectors rail and pipeline transport; perspect ive on the three include pillars commercial/public World Bank’s Energy and given aviation and navigation, country on rigorous—yet practical, services, agriculture/forestry, fishing, energy industries other than electricity and heat genera- Global Practice. global reporting, based elsewhere; Energy = fuels consumed for electricity and Where do emissions come from? tion, and other emissions not specified as has in the opening paragraph. HIC, MIC, and LIC refer to high-, middle-, access Joeri de Wit is an will be achieved when on the planet heat generation, every person defined The universal access goal of countries heating fuels, energy economistare Emissions concentrated in 1 in a handful to modern energy services provided through electricity, fuels, clean and low-income clean cooking countries. cooking solutions” to include both traditional biomass (wood, charcoal, agricultural The term “modern Source: IEA 2012a. Solid fuels are defined and briquettes), and the Bank’s Energy and use and community services. biomass (such as pellets 2 and come primarily from burning and energy coal for productive electricity or gaseous fuels involve (including liquefied petroleum gas), of and forest residues, dung, and so on), processed Vivien Foster is sector Extractives Global refers to solutions that overall emissions rates at or near those other solid fuels (such as coal and lignite). with stoves exhibiting or solid/liquid fuels paired emissions closely manager for the Sus- The geographical pattern of energy-related CO Practice. gas 2 (www.sustainableenergy forall.org). liquefied petroleum middle-income countries, and only 0.5 percent by all low-income tainable Energy Depart- mirrors the distribution of energy consumption (figure 2). In 2010, ment at the World Bank countries put together. almost half of all such emissions were associated with the two (vfoster@worldbank.org). Coal is, by far, the largest source of energy-related CO2 emissions largest global energy consumers, and more than three-quarters globally, accounting for more than 70 percent of the total (figure 3). Daron Bedrosyan were associated with the top six emitting countries. Of the remaining works for London This reflects both the widespread use of coal to generate electrical energy-related CO2 emissions, about 8 percent were contributed Economics in Toronto. power, as well as the exceptionally high CO2 intensity of coal-fired by other high-income countries, another 15 percent by other Previously, he was an power (figure 4). Per unit of energy produced, coal emits significantly energy analyst with the more CO emissions than oil and more than twice as much as natural 2 World Bank’s Energy Practice. Gas Inventory 1 United Nations Framework Convention on Climate Change, Greenhouse 0.php gas. Data—Comparisons By Gas (database). http://unfccc.int/ghg_data/items/380