A short while ago we discussed the European Union’s Energy Efficiency Plan and its goal to achieve a 20% improvement in its energy savings by the year 2020. Click here for a refresher on that. Basically, we found out that the initially instituted plan wasn’t totally working out as the European Commission had hoped, so they did some quick figuring and implemented another plan which would get everyone back on track. Handshakes and back-pats all around.
But what of the non-European Union countries? There is a fair number of them – 17 to be exact (there are 27 countries in the Union, with 5 candidate countries listed). What’s on the energy efficiency table for them? Well, the International Finance Corporation (IFC), which fosters sustainable economic growth for developing countries and, amongst other things, addresses climate change, and environment and social sustainability activities, is promoting the efficient use of energy in industrial enterprises in those countries.
The IFC conducted a survey in 2008 (2006 for Russia) assessing how industrial enterprises in six non-EU countries (Armenia, Azerbaijan, Belarus, Georgia, Russia and Ukraine) prioritize, understand, plan, finance, and implement energy efficiency measures. These countries are some of the most energy-intensive countries in Europe with Ukraine and Russia ranking within the top five and Belarus and Azerbaijan following up in the top ten.
What they found was the almost half the responding institutions in each country stated that improving energy efficiency was one of their main priorities for their business, with those with higher energy costs assigning a higher priority. Makes sense, non? However, they also found that the respondents almost always underestimated the potential benefits of energy efficiency benefits to their companies and fewer than half the respondents ever conducted energy audits to see where energy could be saved.
Even with these challenges, most companies in the surveyed countries had implemented some energy efficiency measures, but there was a clear preference towards measures that were low-cost or no-cost. These were typically administrative or organizational actions (i.e. turning off lights, appointing a specific employee responsible for energy efficiency), which had shorter payback periods and did not require significant budgetary allowances. Most of the companies in the surveyed countries have plans for future energy efficiency investments, but again, these investments were typically in the low-cost range, and while these low-cost investments certainly make a difference, large-scale, formal planning for energy efficiency would make more of a significant impact.
The actually implementation of a formal plan for energy efficiency and incorporating this into the company business strategy wasn’t especially prevalent within the surveyed companies. For instance, just under a third of the surveyed companies in Armenia and just under a quarter of the companies Azerbaijan and Georgia had developed and executed an energy efficiency plan, while in contrast, almost 80% of the companies in Belarus had.
The companies in the surveyed countries appear to be meeting roadblocks on their way to a more energy efficiency future. For instance, all of the countries (except Georgia) had passed national legislation related to energy efficiency, however many of the respondents felt as though the existing legal framework did not effectively promote energy efficiency in their country. Financial, organizational and technical barriers revealed themselves to be a further impediment preventing large-scale initiatives.
Of the respondents, only 15-35% sought outside financing for their projects and they were generally successful in obtaining such financing. The projects that did receiving financial backing had longer payback periods than projects in the recent past, suggesting that more substantial energy efficiency investments were being implemented.
So, as the IFA puts it, it’s a “mix of promise and challenges”. To summarize, the promising trends include energy efficiency being a priority in the minds of the managers of the respondent companies, the fact that planned investments in energy efficiency is substantially higher than in the past, a higher lender knowledge of these investments, and longer payback periods indicating a move towards more substantive measures with greater overall savings potential. Challenges include the organizational, financial and technical barriers to implementing energy efficiency plans, as wells as the ineffective laws, regulations and incentives for energy efficiency.
The IFA recommends various ways to get past these challenges in their report. They suggest improvements in three areas: industry, government and lenders. In terms of industry, increased awareness of the benefits of energy efficiency by managers and staff will help, as well as providing incentives for those staff members to reduce their energy consumption. Implementing a plan – any plan – for energy efficiency, and improving the equipment used to measure usage is also encouraged, along with applying for loans that allow the companies to save energy sooner than it would if it were being financed internally.
It’s suggested that governments ensure that the legal framework for energy efficiency is effective and that the necessary measures are designed and funded to allow companies to achieve their energy goals. Also, governments can work to remove the obstacles that hinder efforts to invest in energy efficiency. Financiers of energy efficient projects can help educate the company managers regarding the impact of energy efficiency, foster the creation of financial products and services in alignment with such projects, and aid in the application, design and evaluation of the projects.
While this study represents only six of the 17 non-European Union countries, between this and what we learned last post, it appears as though overall, Europe is working hard at achieving a significant reduction of energy usage and a significant increase in energy efficiency.