SAVE-E Energy Savings: Closing the Energy Efficiency Gap

Plans to reduce consumption of fossil fuels and hence emissions of CO2 include substitution to renewable energy sources, increased use of electricity and considerable efficiency improvements. Numerous studies have analysed and shown the feasibility of substitution to - and integration of - renewable energy sources. However, further studies have proven the existence of the energy-efficiency gap (EEG) and experience from various support and promotion policies have revealed that the EEG is hard to overcome. On the basis of these findings the aim of this project is to identify relevant factors influencing the EEG and to derive recommendations on how to surmount the EEG. An economic engineering approach is used to identify potentials of efficiency improvements. Based on this, we conduct a comprehensive micro-economic analysis of energy-saving investment behaviour of industries and households, i.e. identifying barriers for adoption and incentive schemes to resolve them. Combining potentials, barriers and incentives, strategies for implementing targeted improvements are developed and the trade-off between efficiency improvements and supply from renewable energy sources analysed. To evaluate macro-economic effects of the investments in savings a small macroeconomic model with detailed energy specifications is developed. Using this model, effects on growth, employment and public finances from using various incentive schemes are quantified.
The objectives of the project are to:
• Identify and quantify technical, economic and social barriers for potential energy savings.
• Analyse implementation strategies, evaluate incentives schemes, and find optimal trade-offs between efficiency improvements and additional renewable energy supply.
• Evaluate macro-economic effects of efficiency improvements and alternative incentive schemes.
• Contribute to development of methods and theory in the intersection of energy systems, behavioural economics, energy economics and stochastic programming areas.