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Wuppertal Institut | 1 AbstractThe economic assessment of low-carbon energy options is the primary step towards the design of policy portfolios to foster the green energy economy. However, today these assessments often fall short of including important determinants of the overall cost-benefit balance of such options by not including indirect costs and benefits, even though these can be gamechanging. This is often due to the lack of adequate methodologies.The purpose of this paper is to provide a comprehensive account of the key methodological challenges to the assessment of the multiple impacts of energy options, and an initial menu of potential solutions to address these challenges.The paper first provides evidence for the importance of the multiple impacts of energy actions in the assessment of low-carbon options.The paper identifies a few key challenges to the evaluation of the co-impacts of low-carbon options and demonstrates that these are more complex for co-impacts than for the direct ones. Such challenges include several layers of additionality, high-context dependency, and accounting for distributional effects.The paper continues by identifying the key challenges to the aggregation of multiple impacts including the risks of overcounting while taking into account the multitude of interactions among the various co-impacts. The paper proposes an analytical framework that can help address these and frame a systematic assessment of the multiple impacts.

The implementation of energy efficiency improvement actions not only yields energy and greenhouse gas emission savings, but also leads to other multiple impacts such as air pollution reductions and subsequent health and eco-system effects, resource impacts, economic effects on labour markets, aggregate demand and energy prices or on energy security. While many of these impacts have been studied in previous research, this work quantifies them in one consistent framework based on a common underlying bottom-up funded energy efficiency scenario across the EU. These scenario data are used to quantify multiple impacts by energy efficiency improvement action and for all EU28 member states using existing approaches and partially further developing methodologies. Where possible, impacts are integrated into cost-benefit analyses. We find that with a conservative estimate, multiple impacts sum up to a size of at least 50% of energy cost savings, with substantial impacts coming from e.g., air pollution, energy poverty reduction and economic impacts.

The European electricity market is linked to a carbon market with a fixed cap that limits greenhouse gas emissions. At the same time, a number of energy efficiency policy instruments in the EU aim at reducing the electricity consumption. This article explores the interactions between the EU's carbon market on the one hand and instruments specifically targeted towards energy end-use efficiency on the other hand. Our theoretical analysis shows how electricity demand reduction triggered by energy efficiency policy instruments affects the emission trading scheme: Without adjustments of the fixed cap, decreasing electricity demand reduces the carbon price without reducing total emissions. With lower carbon prices, costly low emission processes will be substituted by cheaper high emitting processes. Possible electricity and carbon price effects of electricity demand reduction scenarios under various carbon caps are quantified with a long-term electricity market simulation model. The results show that electricity efficiency policies allow for a significant reduction of the carbon cap: Compared to the 2005 emission level, 30% emission reductions can be achieved by 2020 within the emission trading scheme with similar or even lower costs for the industrial sector than were expected when the cap was initially set for a 21% emission reduction.

This paper presents the evaluation of a regional energy efficiency programme implemented in two "départements" of France. Électricité de France (EDF), a French energy company, provides refurbishment advice and financial incentives to end-users in the residential sector as well as specific training courses and certification to local installation contractors and building firms. Refurbishment measures analysed in this paper are efficient space heating equipment (condensing boilers, heat pumps and wood stoves or boilers), solar water heating systems and the installation of doubleglazed windows. A billing analysis based on a survey of programme participants' energy consumption is used to calculate the energy savings attributed to the programme. In order to receive an economic feedback of this demonstration programme, the evaluation of both saved energy and programme costs is of importance. Detailed knowledge of the programme's cost-effectiveness is essential for EDF to achieve the saving obligations imposed by the French White Certificate scheme at the lowest cost. Results of this evaluation can support the development and implementation of further energy efficiency programmes with similar characteristics in other regions of France. The cost-effectiveness is determined from the perspective of the programme participant and the society as well as the energy company in charge of the programme. All cost and benefit components are calculated in Euro per kilowatt-hour, which allows a direct comparison of levelized costs of conserved energy with the avoidable costs of the energy supply system.