Energy efficiency in energy-intensive industries—an evaluation of the Swedish voluntary agreement PFE

Abstract

In this paper we evaluate the Swedish Programme for improving energy efficiency in energyintensive industries (PFE). Since 2005, some 100 energy-intensive companies have entered this five year voluntary agreement (VA) and been exempted from the EU minimum tax on electricity. In return, each company is required to: conduct an energy audit and analysis; identify and invest in profitable electricity saving measures; implement and certify an energy management system; introduce routines for energy efficient procurement and project planning. For most participants the first programme period was completed in 2009 and available data enables this PFE ex-post evaluation. An impact evaluation compiles and analyse data that the companies have reported to the administrating agency, the Swedish Energy Agency (SEA). This assessment of quantifiable results is complemented by a process-oriented approach that combines studies of policy documents, previous evaluations and personal communication with administrators as well as companies. The bottom-up calculation method distinguishes between gross and net impact. While the SEA estimates a gross impact of 1450 GWh/year the net impact consists of an interval between 689 and 1015 GWh of net annual electricity savings. PFE has effectively and to a low cost exceeded the estimated impact of a minimum tax and can thus be judged as successful. A comprehensive evaluation plan could facilitate relevant data gathering in PFE and similar VAs and could, in doing so, improve accuracy and possibly reduce evaluation cost. Such a plan should give weight also to the organisational changes, with potential long-lasting effects, that these programmes are capable of promoting.

Implications of an energy efficiency obligation scheme for the Swedish energy-intensive industries: an evaluation of costs and benefits

“…Thus the EEO is more costly than a voluntary agreement such as PFE. It should be noted that the level of energy savings achieved in the EEO and PFE is comparable for the EII, since the companies participating in PFE represent around 85% of the total energy consumption of the energy intensive sector (Stenqvist and Nilsson 2011 Table 4). These break-even costs exceed the actual costs observed in other countries (see Table 3).…”

“…5 results in terms of achieved energy savings. However, the tax rebates offered by the program were considered capital transfers between the state and the end-users (here, the participating EIIs), and they were almost equal to the costs incurred by the EIIs (Stenqvist & Nilsson, 2011) (see Table 2). After two implementation periods, PFE can no longer be continued as this capital transfer via tax rebates violates the EU regulations on government subsidies (Swedish Energy Agency 2012c).…”

“…It should be noted that the issue of information asymmetries in voluntary agreements has been generally considered a constraint to their cost-effectiveness (Glachant 1999). Also the short payback periods of the measures implemented in PFE could possibly mean that the implementation focused on "low-hanging fruits" in the first period (Stenqvist and Nilsson 2011). Focusing on "low-hanging fruits" is not something that is negative per se.…”

Impact after three years of the Swedish energy audit program

“…Investments in new technology have been given an estimated lifetime of 12 years. These lifetimes are estimated inspired by Stenqvist and Nilsson (2012) who used the same estimations when evaluating the Program for Improving Energy Efficiency in Energy-Intensive Industry. To perform the comparison between sectors the firms were divided into two groups.…”

“…However, large firms with more than 250 employees and a turnover of more than € 50 M are welcome to apply for the support if they can ensure that the SEAP will have a decisive impact on the conduct of the energy audit, and that the firm has not taken part in the Program for Improving Energy Efficiency in Energy-Intensive Industry, a policy directed towards electricity-intensive companies, see Stenqvist and Nilsson (2012). The energy audit can be conducted by internal staff but the SEA recommends consulting external help.…”