RAP Identifies Best Practices in Designing Energy Efficiency Obligations

12 April 2013

Energy efficiency is consistently identified as a low-cost, low-risk resource and is a critical strategy for meeting global carbon reduction goals. The Regulatory Assistance Project, a global non-profit team of power sector experts, identifies the most effective approaches to capturing energy efficiency resources in two recent papers. In “Best Practices in Designing and Implementing Energy Efficiency Obligations,” RAP surveys the globe to identify the most effective approaches to crafting an energy efficiency obligation. “Policies to Achieve Greater Energy Efficiency” takes a slightly different approach and provides a step-by-step instruction manual for developing a comprehensive energy efficiency policy. From establishing baseline efficiency standards for appliances to creating a steady source of funding, this paper reviews the myriad of tools available to policymakers. RAP provides technical and policy assistance on regulatory and market policies that promote economic efficiency, environmental protection, system reliability, and the fair allocation of system benefits among consumers. Visit raponline.org to learn more about RAP’s work.

Best Practices in Designing and Implementing Energy Efficiency Obligations

thumbnail of Best Practices in Designing and Implementing Energy Efficiency Obligations report

An energy efficiency obligation (EEO) is a regulatory mechanism that requires obligated parties to meet quantitative energy saving targets by delivering or procuring eligible energy savings produced by implementing approved end-use energy efficiency measures. Governments in various jurisdictions around the world have endeavored to improve end-use energy efficiency, and in some cases achieve other objectives, by designing and implementing EEO schemes. These schemes require energy providers, such as electricity and gas companies, to meet quantitative energy saving targets through assisting their customers to implement energy efficiency measures. Best Practices in Designing and Implementing Energy Efficiency Obligations includes detailed case studies of 19 EEO schemes implemented in a range of jurisdictions around the world. Key best practices identified in the report include:

  • Keep the policy objectives of the EEO scheme simple and clear, and focused on achieving energy savings.
  • Decide the end-use sector and facility coverage of the EEO scheme according to the overall policy objectives and estimates of energy efficiency potentials for the different sectors and facilities.
  • Establish a procedure for obligated parties to report claimed eligible energy savings to an appropriate authority and a process for checking and verifying these savings.
  • Enable non-obligated parties in the EEO scheme to implement energy efficiency projects to produce eligible energy savings.
  • Establish an appropriate mechanism to enable recovery of the costs incurred by obligated parties in meeting their individual energy saving targets.

thumbnail of Policies to Achieve Greater Energy Efficiency report

Policies to Achieve Greater Energy Efficiency

This best practices guide, Policies to Achieve Greater Energy Efficiency provides a "cookbook" summary of the most effective policies to promote energy efficiency. Governments ranging from local to national can adopt these policies to foster the use of products and services that require less energy input to deliver the same or greater output. The policies are organized around foundational mechanisms, implementation mechanisms, and supporting mechanisms. The foundational mechanisms include Integrated Resource Planning, standards, and market design, while the supporting and pricing mechanisms feature structures for programs, funding, information and labeling, tax policy, R&D and training. The paper describes how each policy mechanism operates, assesses its likely effectiveness, and identifies best practices. The paper also identifies jurisdictions that have successfully applied the policies described.