Partnerships for Energy Efficiency: Reports Explore Public Policies to Encourage Private Investment
Two new reports from international organizations explore how the public and private sectors can work together to encourage energy efficiency investments in private business.
The International Energy Agency (IEA) and the Institute for Industrial Productivity (IIP) produced a November 2011 report, “The Boardroom Perspective: How Does Energy Efficiency Policy Influence Decision Making in Industry?”
Using the Netherlands as a case study, IEA and IIP researchers looked in particular at how – and whether – policies and policy mixes can influence boardroom decisions to invest in efficiency. They also assessed the need for additional policies based on a number of criteria, including the type of investments needed by industry to meet national efficiency targets.
The IEA and IIP found that the Dutch policy mix addresses five key driving forces on companies’ efficiency investment decisions: financial imperatives, policy obligations, knowledge of energy savings opportunities, public commitment to the environment, and public or market pressures to improve environmental performance. Despite the lack of policy obligation, the IEA analysis sindicates that policy in the Netherlands represents a financial driver for energy efficiency measures.
In line with this report and the lessons learned from country examples, the IEA in January published another document, “Joint Public-Private Approaches for Energy Efficiency Finance,” that offers guidance to governments on how to partner with the private sector to finance energy efficiency measures. This report highlights that “accelerating private investment in energy efficiency is crucial to exploit the potential of energy efficiency” and that investments can only happen through a joint effort between public and private actors. In the report, the IEA recommends that governments facilitate and support private investment in energy efficiency by developing public-private partnerships (PPPs) as “mechanisms that use public policies, regulations and/or funding to leverage private-sector financing for energy efficiency projects.”
The text focuses on three mechanisms - dedicated credit lines, risk guarantees, and energy performance service contracts – and it covers all project stages, from planning to implementation of energy efficiency measures.