Industrial energy efficiency improvement – the role of policy and evaluation

Abstract: At EU and to a varying degree at Member State (MS) level, industrial energy efficiency improvement (EEI) is considered an attractive means for reaching political objectives of different dimensions, not least environmental. For energy-intensive manufacturing industry in particular, EEI can lead to cost reductions, improved profitability and competitiveness. However, research and other analyses show that far from all privately profitable EEI actions are implemented, and for this reason a number of policies, programmes and instruments, have been launched to stimulate industrial EEI. For political objectives and measures to be credible, it is essential that the policy process is informed by close evaluations of progress, impact and other outcomes. Evaluation results can also contribute to the improvement of programmes in operation. This thesis contributes with evaluations and assessments of existing programmes and instruments that, besides other objectives, targets industrial EEI and GHG emissions reduction in energy-intensive manufacturing industry in Sweden and partly elsewhere. The research combines a theory-based evaluation approach with impact evaluations and other forms of analysis to find out if and to what extent that desired results in terms of energy savings and GHG emissions reductions are achieved. Outcomes in terms of corporate responses to policies are also addressed in order to identify underlying factors for changes to occur. The results show that the Swedish programme for improving energy efficiency in energy-intensive industries (PFE) has resulted in large and cost-effective electricity savings. As a main programme instrument the implementation and certification of industrial Energy Management Systems (EnMS) has led to organizational changes among interviewed firms in the Swedish pulp and paper industry (PPI). Through its combination of instruments PFE has caused attention-raising effects and norm changes towards a higher priority for EEI. A top-down decomposition analysis of energy trends in the Swedish PPI shows that especially electricity efficiency improvement has increased in the post-2000 period. This result corresponds well with bottom-up reported electricity savings in PFE and confirms the success of the programme. Also CO2 emissions have been reduced in Swedish PPI. An interview-based study on the influence of the EU emissions trading system (EU ETS) on corporate climate strategies shows that the economic value of CO2 emissions is accounted for, but that the carbon price tag represents a minor factor among many that underpin industrial investment decisions. In the third period of EU ETS, the amount of free allocation to manufacturing industry is generally reduced compared to previous periods. However, the outcomes of the new allocation rules are dispersed in some industrial sub-sectors. For instance, the Swedish PPI will receive free allocation well above the actual emission level. To further stimulate industrial decarbonisation, the ongoing discussion on structural reforms of EU ETS is welcomed. To further stimulate industrial EEI the continuation of complementary industrial policies is recommended.