IEEJ：May 2017 © IEEJ2017

The Global Evolution of Energy Efficiency
Policy and its implications for Japan
Brian Motherway
T kTokyo,InstituteI tit t forf Energy
EEfficiency
Effi ioff JJapanIEEJ：May 2017 © IEEJ2017Overview• Recent trends- Savings from energy efficiency- Policies• Energy efficiency as a part of central energy policy- Climate policypy- Energy security- Industrial competitiveness- Cost of living• Future developments- New business models- Digitalisation
2© IEA 2017

IEEJ：May 2017 © IEEJ2017

Savings from energy efficiency in JapanEnergy Intensity in the G7 (TPES/GDP in PPP)

TPES/GDP in PPP

0.25
Canada0.2

USFrance

0.15

JapanGermany

0.1Italy
UK

0.05
2000

2005

2010

2015

Japanese intensity has decreased by 24% since 2000 (15% since 2010) and is 17% less than the G7
average
3© IEA 2017

IEEJ：May 2017 © IEEJ2017

Savings from energy efficiency in G7
Final Energy consumption and savings in G7
3000
Efficiency
savings

MMtoe

2500
2000
1500
1000
500
02000

2015

Efficiency measures introduced since 2000 saved G7 countries 15% of their energy demand in 2015;
Just as one example, tighter standards for household appliances saved 85 TWh of electricity
4© IEA 2017

IEEJ：May 2017 © IEEJ2017

Savings from energy efficiency in G20
Final Energy consumption and savings in G20
8000
Efficiencysavings

M
Mtoe

6000
4000
2000
0
2000

2015

Efficiency measures since 2000 saved G20 countries 13% of their energy demand in 2015;
tighter standards for household appliances saved 200 TWh of electricity
5© IEA 2017

IEEJ：May 2017 © IEEJ2017

The impact of efficiency savings on carbon emissions
3.5

CO2 emissions
i isavings
iffrom efficiencyffi i
improvements
it sincei
2000

3.0

GtC
CO2

2.5
IEA
countries

2.0
1.5

China

1.0
0.5
0.0
2000

2005

2010

2015

In 2015, efficiency gains in IEA and China reduced their combined emissions by 15%;
Efficiency policy in China has become one of the most important global actions to reduce emissions
6© IEA 2017

IEEJ：May 2017 © IEEJ2017

Coverage of mandatory energy efficiency policies is increasing globally

CanadaEuropean Union
China
United States

Japan
Korea

MexicoIndia
Indonesia

BrazilSouth Africa

Australia

Policy coverage in Japan extends across all end-use sectors
7© IEA 2017

IEEJ：May 2017 © IEEJ2017

Mandatory energy efficiency regulations are a key policy driver
Energy use covered by mandatory efficiency regulations
WorldWorld
China
China
UnitedUnitedStates
StatesJapan
Japan

2015

European
EuropeanUnion
Union

India
IIndiadiKorea
Korea
MexicoMexico2000

BrazilBrazilI d nesia
Indoi
Indonesia
0%
0%

10%
10%

20%
20%

30%
30%

40%
40%

50%
50%

60%
60%

Share
Shareofofmandatory
mandatoryefficiency
efficiencyregulation
regulationcoveragecoverage

Japan is one of the top 3 nations with highest share of energy consumption covered by standards,
primarily due to the Top Runner Programme
8© IEA 2017

IEEJ：May 2017 © IEEJ2017

Savings from energy efficiency in Japan
Final Energy consumption and savings in Japan
400

M
Mtoe

300

Efficiencysavings

200
100020002015

Efficiency measures since 2000 saved Japan 19% of its energy demand in 2015;
tighter standards for household appliances saved 15 TWh of electricity
9© IEA 2017

IEEJ：May 2017 © IEEJ2017

Savings from energy efficiency in JapanM
Mtoe

Breakdown of energy demand change in Japan between 2000‐2015
3020100

Efficiencyy

EconomicstructureeTransp
port
service demandd‐40

Transporrt mode

‐30Residentialstructurre‐20

Economicactivity‐10

Due to efficiency improvement Japanese TFC decreased by 27Mtoe, 10% since 2000
10© IEA 2017

IEEJ：May 2017 © IEEJ2017

Energy efficient space cooling equipment
Performance standards for space cooling
100%
100%
80%
80%

60%
60%
40%
40%
20%
20%0%
0%

Japan
Japan

CanadaCanada

China
China

Korea
Korea
MEPS
MEPS<<20052005

India
India

UnitedUnitedStates
StatesEUEU

MexicoMexicoSaudi
Saudi Arabia
ArabiaMEPS
2005-15
MEPSinincrease
crease 2005-15

Japan’s space cooling standards are closest to best available technologies worldwide
11© IEA 2017

IEEJ：May 2017 © IEEJ2017

Passenger vehicle standards
Additi
Additionall global
l b l savings
ipotential
t ti l fromfapplicationli ti
off Japanese
Jpassenger vehicle
hi l standards
t d d3

OtherO
therRussia
Russia
India
India

2

CanadaC
anada
BrazilB
razil
MiddleEastM
iddle East

1

EUEU
Chi
China
C
hi
hina
UnitedU
nited States
States02014
2014

Japan’s efficiency standards for passenger vehicles are best in class and if every major vehicle market
adopted them, oil demand would be reduced by an additional 2.3 million barrels per day
12© IEA 2017

IEEJ：May 2017 © IEEJ2017

The next phase for transport efficiency standards – Freight Trucks
Gl b l energy consumption
Globalti
ini light,
li ht mediumdi
andd heavy-trucksht
k covereddbby efficiency
ffi istandards
t d d
60%
60%
50%
50%

2015
2015

40%
40%
30%
30%
20%
20%
2005
2005
10%
10%
0%
0%

Light duty
dutyvehicles
vehiclesLightMediumand heavy duty trucksMediumandheavy
dutytrucks

Japan was the first country to implement truck standards in 2005 with full enforcement phased in from2015. These standards aimed to improve truck efficiency by 12% over 2002 levels by 2020.
13© IEA 2017

IEEJ：May 2017 © IEEJ2017

Market Based Instruments (MBIs) for energy efficiency
Ch t tto b
Chart
be updatedd t dbby FFabianbi / SamS

Utility obligations and efficiency auctions have been developed in many countries
14© IEA 2017

IEEJ：May 2017 © IEEJ2017

MBIs create a market for energy efficiency
Investment stimulated by market-based instruments
30 000Rest of the world

Million USD per year

25 000

Other European countries
20 000DenmarkItaly

15 000FranceUnited Kingdom

10 000

Canada5 000

United States02005

2015

Market based instruments have led to USD 26 billion in energy efficiency investment
15© IEA 2017

IEEJ：May 2017 © IEEJ2017

Importance of policy design• MBIs have
ha e worked
orked successfullys ccessf ll in many
man jurisdictions
j risdictions b
butt theevidence on their relative effectiveness is not conclusive• Freedom for private sector to innovate and discover bestdelivery routes• Risk for policy maker that – if designed or implementedbadlyy – market p
participants
pwill find ways
y to gamegthesystem
MBIs put a premium on good policy design, including strong monitoring, verification and evaluation
16© IEA 2017

IEEJ：May 2017 © IEEJ2017

MBI design requires attention

Context shapinng instrument deesign

General design features of MBIs

Structuralfactors

Existing
policies

Fuel coverage

Lifetimes

Eligiblemeasures

Sectors

Calculation ofsavings

Monitoring &verification

Obligation‐specific design features

Historical,
political andcultural factorsObligatedparties

Customers

TargetCost recovery

Banking andborrowing

Trading

Evaluation

Auction‐specific design features
PricingPi ianddpayment

Project size

Competition withenergy supply

Penalties

Many considerations are required around instrument choice and design
17© IEA 2017

IEEJ：May 2017 © IEEJ2017

Considerable variation in cost among programmes
Expenditure by obligated parties and payments to auction winners per unit of energy saved

MBIs are saving significant amounts of energy for less than the cost of supply
18© IEA 2017

IEEJ：May 2017 © IEEJ2017

The market for energy efficiency services appears poised for growth

Global energy service company revenues by country/region
country/region, 2015
OtherUSD 1.9 billion

ChinaUSD 13 billion

United States
USD 6.3 billion

European Union
USD 2.7 billion
The global energy services market was USD 24 billion in 2015 and indicators point to future growth
19© IEA 2017

IEEJ：May 2017 © IEEJ2017

Energy efficiency’s role in wider
policy20

IEEJ：May 2017 © IEEJ2017

New energy efficiency policies in other countries/regions• European Union – Energy Efficiency
ffDirective- 30% reduction in energy use by 2030

• China
Chi – 13th fivefi year planl- 15% reduction in energy intensity by 2020

• Canada- Energy efficiency key focus of new climate policy framework• Mexico- Energy transition law• Other countries that are p
progressing
gg energy
gy efficiencyy policies:
p- Saudi Arabia, Brazil
21© IEA 2017

IEEJ：May 2017 © IEEJ2017

Energy efficiency as part of mainstream energy policy
GHG emissions reduction by measure in the Bridge Scenario
Scenario, relative to the INDC Scenario
Scenario, 2030
Russia
27%European Union

China

United States76%

Middle East

44%

80%

9%

Japan
42%

India
Southeast Asia

Efficiency
Inefficient coal plants
Renewables
Methane reductions
Fossil‐fuel subsidies

Latin America

Africa

43%

34%

32%
44%

Source: IEA, World Energy Outlook Analysis

Improvements to energy efficiency in Japan represent 42% of greenhouse gas emissions reduction
22© IEA 2017

IEEJ：May 2017 © IEEJ2017

Where do emissions savings come from?
Savings by measure, 2030
Renewables
investment

GHG emission savings from energy efficiency, 2030
Mt CO2‐eq‐50‐40‐30‐20‐1034%

Japan

42%
Heating and coolingIndustrial motors

24%Reducing
inefficient coal

Energyefficiency

Appliances and lighting
Road transport
SSource:
IEA
IEA, WorldW ld EEnergy OOutlooktl k AAnalysis
l i

In Japan, the majority of greenhouse gas emissions savings from energy efficiency are obtained fromimprovements to industrial motors and road transport
23© IEA 2017

IEEJ：May 2017 © IEEJ2017

Energy efficiency and energy security

36

1230

1024

818

61246200
CoalOil

USD billion (20155)

Mtooe

Avoided imports for Japan from efficiency gains, 2015GasEnergy efficiency savings have reduced the amount of coal, oil and gas imports required by Japan24© IEA 2017

IEEJ：May 2017 © IEEJ2017

Energy efficiency and reduced energy import dependency
Gas import savings and dependency

3525Japan

30

UK

Import saviings(Mtoe)

Oil import savings and dependency

2025

Japan

1520
G
Germany

1510
Korea

Germany

105Korea

5UK

000%

20%

40%

60%

80%100%0%

50%100%If energy savings from efficiency since 2000 are treated as a domestic resource, Japanese gas importdependency would be 13% less and oil import dependency would be 14% less in 2015
25

© IEA 2017

IEEJ：May 2017 © IEEJ2017

Efficiency measures following Fukushima

26

20112012

2013 – 20152016

• Power outages (March)• Large user limits (August)• Numerical targets forelectricity use• Numerical targets forrequired electricity saving• Requirement forelectricity savings (nonumerical targets)• Peak demand shift• Electricity savings
measures came to an end© IEA 2017

IEEJ：May 2017 © IEEJ2017

Energy efficiency contributing to emergency response
R lReplacementt off electricity
l t i it supplyl fromfnuclear
lfollowing
f ll i
Fukushima
F k hi
100%80%DemandRenewables

60%

C l
CoalGas40%

Oil
Nuclear

20%
0%
2010

2012

2013

2014

2015

Energy efficiency improvements are responsible for replacing the largest share of nuclear powerelectricity supply in 2015
27

© IEA 2017

IEEJ：May 2017 © IEEJ2017

Avoided electricity power plant from demand side
A id d power plant
Avoidedl t capacity
it fromfdemanddd side
id measures following
f ll i
Fukushima
F k hiGWe 150

100

AvoidedGas
Oil50

Coal02010201120122013

2014

2015

Energy efficiency and conservation avoided 21 GWe of new electricity supply capacity since 2010,equivalent to nearly half of Japan’s total nuclear power generation capacity
28© IEA 2017

IEEJ：May 2017 © IEEJ2017

Sectoral electricity demand change since 2010

Mtoe

S t l electricity
Sectorall t i it demand
dd change
h3530
25
20
15
10
502010Industry

2014

2010

Residential

2014

2010

Service2014

Electricity use between 2010 and 2014 decreased more in the industry and residential sectors than theservice sector, although service sector energy use decreased more in 2011 than the other sectors
29© IEA 2017

IEEJ：May 2017 © IEEJ2017

Energy efficiency in Japanese industry

181614121086420

3.0
2.5
2.0
1.5
1.0

USD million / ktoe

PJ / $US bnn GVA 2005 PPPP

Industrial energy intensity in IEA member economies and industry energy price, 2014

Energyintensity

0.500
0.0

Industrial
energypriceJapan’s higher energy prices provide a strong economic driver for industrial energy efficiency
30© IEA 2017

IEEJ：May 2017 © IEEJ2017

Comparison of industrial energy intensityIndustrial energy intensity in IEA member economies adjusted for industry structure
structure, 2014
PJ//$US bn GVA 20005 PPP

181614Unadjusted

1210864Adjusted forstructure

20Variation in industrial energy intensity due to multiple factors
31© IEA 2017

IEEJ：May 2017 © IEEJ2017

Energy efficiency contributing to industrial competitivenessJapanese non-metallic minerals manufacturing

Indicator (22000 = 100)

180
160
140
120
100
80
2000

2002

2004

2006

2008

2010

2012

2014
Source: IEA and WIOD (2016)

Despite rising energy prices, energy efficiency improvements have contributed to a reduction in theimpact on gross value added and competitiveness
32© IEA 2017

IEEJ：May 2017 © IEEJ2017

Energy efficiency in Japanese cement manufacturing

GJ/tonne clinker

Thermal energy intensity of clinker production in cement manufacturing
manufacturing, 2014
5100%

480%

360%

240%

120%

00%

Thermalenergyintensity
Clinkerratio

Kilns with
waste
heat
recovery

Source: IEA Energy Technology Perspectives (2017)33© IEA 2017

IEEJ：May 2017 © IEEJ2017

Energy efficiency in Japanese cement manufacturing

GJ/tonne clinker

Thermal energy intensity of clinker production in cement manufacturing
manufacturing, 2014
5100%

480%

360%

240%

120%

00%

Thermalenergy
intensity
Clinkerratio

Kilns withwasteheatrecovery

Source: IEA Energy Technology Perspectives (2017)

Thermal energy intensity in Japan is lower than North American or European countries due in part to ahigher percentage of kilns with waste heat recovery
34© IEA 2017

IEEJ：May 2017 © IEEJ2017

Energy efficiency benefits for Japanese households
Indices of energy price, proportion of income spent on energy, and efficiency in residential buildings
130

Energyprice120
110% ofincome
spent onenergy

10090

Efficiency
effect

8070

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Energy efficiency improvements within the residential sector
limited the impact of rising energy prices on household expenditure on energy
35© IEA 2017

IEEJ：May 2017 © IEEJ2017

Future developments for energy efficiency• New models for delivering energy efficiency- Energy as a service- Integration
gwith renewable energygy• Energy efficiency as a fuel- Demand side responsep- Capacity auctions• Digitalisationg- Advanced metering- Improved control and optimisation of industrial processes- Real time data collection and analysis

36© IEA 2017

IEEJ：May 2017 © IEEJ2017

Increased electricity demand by connected devices
ICT electricityy demand byy segmentg

Networked device electricityy demand
1 200

Edge devices anduser‐premise
network equipment
42%
Networks 18%

800

TW
Wh

Other 19%

1 000

600
400

Data centres 21%

Source: IEA More Data, Less Energy (2014)

20002008

2011

2014

2017

2020

2023

The energy use of connected/networked devices is growing rapidly, presenting new challenges forenergy efficiency
37© IEA 2017

IEEJ：May 2017 © IEEJ2017

Integration of energy services – efficiency and renewables• Shifting
Shif i focusffromfprovidingidi energy
to providing a service e.g. illumination,entertainment etc.
• Opportunity to increase combinationof energy efficiency and renewableenergy• Example of BBOXX:- Energy efficient appliances together
with the BBOXX home solar systemenable customers to use the following
gappliances for up to 6 hours:- 4 LED lights;- 15.6” TV;- Radio;;- Portable light;- Charge 2 mobile phones;

38© IEA 2017

IEEJ：May 2017 © IEEJ2017

Energy efficiency and renewables will be the twin drivers of the transition
Global CO2 emissions savings in 450 Scenario relative to the New Policies Scenario

Efficiency

Source: IEA World Energy Outlook (2016)

The New Policies Scenario including all the NDCs from the Paris agreement still leaves a significant
amount of efficiency potential untapped.
39© IEA 2017

IEEJ：May 2017 © IEEJ2017© IEA 2017

Contact :report@tky.ieej.or.jp