UK’s energy efficiency policy ‘not fully coherent’ –the difficulties of making complex policy mixes work

Posted on by Florian Kern — No Comments ↓

A recent commentary piece in Ends report (UK’s energy efficiency plan ‘not fully coherent’, by Paul Hatchwell, 7th May) is critical of DECC’s National Energy Efficiency Action Plan (NEAP). In the article Hatchwell  refers to an assessment by the EU-wide Coalition for Energy Savings which concluded that the ‘UK’s plans were considered “assessable”, but classed as “not fully coherent and/or several measures and claimed savings questionable”.  As project leader on a Centre on Innovation and Energy Demand project on the ‘Policy synergies and trade offs for low energy innovation’ I find this article interesting as it highlights the difficulties of making complex policy mixes work.

NEAPs are required by the European Commission for member states to report on actions undertaken to deliver on the EU’s commitment to increase energy efficiency by 20% by 2020. Hatchwell points out that two thirds of the envisaged energy savings in the UK’s national plan are assumed to come from the domestic sector while the target for industry and commerce are ‘surprisingly modest relative to opportunities. There is an almost negligible contribution from the energy-intensive transport sector.’ The plan lists 19 policy instruments which are meant to deliver the promised energy savings. Instruments include tightening building regulations, the Energy Company Obligation, the Carbon Reduction Commitment Energy Efficiency Scheme affecting large commercial and public sector energy use, the Green Deal’s domestic energy efficiency loans, and the smart meter roll-out.

For me this article raises at least three different issues which we are currently grappling with in a Centre on Innovation and Energy Demand-funded project: ‘Policy synergies and trade offs for low energy innovation’ Read more ›

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Comments on a seminar titled: “Theorising an instrument for a ‘Low Carbon Bretton Woods’”

Posted on by Michele Stua — No Comments ↓

Officially launched during a SPRU seminar titled “Theorising an instrument for a ‘Low Carbon Bretton Woods’”, held on Friday 2nd of May, an innovative idea focusing on climate change-related international policies and carbon markets has recently raised interest and debate both within and outside the School of Business Management and Economics.

Core of the idea is the development of an instrument, and of its reference functioning system, capable of addressing most of the main obstacles and lock-ins that are still impeding an international agreement in the field of climate change negotiations. Resulting from more than seven years of research, the idea merges elements form already functioning carbon trading schemes with a limited set of modifications proposed by academics and policy-makers in an attempt to define the structure of a hypothetical global carbon market. Read more ›

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Building and nurturing a community: the importance of material and emotional dimensions in grassroots innovation

Posted on by Adrian Smith — No Comments ↓

Grassroots image

As part of our CIED activities and with support from Ellen van Oost (University of Twente), Johan Soderberg (IFRIS) and Sascha Dickel (Technical University Munich), we recently ran a session for practitioners and academics involved and interested in grassroots digital fabrication. It was held as part of a wider conference considering an Innovative Civil Society organised in Copenhagen by the Living Knowledge network of science shops over 9th to 11th March 2014. Much of the conference was about citizen science i.e. involving citizens in scientific knowledge production, yet about thirty people turned up to our session wanting to hear more about and discuss grassroots digital fabrication in Hackerspaces, Makerspaces and FabLabs.

Such labs and spaces are community-based workshops that enable people to access versatile digital design and fabrication technologies, and join together in collaborative projects where they can make anything they wish. Workshop members meet up at regional, national and international events and are networked through social media and on-line resources. Many cities around the world have or are opening grassroots digital fabrication workshops that are extremely diverse. Our session started off with three local practitioners’ presentations: Vanessa Carpenter (Illutron Collaborative Interactive Art Studio), Michael Hviid Nielsen (Copenhagen FabLab) and Oyuki Matsumoto (STPLN Open House Makerspace), and was followed by a World Café discussion on grassroots digital fabrication.

Whilst our session generated a wide variety of insights, the one we would like to draw out here was the repeated emphasis on the material and emotional aspects of grassroots innovation, in particular the role these play in the building and nurturing of a community of workshop practitioners. Feeling excited about taking things apart to see how they work, and generally having fun making and thinking about them, and wanting to share this with others all seem to be crucially important for people to be actively engaged in these workshops. Perhaps this is obvious, but at times the wider conference seemed so focused on techniques of public engagement and participation in knowledge production that it seemed as though some simple fundamentals of community development (such as the importance of creating shared emotional connections) were overlooked.

Building a community was key to the success of the three local workshops that gave a presentation at our session. In the context of grassroots digital fabrication, the combination of building material things in projects, at the same time as developing social bonds and building emotional connections, are all important aspects when trying to build a community of practitioners. The more established workshops demonstrated this, whilst newer ones that had relatively recently opened their facilities were only beginning to appreciate how important community building is to get people involved and stay involved in these workshops. STPLN in Malmö was an interesting example because the facilities (which were at first under-used) co-evolved over time with the development of a community. The STPLN team realised that giving people access to technologies and facilities was not enough. The atmosphere within workshops needed to allow people to feel playful and accepted, where they could be excited about experimenting with things, collaboratively create their own activities within the space, and develop a sense of belonging.

Some of the practitioners commented on how people who got involved in projects, stayed involved in subsequent activities because they became inspired by making things together. Sometimes people are experimenting purely for fun, while at other times they are grappling with wider social goals. For example, Vanessa described how at Illutron, an arts-based workshop, they try to facilitate enjoyable and playful public events in order to stretch and inspire people to think about social interactions in different ways, and at the same time draw them into their workshop activities. Michael from Copenhagen FabLab noticed how learning simple fabrication techniques whilst doing a project, could spark ‘leaps of creativity’ and inspire ideas for other projects that drew people into developing other skills, and therefore on-going involvement in the workshop. Experimenting with material things and technologies, designing and making things together, and having fun through shared emotional connections seem to be key to the development of communities within workshops.

Trying to encourage some workshop users to care about a common ethos (supporting open source ideas and shared knowledge production as advocated by most Hackerspaces, FabLabs and Makerspaces) was another part of the material and emotional dimension of building a community. Michael said that people and groups did not always document their projects, something important for designs and instructions to be freely available to others, even though this is an important part of the open knowledge. Cultivating a sense of belonging means that people need to feel welcome and confident about sharing but also to develop a sense of shared responsibility for the development of the workshop. Oyuki from Malmö STPLN described how the construction of their workshop evolved over time in order that participants could feel comfortable and hence participate and contribute.

All the practitioners pointed out that it takes energy and hard work to create such an atmosphere (if it does not pre-exist). Here, nurturing a diversity of different workshops seems to be key: for instance, some workshops where people are keen to explore open source ideas, and others where people are allowed to pursue their own individual projects. In the end, the people who are involved in setting up these workshops can only go so far in creating atmosphere and physical space where people are encouraged to work collaboratively. Each member and his/her understanding of the workshop and the technology within it play a role in what the space is used for, how it is used and by whom, and what it becomes over time. Workshop communities seem to co-evolve with their members’ competences, emotions and meanings, as well as the technologies and environments with which they surround themselves collectively.

As we noted above, such emotional and material dimensions of grassroots innovation were only one aspect of the session’s discussion, and the one we have chosen to point out here. It did not form a focus for discussion, but kept popping up as we talked about other issues, like environmental sustainability, inclusion, and creativity. Nor did we focus on negative emotional elements, such as fearfulness, jealousy, and frustration – but likewise, these emerged as elements of the discussion. Obviously, there is more to the material and emotional building of communities of grassroots digital fabrication than we are able to go into here. In our own research, we are only beginning to appreciate these rich and complex features. But when much of the wider conference saw civic engagement in innovation as a matter of technique and best practice, we wanted to record a wider mix of features, which at times are very spontaneous and improvisational, but which have to be involved when cultivating a more innovative civil society.

By Adrian Smith and Sabine Hielscher, Centre on Innovation and Energy Demand (CIED), SPRU, University of Sussex

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Scrapping the German Renewable Energy Act?

Posted on by Florian Kern — No Comments ↓

When the German Commission of Experts for Research and Innovation (EFI)  released its annual report to the German Chancellor Merkel a couple of weeks ago, two of the 260 pages caught most of the attention of the media. Two pages which presented the conclusion that the German Renewable Energies Act (Erneuerbare-Energien-Gesetz, short: EEG) with its feed-in tariffs had no innovation and no climate impact. Therefore the Commission concluded the Act should be abolished. A finding that came as quite a surprise to us, as it was contrary to our own research findings. Various renewable industry associations were quick in rejecting these claims. After carefully scrutinising the analysis we came to the conclusion we also disagree with the recommendation of the commission. While there are good reasons for re-thinking and revising the EEG in its current form, we argue that this should be done based on a balanced view of what the instrument has achieved to date.

So, together with several German and European experts on renewables policy and innovation we drafted an expert statement which combines our various findings on the positive impact of the German Renewable Energies Act (EEG) on innovation and climate protection. This statement has now been translated into English, and provides an overview of the current evidence on these issues, which may also help inform policy makers in the UK and other countries. It concludes that:

  1.  The EEG has definitely generated innovation effects and supported the transformation of the German energy system.
  2. The conclusion that the EEG has no effect as a climate policy cannot be upheld.

This week we may find out how far policy makers and civil servants in the German government have taken the plurality of voices on board when revising the EEG, as Merkel’s Cabinet is envisaged to adopt Minister Gabriel’s proposal for the EEG 2.0 this April 8, 2014, thereby setting the stage for the fate of the German Energiewende and its global knock-on effects.

By Florian Kern and Karoline Rogge, Sussex Energy Group, SPRU, University of Sussex

 

Expert statement on the impact of the German Renewable Energies Act (EEG) on innovation and climate protection

In response to the annual report of the “Expert Commission Research and Innovation” to the German Chancellor

1. Context and significance of the EEG

Renewable energies play a decisive role in the transformation of the energy system. A successful transformation will essentially depend on innovations being triggered and diffused. Besides protecting the climate, natural resources and the environment, it is therefore a declared goal of the German Renewable Energies Act (EEG) to promote the further development of technologies used to generate electricity from renewable energy sources. The actual innovation effect of this instrument is questioned from time to time. The latest report by the Commission of Experts for Research and Innovation (EFI) concludes that “the EEG is neither a cost efficient instrument for climate protection, nor does it seem to have a measurable impact on innovation”. The EFI therefore does not see any justification for continuing the EEG.

Prompted by the current discussion, the authors of this statement decided to pool their findings from many years of research into the EEG’s environmental and innovation impacts, documented in numerous publications, in order to contribute to the discussion about the impact of the EEG in a condensed but fact-based and differentiated form. The undersigned conclude that the EEG has definitely generated innovation effects and supported the transformation of the energy system.

2. What is innovation and how can it be measured?

First of all, it should be noted that innovations can be defined as genuinely novel as well as significantly improved products, services and processes already on the market, which are not necessarily based on patented know-how. This definition implies that innovation should be measured by a variety of indicators. Alongside patents, conventional indicators include, e.g., the number of new products launched onto the market or products whose quality has improved; improved price/ performance; but also innovative start-ups and investments in research and development. Hence, the comprehensive analysis and assessment of a policy instrument’s impact on innovation should be based on a multitude of indicators and therefore on different data collection methods, because single indicators can only capture partial aspects of innovation – and some of these only very indirectly.

When analyzing the innovation impact of a policy instrument such as the German Renewable Energies Act, it is also important to bear in mind that innovations always depend on the interaction of different factors: Public funding of research and development but also increasing external pressure to act – which innovations should alleviate – play a role as do scientific progress, demand potentials, changes in consumer preferences and policy measures promoting demand, such as the EEG. Accordingly, the innovation impacts of individual instruments have to be embedded in this overall context and assessed from a systemic point of view.

3. The innovation impact of the EEG

Patent figures are frequently used to illustrate innovation dynamics and potential of future technical performance and market dynamics. There has been a marked, disproportionate increase in patent applications for renewable energy technologies over the last few years. Different studies reveal a clear positive correlation between patent development and the demand for renewable energies. The EEG has without doubt made a major contribution to increasing this demand in Germany – as have similar instruments in other countries – and thus to the accelerated diffusion of renewable energy technologies. For instance, almost 100% of photovoltaic and 85% of wind energy capacities in the EU are based on feed-in tariffs.

Technological innovations

Similarly, if innovation is indicated by the price and/or performance of a technology, a very positive picture results with regard to innovation dynamics. In the wind power sector, the average effect of wind turbines more than doubled from 1100 kW to 2600 kW between 2000 and 2013 according to data from German wind power associations. This increase was driven by technical innovations and enables a much larger amount of electricity to be generated per turbine. In photovoltaics, solar systems now cost one third of what they did 7 years ago, and there has been a simultaneous huge increase in their conversion efficiency as well. Our results show that economies of scale and learning effects made possible due to increased demand have made a major contribution to these changes. Our case study results indicate that even market newcomers profit from the specific conditions of fixed feed-in payments due to increased investor interest. Furthermore, the market dynamics triggered by the EEG has enabled companies to invest in process innovations and innovative manufacturing equipment, which has a positive impact on technologies’ costs and efficiency. Beyond innovations in the technologies it directly promotes, the EEG has also triggered extensive innovative activities in complementary technologies such as energy storage systems, inverters, forecast software and grid technology. In particular, there is considerable pressure for innovations in various grid system components. This pressure is being exerted by the requirements of a power sector increasingly based on renewable energies; a situation which has come about due to expansion of renewable electricity generation induced by the EEG.

Organizational and institutional innovations

The innovation impacts are not just of a technical nature, but also relate to organizational and institutional innovations in other fields, e.g. the financial sector. In the public debate, increasing importance is given to the challenge of financing the energy transition, which requires innovative solutions. Due to the EEG and comparable feed-in systems in other European countries, new actors – e.g. small cooperatives, private homeowners, farmers, insurance companies and pension funds – could be attracted which has provide considerable amounts of capital. The costs of the energy transformation can be significantly reduced thanks to EEG’s stable and long-term investment horizon and these actors requiring only low rates of return. The interaction of direct and indirect, technical and organizational innovations is what constitutes a system innovation which enables the transformation of the energy generation system into one based on renewable energies.

International innovation impact

Another aspect to be considered when analyzing the EEG’s innovation impact is that innovations are increasingly taking place in international networks and changing global value chains. The EEG and comparable policy instruments have also triggered internationally relevant innovations. There have been a lot of reports in the media about rivals from Asia, who also benefit from the EEG and who have recently developed into competitors of Germany’s solar cell manufacturers. The development of the relevant capacities in Asia has been made possible by equipment being imported from Europe, into which European know-how and experiences had been integrated. Over time, this has not only contributed to declining costs and prices of the technologies in Europe, but has simultaneously sparked innovations, e.g. in manufacturing equipment. Even more significant globally is that the enormously reduced costs of renewable energy technologies have facilitated their application in developing and newly industrializing countries and that these countries are now pursuing entirely new strategies in the expansion of their electricity systems. It is now foreseeable that there will be a shift in the market dynamics in these countries. For instance, between 2010 and 2012, about three quarters of new wind power capacity were installed outside the EU and about half in Asia, which means additional export markets and, thus, that innovation incentives will follow. The EEG has played a role in triggering these self-reinforcing feedback processes. It could be criticized that other countries benefit from this innovation to a considerable extent, while the costs of the EEG are incurred in Germany. This criticism does not address the EEG’s innovation impact, however, but rather the international distribution of its costs – Germany could claim that it is taking on a global responsibility by bearing the investment costs which trigger these innovations.

4. The contribution of the EEG to climate protection

Overall, our scientific findings show that the policy has had a positive impact on innovation on a broad scale. In addition to this, however, there is the question whether the EEG also benefits climate protection or whether it does not bring about any additional CO2 reductions due to the EU’s emission trading scheme’s cap on EU-wide CO2 emissions. The argument that the EEG does not result in any additional CO2 reduction ignores the fact that the targets set for emissions trading and renewable energies were coordinated with each other within the EU’s 2020 integrated climate and energy package. The different policy targets of emissions trading and supporting renewable energies were deliberately weighed up by the policy makers. While the main target of the emissions trading scheme is to minimize the short-term costs of avoiding CO2 emissions, the policy measures supporting renewable energies aim at, and, as shown above, achieve the cost reduction and development of technologies which are not “near market” to start with. The EEG has no effect on climate protection within the EU only if renewable energies exceed their targets and, at the same time, the saved emissions are not “banked” for future trading periods and if future emission targets are not influenced by the success of previous emission reductions and technology developments or banking behavior. According to the most recent evaluations of the EU Commission, however, the expansion of renewable energies is currently proceeding almost exactly in line with the set targets and the current debate about the EU’s 2030 targets shows the significance of the previous success from applying new technologies when discussing the targets. In addition, the EEG-induced cost reductions – as described above – also contribute to the increased diffusion of renewable energy technologies outside Europe and, thus, to global climate protection. The conclusion that the EEG has no effect as a climate policy therefore cannot be upheld.

5. Implications for the revision of the EEG

Based on our findings, it can be stated that the EEG does have a positive impact on innovation. It is important to note that there are direct but also indirect effects, some of which emerge at global level and which cannot be captured by studies based on individual technologies, but which our findings indicate play a key role when evaluating innovation effects. However, this positive conclusion does not imply that we believe there is no need to change the EEG. The positive experiences made should be taken into account during the forthcoming amendment of this policy tool and when aiming to increase the incentives for innovations. We regard the amendment of the EEG as only one important component in the transformation of the energy sector: Scientists agree that the innovations which are essential to transform the energy system are most effectively promoted by combining demand- and supply-side measures in a balanced policy mix. As clearly shown by our empirical results, these include the formulation of credible medium- and long-term targets for renewable energies in terms of a mission-oriented innovation policy. Putting these ambitious targets for renewable energy technologies into practice by using different policy instruments to promote supply and demand and embedding them in the specific given context is what makes an innovation-oriented policy successful – hardly a surprising result from the perspective of systemic innovation research.

Researchers supporting this statement

This statement brings together the expertise of the following undersigned specialists:

  • Dr. Mario Ragwitz, Prof. Dr. Rainer Walz (Fraunhofer Institut für System- und Innovationsforschung (ISI), Karlsruhe)
  • Prof. Dr. Volker Hoffmann, Dr. Tobias Schmidt (ETH Zürich)
  • Prof. Dr. Karsten Neuhoff (Deutsches Institut für Wirtschaftsforschung, DIW Berlin)
  • Dr. Florian Kern, Dr. Karoline Rogge* (SPRU – Science and Technology Policy Research, University of Sussex (*and Fraunhofer ISI))
  • Prof. Dr. Uwe Cantner, PD Dr. Holger Graf (Friedrich Schiller Universität, Jena)
  • Prof. Dr. Joachim Schleich (Grenoble Ecole de Management sowie Fraunhofer ISI)
  • Prof. Dr. Rolf Wüstenhagen (Institut für Wirtschaft und Ökologie, Universität St. Gallen)
  • Dr. Klaus Jacob (Forschungszentrum für Umweltpolitik (FFU), FU Berlin)
  • Prof. Dr. Bernhard Truffer (CIRUS, EAWAG Dübendorf)
  • Univ. Prof. Dr. Reinhard Haas (Energy Economics Group, TU Wien)
  • Prof. Dr. Marko Hekkert, Dr. Simona Negro (Copernicus Institute, University of Utrecht)
  • Prof. Dr. Staffan Jacobsson (Chalmers University, Göteborg)
  • Prof. Dr. Volkmar Lauber (Universität Salzburg)
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Energy surplus: the economy blind spot?

Posted on by Claire Copeland — No Comments ↓

North Sea oil rig

The special importance of energy has tended to be ignored or downplayed by conventional economists although it has recently become a political hot potato in the UK and elsewhere. What is also largely ignored is the importance of a large energy surplus to the health and strength of an economy that in turn impacts on our general standard of living.

Energy surplus is a simple concept – it’s the calculation of net energy output. In other words: the energy generated less the energy expended required in order to acquire it.  Energy inputs include the energy embodied in operating equipment and buildings and the energy consumed by them. If you are into metrics the calculation to compare different energy supply technologies is the ratio of energy output to the energy inputs. This is called the energy return on energy invested; EROI or EROEI.

Many countries have long enjoyed the large energy surplus provided by fossil fuels. This has enabled economies to diversify and become ever more sophisticated since the levels of energy surplus have been greatly in excess of that needed to satisfy basic human needs. In order to maintain such an economy, and therefore standard of living, then that large energy surplus needs to be maintained. This is achieved either by sources that produce a large energy surplus or considerable amounts of sources with a lower energy surplus.

There are signs however that the large energy surplus that has been enjoyed in the past may be on the decline. This is mostly driven by a decline in the EROI for oil and gas. Global production of oil and gas was 30:1 in the 1990s but in 2006 this had fallen to 18:1 (Gagnon, Hall, & Brinker, 2009). And with oil and gas still making up the majority of our global primary energy supply, 52.8% in 2011 – virtually unchanged since 1973 (IEA, 2013), this decline is important.

It’s fairly easy to understand that no life form can survive for long while energy inputs exceed the energy output. What appears to be harder to realise is that trends in energy surplus also have serious implications for the economy.

A decline in energy surplus occurs for the following reasons:

  • increased energy input expenditure for the same level of energy output
  • reducing energy output for the same level of energy input
  • or both of the above

So what is the explanation for the fall in EROI for global oil and gas? There are two main reasons: First of all an increasing proportion of conventional sources of oil and gas are passing their peak and are therefore not producing as much output as before. And secondly, there is an increasing proportion of unconventional oil and gas exploitation i.e. tar sands, deep-water oil fields, shale gas.  Unconventional oil and gas require greater capital expenditure (inputs) than conventional sources. Both these reasons can be summarised as an increasing toil for oil and gas. “Toil for Oil” was part of the title of in a Financial Times article (Lewis, 2013) reporting on the 2013 IEA World Energy Outlook report. The article specifically discusses the rapid increase recently in capital expenditure by the oil and gas industry.

And what of renewables? With the exception of hydro all renewable supply technologies have EROI figures that are lower than conventional fossil fuels. Technology improvements will of course go some way to narrowing the gap with oil and gas, especially as the proportion of unconventional sources continues to increase. But renewables are extremely site specific, are not as versatile, e.g. generating electricity only, and there is also the intermittency problem in the case of wind and solar. Addressing intermittency would reduce EROI since this would require greater energy inputs. It can also be expected that over time the marginal extra unit of wind and solar will have a lower EROI through the “best first” principle i.e. the best sites will be exploited first.

Note that those capital energy inputs are manufactured and supplied to the energy sector by the industrial economy. Increasing toil for energy of any kind to maintain a level of energy output means a crowding out of the ability of the economy to deliver other activities. It could ultimately lead to a contraction of the economy i.e. recession.

Ignoring the trends in energy surplus is therefore dangerous and can lead to failures in energy policy and planning. Innovations and technological improvements will go some way to try to halt or reverse this decline especially if a completely new abundant energy source is discovered. But will human creativity save the day or will energy resource limits bite and more importantly than this: When?

Claire Louise Carter is a PhD student at the Sussex Energy Group in SPRU at the University of Sussex.

References:

Gagnon, N., Hall, C. A. S., & Brinker, L. (2009). A Preliminary Investigation of Energy Return on Energy Investment for Global Oil and Gas Production. Energies, 2(3), 490–503. doi:10.3390/en20300490

IEA. (2013). Key World Energy Statistics 2013.

Lewis, M. (2013, November 25). Toil for oil means industry sums do not add up. Financial Times. Retrieved from http://www.ft.com/cms/s/0/5e923e3a-51d3-11e3-8c42-00144feabdc0.html?siteedition=uk#axzz2mJM8b39E

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