User:Peace Building

Definition of Energy Efficiency

Energy efficiency is a generic term, and there is no one unequivocal quantitative measure of 'energy efficiency'. In- stead, one must rely on a series of indicators to quantify changes in energy efficiency. In general, energy efficiency refers to using less energy to produce the same amount of services or useful output (Patterson 1996). For example, in the industrial sec- tor, energy efficiency can be measured by the amount of energy required to produce a ton of product. Hence, energy efficiency is often broadly defined by the simple ratio:

Useful output of a process Energy input into a process

The issue then becomes how to precisely define the useful output and the energy input, which in turn gives rise to a number of important methodological considerations which are often ignored in the literature. A number of indicators can be used to monitor changes in energy efficiency. These fall into four main groups: (1) Thermodynamic: these are energy efficiency indicators that rely entirely on measurements derived from the science of thermodynamics. Some of these indicators are simple ratios and some are more sophisticated measures that relate actual energy usage to an 'ideal' process. (2) Physical-thermodynamic: these are hybrid indicators where the energy input is still measured in thermodynamic units, but the output is measured in physical units. These physical units attempt to measure the service delivery of the process – e.g. in terms of tonnes of product or passenger miles. (3) Economic-thermodynamic: these are also hybrid indicators where the service delivery (output) of the process is measured in terms of market prices. The energy input, as with the thermodynamic and physical-thermo- dynamic indicators, is measured in terms of conventional thermodynamic units. (4) Economic: these indicators measure changes in energy efficiency purely in terms of market values ($). That is, both the energy input and service delivery (output) are enumerated in monetary terms (Patterson 1996).

Comparison of energy efficient light and normal light bulb

The difference between the actual energy used to provide energy services such as lighting, heating, cooling, and refrigeration and the level of energy efficiency that can be provided in a cost-effective way for the same services is defined as the "energy efficiency gap." Understanding the reasons for this gap requires careful quantitative analysis of the engineering and economic characteristics of specific technologies, as well as an assessment of data on adoption of the technologies in the market and of policies to promote energy efficiency (Levine, et al. 1995).

If consumers ignore seemingly cost-effective energy efficiency investments with no hidden costs or time lags, this is a market failure. A market failure is "a condition in any market that results in an inefficient allocation of resources." When market failures occur, government policies can be designed to overcome these economic inefficiencies (Levine, et al. 1995).  Case Study showing the impacts of policy to overcome market failures

California was the first state to promulgate energy-efficiency regulations for residential appliances, which limited the sale of refrigerators to those with energy consumption lower than a specified maximum. The range of other appliances that could be legally sold was similarly restricted on the basis of energy efficiency or annual energy consumption. In 1986, after several states had adopted their own energy efficiency regulations, manufacturers and environmental groups negotiated a set of national efficiency standards. These national appliance standards were encoded in the National Appliance Energy Conservation Act of 1987.8 This Act established national efficiency standards for refrigerators and several other appliances and required the US Department of Energy to issue other standards and to update all standards at defined intervals. Since then, the US Department of Energy has updated those standards.

Command-and-control type instruments could incur high institutional costs if used to achieve an ambitious target level far below the current consumption level. Due to the high-cost implications to building owners for compliance, opposition to enforcement of regulatory control is likely to occur and, if enforced, could incur high costs for policing and prosecuting violations, rendering the control unenforceable. This explains why only moderate targets can be set, and only a moderate result achieved through the use of this type of instrument. However, it could be highly cost-effective if the compliance requirement is set at such a level that the costs for implementing improvement measures can be paid back by the energy cost saving the measures provide, which is possible if there is a signiﬁcant energy efﬁciency gap caused by the existence of information barriers (Lee and Yik 2004).

References Lee, W.L., and F.W.H. Yik. 2004. "Regulatory and voluntary approaches for enhancing building energy efﬁciency." Progress in Energy and Combustion Science 477-500. Levine, Mark D., Jonathan G. Koomey, James E. McMahon, Alan H. Sanstad, and Eric Hirst. 1995. ENERGY EFFICIENCY POLICY AND MARKET FAILURES. Annual Review, Oak Ridge: Energy Division. Patterson, Murray G. 1996. "What is energy efficiency? ." Energy Policy 377-391. 13:42, 28 November 2017 (UTC)13:42, 28 November 2017 (UTC)