World Energy Outlook 2006

ut many go to fuel efficiency. In addition, energy savings come from hybrid
cars and alternative fuel vehicles and from the more rapid market penetration
of light-weight materials. Such technological advances come at a cost: in 2030,
the additional cost per vehicle is between $200 and $600 in non-OECD
countries and between $400 and $800 in OECD countries, compared to the
Reference Scenario. This increment represents only an average 3% and 5%
increase in the vehicle price respectively. Improving vehicle efficiency is, of
course, cheaper in countries with a larger share of inefficient vehicles, especially
heavy ones, in the existing fleet.
Other Sectors
Three-quarters of the additional investment in the industry and in the
residential and services sectors is for electrical equipment. Additional
investment in the Alternative Policy Scenario in electrical equipment –
industrial motors, appliances and lighting – in industry and buildings amounts
to $950 billion. Around three-quarters of this investment occurs in the
buildings sector. Investment in efficient lighting and appliances accounts for
more than 80% of additional investment in the residential and services sectors.
Additional investment in motor systems and other electrical equipment
accounts for the bulk of additional investment in industry (see Box 8.3).
Box 8.3: Energy Efficiency Project in Industry in China
The Global Environment Facility (GEF) is providing funds to back loan
guarantees to commercial banks in China to promote Energy Management
Companies’ (EMCs) work on energy performance contracting (World Bank,
2002 and 2005). The expansion of the EMC industry is one of the main
means the Chinese government is using to promote energy conservation.
EMCs carry out projects at industrial companies on a contractual basis,
providing the design, financing and implementation of the project. EMCs
and their industrial clients are free to choose the efficiency measures to be
implemented. Equipment installed during the project is handed over by the
EMC at the end of the contract (usually one to three years).
The GEF project was built in two phases. The first one has been completed
and the second has started. More than 140 measures have been
implemented during the first phase of the programme. They have already
yielded significant savings in industrial energy consumption, 75% of which
were in the form of reduced coal burn and the remainder in the form of
reduced electricity consumption.
Total expected investment over the second phase of the project is
$384 million. Planners project that, over its lifetime, the programme should
result in 35 million tonnes of coal equivalent (25 Mtoe) energy savings
as well as a reduction of 86 Mt of CO 2 emissions. On the basis of 2005
end-use prices to industrial customers and the fuel mix of the first phase,
the average payback time amounts to less than one year.
Chapter 8 - Assessing the Cost-Effectiveness of Alternative Policies 201
© OECD/IEA, 2007
8