- Buildings Guide
- Policy Guide
- Appliances Guide
Voluntary Agreements (VAs) on energy efficiency targets and actions can be concluded by the government with commercial or public organisations (e.g. developers, housing companies, local authorities). The organisations commit to reaching energy efficiency targets and or to implementing energy efficiency actions, e.g. retrofitting their building stocks or investing only in (very) energy-efficient new buildings. VAs can thus be a complement to regulations, e.g. for promoting higher energy efficiency levels than mandated by law. In order to make such agreements effective, they must include rules for independent monitoring and impose effective penalties in case of non-compliance.
Voluntary Agreements (VAs) on energy efficiency targets and actions can be concluded by the government with commercial or public organisations (e.g. developers, housing companies, local authorities). In the VA, the participating organisations commit to reaching energy efficiency targets and or to implementing energy efficiency actions, e.g. retrofitting their building stocks or investing only in (very) energy-efficient new buildings. VAs can thus be a complement to regulations, e.g. for promoting higher energy efficiency levels than mandated by law. Meanwhile, a VA works best when it is integrated into a policy package that contains, for example, reduction of or even exemption from energy/CO2 taxation, energy audits, or government’s promise of relief from future regulation.
VAs on energy efficient buildings and appliances have already been implemented in the last decade, such as the EU GreenBuilding Programme (GBP), the EU Green Light programme or the Energy Star Home programme in USA. These programmes have achieved significant energy savings. For instance, the GBP resulted in an annual saving of 304 GWh/year.
The energy savings of Voluntary Agreements (VAs) can be substantial. However, it depends on the targets set in the agreement, the commitment of the participating organisations, and the size of the organisation etc. If properly designed, VAs are highly cost-effective both for the government and society, given their low public budget requirements (if they do not heavily rely on subsidies and tax exemptions). Because of the clear profitability of the energy efficiency technologies the governmental authority aims to promote, and the benefit they gain from the increased public recognition as a “green” organisation. It can also be very cost-effective for the participating organizations,
Voluntary Agreements (VAs) on energy efficiency targets and actions can be concluded by the government with commercial or public organisations (e.g. developers, housing companies, local authorities). The organisations commit to reach energy efficiency targets and or to implement energy efficiency actions, e.g. retrofitting their building stocks or investing only in (very) energy-efficient new buildings.
Worldwide implementation status
Voluntary Agreements (VAs) on energy efficient buildings and appliances have already been implemented, especially in Europe and the USA.
For example, since 2005, the European Commission (EC) has started the GreenBuilding Programme (GBP), which aims to improve the energy efficiency of new and existing non-residential buildings in Europe by providing information and public recognition of companies that show actual commitment to adopting energy efficient measures. The GBP is implemented on a voluntary basis and is complementary to the EU Energy Performance of Buildings Directive (EPBD) (Valentová/ Bertoldi 2010). For results, please see the Policy impact section.
The GreenLight programme (GLP) was launched by the EC in 2000. It is a voluntary agreement to encourage non-residential electricity consumers (i.e. the Partners) to commit to installing energy-efficient lighting in their facilities. Similarly, the GLP provides the partners technical information support and public recognition (Ciugudeanu/ Bertoldi 2004).
In the USA, the Energy Star programme has extended its scope to low energy buildings. A builder signs a voluntary agreement with the Environmental Protection Agency (EPA), in which the builder agrees to construct buildings that meet the Energy Star requirement and the EPA provides technical support, assists in quality control, supports consumer outreach, etc. The buildings should be verified by an independent third party (Energy Star).
Between 2007 and 2013, the Danish Electricity Saving Trust introduced the Curve Breaker Agreement. The Agreement set binding targets for reducing electricity consumption to voluntary signatories. The targets typically ranged between three and 15 per cent of demand reduction over a period of three to five years. Target groups were municipalities, regions, ministries and agencies but also non-governmental actors .The defined targets were negotiated with CBA coaches who worked at the Danish Saving Trust (DEST).
Voluntary Agreements (VAs) on energy efficiency can be formulated and implemented at trans-national, national, regional or local level.
Behaviour and Management
Supply-side actors and energy consultants may benefit from an increased demand in energy-efficient buildings and technologies, which may require more design and installation work and higher investment.
The following pre-conditions are necessary to implement voluntary agreements:
Agencies or other actors responsible for implementation
A public authority with appropriate statutory powers and expertise in energy efficiency should be in place to design, implement, and evaluate VAs (Bertoldi/ Rezessy 2010).
Ideally, independent third parties who are responsible for verifying energy savings of the participating organization can be involved to enhance their compliance with the agreements (Bertoldi/ Rezessy 2010).
Funding is needed for providing investors with information or technical assistance and/or energy audit.
A smaller amount of mainly staff costs is also required for the overall administration of the VA scheme. Communicating the scheme will also require some funds.
An easy-to-monitor and consistent set of calculation methods for the verification of energy savings needs to be in place. If these methods are not part of building energy efficiency regulations, they need to be developed.
Voluntary Agreements (VAs) can be more effective if quantified targets, e.g. amount of energy saved per year, are specified at the beginning.
International co-operations that share best practices of the design and implementation of Voluntary Agreements (VAs) can help policy-makers at trans-national, national, regional/local level to improve their design and implementation of VAs.
For energy savings, participating organisations self-report their saving achievements regularly. The simplest way of measurement and verification is to stipulate deemed saving assumptions for certain energy efficiency options before their installation (Neme/ Cowart 2012). This can be done through an energy audit of the buildings that may be needed anyway to identify the energy efficiency options that are reasonable to implement.
For evaluating economic benefits and costs, the implementing governmental authority needs to provide their costs incurred, separately for the preparation, administration, communication and evaluation costs and for any financial incentives provided by the government. Participating organisations need to provide information about the expenditures that they would have paid for the energy or power they saved and incremental costs to invest in energy efficiency measures. A standard reporting form can be provided to participating organisations for that purpose (Ciugudeanu/ Bertoldi 2004).
Confidentiality needs to be guaranteed for all data provided.
The common approaches of evaluating the effectiveness of Voluntary Agreements (VAs) is (1) to measure the energy consumption of the participating organization and then compare it to a typical non-participating organisation; (2) to compare energy consumption of the participating organisations before and after taking up energy efficiency options (Gupta et al. 2007; Ciugudeanu/ Bertoldi 2004). The “International Performance Measurement and Verification Protocol” (IPMVP) provides an overview of best practice examples for verifying savings from both traditionally- and third-party-financed projects (EU-greenlight). In addition to the data directly monitored for the energy efficiency programmes, evaluation of net energy savings compared to baseline trends should address side-effects such as rebound, multiplier, and free-rider effects, and the ‘lifetime’ and potential deterioration of energy savings.
In order to have a credible evaluation, it should, ideally, be conducted by an independent third party with reports made public (Bertoldi/ Rezessy 2010).
However, evaluating the effectiveness of VAs is difficult because: (1) VAs are often combined with other instruments and some studies have claimed that improvements have been largely triggered by other instruments, e.g. regulatory instruments (Chidiak 2002, Johannsen 2002 and Helby 2002 in Gupta et al. 2007); (2) when comparing the participating organizations and non-participating ones there is the possibility of a selection bias, i.e. it is often the “greenest” organizations entering into VAs (Gupta et al. 2007). Studies neglecting these issues may result in an over-estimation of the VA’s effectiveness.
For evaluating the economic benefits for the society, standard values for the incremental energy supply costs that will be avoided in the long run for a kWh of energy or a kW of load should be developed by the government.
Design for sustainability aspects
Other sustainability aspects, such as resource efficiency, health aspects etc., can be integrated into Voluntary Agreements (VAs).
An increasing demand for energy efficiency products and services driven by the implementation of Voluntary Agreements (VAs) creates job opportunities in these fields.
The following measures can be undertaken to overcome the barriers
Energy savings of Voluntary Agreements (VAs) depend on the targets set in the agreement, the commitment of the participating organisations, the size of the organisation, etc.
In the EU GreenBuilding Programme, for example, builders of new non-residential buildings need to prove at least a cutback of 25% below the building code after implementing energy efficiency measures. Between 2006 and end 2009, 167 partners joined the Programme with almost 300 buildings. The total savings of the GBP between 2006 and 2009 amounted to 304 GWh/year (Valentová/ Bertoldi 2010).
In the EU GreenLight Programme, different companies in different countries exhibited various savings. For instance, in Belgium, GreenLight Partner Beerse Metaalwerken saved 24,919 kWh/year by replacing the standard high pressure mercury lamps of their workshop with 26-mm diameter fluorescent lamps. In Portugal, GreenLight Partner Sonae Imobiliária claimed to have saved 400,838 kWh/year by substituting the magnetic ballasts with electronic ones in the car park (Ciugudeanu/ Bertoldi 2004).
In the Danish Curve Breaker Agreement (CBA) programme, between 2007 and 2010, 177 curver breaker agreements were concluded. By 2011, signatories had achieved an average 7.5 % of electricity demand reductions.
The cost of Voluntary Agreements (VAs) for policy or measure depends on the support the government provides (e.g. information and technical assistances), the size of the VAs, the size of incentives (e.g. tax exemptions), etc. In terms of preparation, VAs imply much lower costs, in comparison with issuing legislations (Bertoldi/ Rezessy 2010). The costs for participating organizations vary among individual projects, depending on the energy efficiency measures they implement.
In the Danish Curve Breaker Agreement (CBA) programme, the Danish Energy Saving Trust (DEST) offered various tools to promote electricity demand reductions (e.g. training courses, behavioural campaign materials, energy efficient procurement guidelines and tools). Costs of the CBA programme are not known to us but could be considered to be quite small. DEST’s work, with many more programmes in addition to the CBA, is financed by an extra charge of 0.06 Eurocent/kWh on the electricity bills of private households and public institutions.
With proper design and implementation, Voluntary Agreements (VAs) can be highly cost-effective for society and policy or measure operators given their high energy saving potentials and the fact that they require much less of public budgets in comparison with other instruments, such as regulations.
For participating organizations, the expected net benefit can be high. On one hand, for example, the EU GreenBuilding Programme aims to trigger investment on proven energy efficiency technologies that are clearly profitable. On the other hand, the organisations also benefit from the increased public recognition as a “green” organisation.
In Denmark, the tailor-made solutions (investment in energy-efficient technology and building energy management) elaborated with the assistance of the Danish Energy Saving Trust and implemented by the Curve Breaker Agreement signatories were normally be cost-effective.
Curve Breaker Agreement
Type: Voluntary Agreements with commercial or public organisations