Barriers to Industrial Energy Efficiency in Singapore – Report from the Fifth Fuel Project Chai Kah-Hin, Catrina Yeo 1
What stands in the way for energy efficiency? Energy efficiency gap • “paradox of gradual diffusion of apparently cost- effective energy efficient technologies” [Jaffe and Stavins 1994] Barriers • “postulated mechanisms that inhibit investment in technologies that are both energy efficiency and economically efficient” [Sorrell 2000, page 27] 2
What are the barriers preventing Singapore’s industrial companies from implementing energy efficiency? • Consumes > 50% of final energy consumption • Emits > 50% of energy-related CO2 emissions Final energy consumption by sector 2007 (Source: IEA 2008) 3
Methodology Conclusion • Managerial Data Analysis and policy • Partial least implications Survey squares path • Contribution • Dillman's modeling to research Conceptual design • Hierarchical Framework method ordinary Data Development Collection & least squares • Systems Literature regression Analysis thinking Review • Interviews • Hypotheses • Journals & with development conference companies papers • Case study of • Trade & GWM industry Singapore reports 4 Confidential
Barriers faced by selected companies Key Barriers A B C D E F G H I J K L M N O P ● ● ● ● ● ● ● ● ● ● Fear of technical risks/ cost of production loss ● ● ● ● ● ● ● ● Perceived high cost of energy investments ● ● Other capital investments are more important ● ● Uncertainty of future energy prices ● Lack of experience in technology Lack of information in EE and energy saving ● ● ● ● ● ● ● technology ● ● ● ● ● Lack of staff awareness / trained manpower ● ● ● ● ● ● Lack of (accurate) measurement ESCOs lacking in specialized knowledge ● ● ● ● ● ● Limited access to capital / budget ● Lack of government incentives ● ● ● ● Weak policies & legislations Bureaucratic procedures to get governmental ● ● financial support ● Too many government stakeholders ● Resistance to change Legacy System (Efficiency levels may currently be ● ● ● ● ● ● ● structurally based, or merely be an artefact of initial installation and construction specifications) ● ● ● Space Constraint 5
Framework for Energy Efficiency - MCIR MOTIVATION ( M ) Why should companies be interested in energy efficiency? ENERGY EFFICIENCY CAPABILITY ( C ) OUTCOMES Do companies have the technical and • How many projects financial capabilities to implement energy devoted to energy efficiency? efficiency are there in the companies? IMPLEMENTATION (I) • How satisfied were the Are there any internal resistance? Are companies with the roles and responsibilities clearly defined? returns on their energy efficiency investments? RESULTS (R) Was it worth the effort? Can companies demonstrate the returns? 6
Response Rate 143 replies from companies in 5 sectors, a response rate 6.1% Manufacture of computer, Manufacture of food products electronic and optical products Manufacture of chemicals and chemical product Manufacture of machinery and equipment Manufacture of basic metals and fabricated metal products 7
Respondent Profile – Non energy-intensive * 84% spent 10% or less * to annual operating cost (excluding manpower costs) 8
EE Outcome: Limited energy efficiency implementation, and only 1/3 are satisfied with the returns " Overall we are satisfied with the returns "We have done many projects of our energy efficiency projects” in the past three years" 50.0% 50.0% 52% disagree 38.9% 40.0% 40.0% 28% agree 27.0% 30.0% 30.0% 22.0% 20.0% 20.0% 15.6% 14.3% 12.8% 13.5% 9.9% 9.5% 9.5% 8.7% 10.0% 6.4% 6.4% 10.0% 5.6% 0.0% 0.0% 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Strongly Neutral Strongly Strongly Neutral Strongly disagree agree disagree agree 9
Motivation: Largely driven by cost, and not so much by customer. "My company implements energy efficiency "Our customers demand us to be practices and technologies so as to more energy efficient than our reduce energy costs" current level." 50.0% 50.0% 42.3% 56% agree 40.0% 40.0% 21.6% agree 27.5% 30.0% 30.0% 25.4% 17.6% 16.9% 20.0% 20.0% 13.4% 12.7% 10.6% 7.0% 10.0% 6.3% 10.0% 6.3% 4.9% 4.9% 4.2% 0.0% 0.0% 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Strongly Neutral Strongly Strongly Neutral Strongly disagree agree disagree agree 10
Motivation: Companies are concerned about environment, even at the absence of strong legal framework "My company's top management views "My company is concerned and environmental issues seriously." cares about the environment." 50.0% 50.0% 80% agree 70% agree 40.0% 40.0% 31.0% 30.0% 30.0% 26.1% 26.1% 23.2% 23.2% 22.5% 21.8% 20.0% 20.0% 15.5% 10.0% 10.0% 3.5% 2.8% 2.1% 1.4% 0.7% 0.7% 0.0% 0.0% 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Strongly Strongly Strongly Neutral Strongly Neutral agree agree disagree disagree "There is a strong penalty by national regulators if we do not adhere to rules and regulations of energy consumptions 49.7% 50.0% 40.0% 30.0% 14% agree 20.0% 14.0% 11.2% 11.2% 8.4% 10.0% 4.2% 1.4% 0.0% 1 2 3 4 5 6 7 Strongly Strongly Neutral 11 agree disagree
Capabilities: Companies are aware of opportunities, and have some technical (internal and external) and financial abilities " The engineers and technicians in my company have the "My company is aware of the opportunities improvement for energy efficiency." technical knowledge to implement energy efficiency practices and adopt energy efficient technologies" 50.0% 50.0% 59% agree 40.0% 40.0% 41% agree 30.3% 28.7% 30.0% 30.0% 24.5% 21.8% 18.9% 20.0% 20.0% 11.3% 11.9% 10.6% 9.9% 8.5% 7.7% 8.4% 10.0% 10.0% 4.2% 3.5% 0.0% 0.0% 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Strongly Neutral Strongly Strongly Neutral Strongly agree disagree agree disagree "My company can easily access external experts who can "My company has the financial resources to invest in energy efficiency improvement projects” help us in conducting energy audits and implementing energy efficiency improvements .” 50.0% 50.0% 40.0% 40.0% 46% agree 32.2% 29.6% 33.6% agree 30.0% 30.0% 21.8% 18.9% 20.0% 20.0% 14.1% 14.0% 13.3% 10.6% 9.2% 9.1% 8.5% 7.0% 10.0% 10.0% 6.3% 6.3% 0.0% 0.0% 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Strongly Strongly Neutral Strongly Neutral Strongly agree disagree disagree agree 12
Implementation: Minimum internal resistance but lack of clear line of responsibility on energy efficiency improvement "My company's production department resists energy " In my company, the responsibility of energy efficiency efficiency improvement projects for fear of disruption matters is clearly assigned to one or several staff who to production and delivery schedule." is/are competent in energy efficiency matters." 50.0% 50.0% 37.3% 40.0% 40.0% 35.9% 32% agree 30.0% 30.0% 12% agree 16.9% 20.0% 20.0% 16.2% 16.2% 14.8% 12.0% 9.9% 8.5% 8.5% 7.0% 7.0% 10.0% 10.0% 6.3% 2.8% 0.0% 0.0% 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Strongly Neutral Strongly Strongly Neutral Strongly disagree agree disagree agree 13
Results Demonstration: Lack of quantitative measures on energy efficiency investment "In my company, energy savings from energy "My company uses an automated metering & control efficiency projects can be verified objectively" system (real-time) to track energy consumption." 50.0% 50.0% 40.0% 40.0% 26.8% 30.0% 28% agree 30.0% 26.1% 22% agree 23.9% 18.3% 16.9% 20.0% 20.0% 16.2% 12.7% 12.0% 12.0% 10.6% 9.2% 10.0% 10.0% 6.3% 6.3% 3.5% 0.0% 0.0% 1 2 3 4 5 6 7 1 2 3 4 5 6 7 Strongly Strongly Neutral Strongly Strongly Neutral disagree agree agree disagree " In my company, we are NOT able to report energy savings from energy efficiency projects 50.0% with quantitative figures” 40.0% 39% agree 30.0% 26.1% 20.0% 14.8% 14.1% 12.0% 12.0% 11.3% 10.6% 10.0% 0.0% 1 2 3 4 5 6 7 Strongly Strongly Neutral 14 agree disagree
Summary MOTIVATION ( M ) • Largely driven by cost, and not so much by customer • Companies are concerned about environment, even at the absence of strong legal framework ENERGY EFFICIENCY CAPABILITY ( C ) OUTCOMES (EE) • Companies are aware of opportunities, and have some technical (internal and external) Limited energy efficiency and financial abilities implementation, and only 1/3 are satisfied IMPLEMENTATION ( I ) with the returns • Minimum internal resistance but lack of clear line of responsibility on energy efficiency initiative RESULTS ( R ) • Lack of quantitative measures on energy efficiency investment 15
Further Statistical Analysis • Statistical analysis suggests the following factors are correlated to energy efficiency outcome: – Results Demonstration – Cost – Implementation • Factors which have little correlation: – Corporate Social Responsibility, even though is rated highly in this survey – Financial capability 16
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