Policies to promote EnMS

Policies to promote EnMS Energy Efficiency in Emerging Economies (E4) Training Week International Energy Agency (IEA) 6-10 June 2016, Paris

Content 1. Why Energy Management Systems (EnMS)? 2. Globally recognized voluntary standard 3. Supportive policy mechanisms for implementation: target-setting agreements (incl. reporting requirements) tax policies training and technical assistance recognition programs capacity-building for EnMS implementation conformity assessment professionals 4. Voluntary or mandatory? 5. Lessons from UNIDO Programme 2

Barriers to implement EE in industry Policies? There are no mandatory rules or regulations to adopt EE or reduce GHG emissions Market conditions? The prices of fuels and electricity are low; no CO 2 market; and/or no market recognition from value chain Awareness? Enterprises do not recognize the need to manage energy use. Unaware of where and how they spend energy Technical? Enterprise are unable to monitor their energy use or/to modify their processes 3

INSERT THE TITLE OF YOUR PRESENTATION HERE 1. Why Energy Management Systems (EnMS)? 4

Quiz 1 About Energy Management Systems Question 1 Why should enterprises adopt EnMS? a) To improve their energy efficiency b) To reduce costs c) To increase productivity d) Systematically manage their energy use Question 2 What should be improved by adopting an EnMS? a) Fuel usage b) Electricity usage c) Energy performance d) Energy intensity Question 3 The ISO 50001 is a? a) Structured approach to the management of energy use b) Voluntary global management system standard c) Guide to improve energy performance d) Technical regulation 5

BENEFITS of Energy Efficiency Organization s financial savings Increasing of reliability of operations Positive effect on productivity and competitiveness Attractive financial and economic returns Reducing the exposure to rising energy prices Increasing of security of supply Reducing the impact on the environment then Why it is not happening? 6

BARRIERS to Energy Efficiency Management focus on production, not on EE Lack of information and understanding of financial and qualitative benefits Lack of adequate technical skills for identifying, developing and implementing EE measures and projects Poor monitoring systems and data First costs more important than recurring costs disconnection between capital and operating budgets When EE knowledge exists it very often resides with individuals rather than with the company/ organization sustainability risk Financing 7 7

Reference EnPI value (baseline period) Current EnPI value (reporting period) EnMS Goals It is all about Continuously Improving Energy Performance! Energy Baseline ISO 50001 DEFINITION 3.12 energy performance measurable results related to energy efficiency (3.8), energy use (3.18) and energy consumption (3.7) Energy Target Actual value Target Achieved! Source: ISO 50001: 2011 Source: Adapted from ISO 50006 8 8

EnMS Goals Ad-hoc Energy Management Approach 9 9

EnMS Goals Systematic Approach Senior management commit to EnMS Costs +5% 0 Initial savings sustained -5% -10% -15% -20% -25% Investment Housekeeping first then investment EE becomes company culture 0 Years 3 10

105 What can be achieved by adopting EnMS? Energy Use (2003 Base Year) 100 95 2-3% saving per year 5% saving per year 90 85 80 EnMS Certification Investment restrictions 75 Source: Liam McLaughlin, UNIDO Expert 70 2003 2004 2005 2006 2007 2008 11

What can be achieved by adopting EnMS? Management focus Systematic activity Actively managing energy use and costs, reducing exposure to rising energy costs Obligation to train and raise awareness Obligation to provide resources Document savings for internal and external use (e.g. emission credits, legal reporting requirements) Reduce GHG emissions without negative effect on operations Continuity through changes of personnel Energy and Cost Savings Continual Improvement Environmental Benefits 12

What can be achieved by adopting EnMS? Most industrial enterprises that have implemented EnMS achieved average annual energy intensity reductions of 2-3% against 1% reduction of business as usual (IRL, NET, DEN, SWE, USA) For companies new to energy management, savings during the first 2 years are 10-20% UNIDO experience: Average organization-wide energy savings in first 1-2 years range from 5% to 15%, with little or no capital investments 13

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INSERT THE TITLE OF YOUR PRESENTATION HERE 2. A globally recognized voluntary standard 15

EnMS Standards and ISO 50001 Why? Policy best practice to effectively promote and implement sustainable EE in industry Demonstrated market-driven tools to disseminate BAT and BAP and support their implementation Increased focus on demand for standards & regulations as tools in the fight against Climate Change (services, trade, negotiations, etc.) Underpinning and catalyzing development or strengthening of policy and regulatory frameworks (i.e. ISO 14001 experience) Boosting of IEE market transformation and acceleration of the adoption of EE technologies and services Harmonization across countries 16

EnMS Standards and ISO 50001 Background National EnMS standards (as of 2009) Denmark, Sweden, Ireland, USA, South Korea, Thailand, South Africa, China National EnMS specifications or laws (as of 2009) Australia, Canada, Germany, The Netherlands, United Kingdom, Japan Regional EnMS standards EN 16001 European Energy Management Standard 1 July 2009 International EnMS standards International Standard ISO 50001 Energy Management Systems Requirements with guidance for use 15 June 2011 currently under revision 17

EnMS Standards and ISO 50001 Background March 2007 - UNIDO Meeting on EnMS in Industry Recommendation to ISO Secretariat to consider developing an International EnMS Standard ISO 50001 developed by ISO Project Committee 242 Energy Management, established in Feb 2008 Membership as of March 2014 49 countries full members 12 countries as observers 11 organizations-in-liaison, incl. UNIDO ISO 50001 developed in less than 3 years (record time!) ISO TC 242 Energy Management (2008) ISO TC 257 - Evaluation of Energy Savings (2010) ISO TC 301 Energy management and energy saving (2016) 18

Definitions Energy Management System (EnMS) Systematic and structured approach to the management of energy use Energy Management System Standard Standardised approach to implementing an EnMS An organization may decide to base its EnMS on a standard e.g. ISO 50001:2011 (This is best practice) Certification of EnMS An organization may decide to have its EnMS certified to a standard (to demonstrate its best practice to customers, clients and suppliers OR fulfil a legal or other requirement) Source: UNIDO EnMS Programme 19

Quality Infrastructure 1.01 conformity assessment embraces the activities which determine whether standards, regulations, specifications or other requirements are met Source: UNIDO EnMS Programme 20

7,000+ ISO 50001 Global Certifications Sep 2015 Source: ISO Survey September 2015 50% (3,400 certificates) in Germany 21

Certificates issued Source: ISO Survey September 2015 Argentina 14 Brazil 38 Cameroon 0 China 65 Egypt 15 India 443 Indonesia 28 Kazakhstan 35 Mexico 21 Mongolia 0 Myanmar 0 Nigeria 0 Peru 1 Russia 115 Serbia 14 South Africa 7 Sri Lanka 8 Tunisia 0 Turkey 136 UK 853 Ukraine 34 US 80 Uzbekistan 0 Venezuela 1 Vietnam 23 22

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EnMS/ISO 50001 Support standards ISO 50002:2014 Energy audits ISO 50003:2014 EnMS Requirements for bodies providing audit and certification of energy management systems ISO 50004:2014 EnMS Guidance for the implementation, maintenance and improvement of an EnMS ISO 50006:2014 Measuring Energy Performance using Energy Baselines and Energy Performance Indicators General Principles & Guidance ISO 50015:2014 Measurement and Verification of Organizational Energy Performance General Principles and Guidelines ISO 50001 Updated version harmonization amongst MS plus revisions 24

ISO 50001 from pilot to wide dissemination ISO 50001 will succeed in delivering the expected impact and benefits to organizations and countries only if it is implemented properly and widely, if : Technically sound and effective implementation of EnMS/ISO 50001 depends on the availability of qualified experts/ professionals to assist organizations and enterprises Key success indicators will be: the ability to demonstrate to organizations and to the market the tangible benefits of implementing EnMS/ISO50001 the level of policy support granted and/or regulation attached to the implementation EnMS/ISO50001 25

Quiz 1 About Energy Management Systems Question 1 Why should enterprises adopt EnMS? a) To improve their energy efficiency b) To reduce costs c) To increase productivity d) Systematically manage their energy use Question 2 What should be improved by adopting an EnMS? a) Fuel usage b) Electricity usage c) Energy performance d) Energy intensity Question 3 The ISO 50001 is a? a) Structured approach to the management of energy use b) Voluntary global management system standard c) Guide to improve energy performance d) Technical regulation 26

INSERT THE TITLE OF YOUR PRESENTATION HERE 3. Supportive policy mechanisms for implementation 27

Question 3 The best way to ensure that enterprises have adopted ENMS is a) Certification of ISO 50001 by accredited Certification Bodies b) Robust adoption of ISO 50001 c) Third party verification of improved E performance d) Ad-hoc management system Question 4 Certification of ISO 50001 is to a) Assess conformity against all of the requisites of the standard b) Providing a certificate against a management system implementation c) Get international recognition on management practices d) Verification process for achieving energy savings Quiz 2 Policies Question 5 An EnMS support policy is successful if a) determine tangible benefits ($, KWh) b) Achieves outputs set in its M&E framework c) Has wide sectorial adoption d) Industries adopt MRV at the facility level 28

Target-setting A. Mandatory: Where adoption is made mandatory within the goal of achieving a certain energy intensity target B. Voluntary or negotiated agreements: used by governments as a mechanism for promoting IEE Challenges Sectorial targets are divided across facilities Need for robust mechanisms for target setting, MRV, Government enforcement and control agencies have capacities Need for institutional capacities from industries (associations, chambers, federations) to negotiate and operate 29

Tax policies and incentives Exemptions to enterprise taxes: On fuel or electricity use On carbon taxes Rebates on VAT of efficient industrial equipment or monitoring systems for environmental and/or energy control Reduced income tax Challenges Can be perceived as a subsidy Enterprises ability to use the instruments 30

Training and technical assistance Government led or government funded programs to strengthen technical skills in the industrial sector (University led, through Learning Networks) Subsidizing technical consultants who may assist the implementation of EnMS Challenges Encouraging industry to participate Can be perceived as a subsidy Enterprises ability to use the instruments Availability of qualified staff Creation of qualification mechanisms for technical experts 31

Enterprise Recognition Programs Market based policy >> to achieve recognition there has to be a tangible benefit obtained by the recognized enterprises Third party verification >> to provide industrial facilities and companies with a transparent system for verifying improvements in energy performance and management practices, which may involve or not ISO certification Can be supported by cost-shared training and technical assistance for facilities seeking recognition Challenges Enterprises ability to use the instruments Market value 32

Capacity-building for EnMS implementation There is a need to have responsible agencies and competent staff across all aspects of an EnMS promotion policy, whether there is mandatory enforcement or control or just promotion of EnMS Need for inter-institutional coordination How to equip government agencies with mandatory roles? How to strengthen agencies with support roles? Challenges Need for dedicated teams or agencies? 33

Capacity-Building for conformity assessment professionals If enterprises will certify the ISO 50001 standard, then the Quality Infrastructure needs to strengthened, particularly the ability of Certification Bodies to assess conformity, starting by Auditors There are three main features of certification bodies that are addressed relative to conformity assessment, competency, consistency, and impartiality Need for an internationally recognized accreditation process at country level Challenges Ensuring that energy performance improvements are achieved 34

Quiz 2 Policies Question 3 The best way to ensure that enterprises have adopted ENMS is a) Certification of ISO 50001 by accredited Certification Bodies b) Robust adoption of ISO 50001 c) Third party verification of improved E performance d) Ad-hoc management system Question 4 Certification of ISO 50001 is to a) Assess conformity against all of the requisites of the standard b) Providing a certificate against a management system implementation c) Get international recognition on management practices d) Verification process for achieving energy savings Question 5 An EnMS support policy is successful if a) determine tangible benefits ($, KWh) b) Achieves outputs set in its M&E framework c) Has wide sectorial adoption d) Industries adopt MRV at the facility level 35

INSERT THE TITLE OF YOUR PRESENTATION HERE 4. Voluntary or mandatory? 36

The importance of a Programmatic Context Before ISO 50001, in countries with national EnMS standards: EnMS standards were typically voluntary Part of larger programs targeted primarily to large industrial plants and energy consumers Technical assistance was available (training & expert services) Offer financial incentives for compliance, usually as part of a targetsetting agreement Case studies used to publicize benefits Public recognition was provided for outstanding performers 37

The importance of a Programmatic Context Denmark Vol Yes Yes Yes Yes Yes Yes Yes Lim 60% Ireland Vol Yes Yes No Yes Yes Yes Yes Yes 25% Sweden Vol Yes Yes Yes Yes Yes No Yes No 50% United States Vol No Yes No Yes No Yes No Yes <5% Japan ^ Man No Yes Yes Yes No Yes Yes Yes 90% Source: Adapted from A. McKane for UNIDO 38

The importance of a Programmatic Context After the release of ISO 50001: Clear increase of EnMS policies, programs and best-practices, either consolidated or introduced voluntary approach still predominant But There is wide variability of context between OECD and different developing regions/economic groups Past and existing EnMS (and standards) policy and program best-practices were/are in countries with mature industrial EE policy frameworks and implementation In most, if not all, best-practice cases, industry associations and/or regional/local institutions have played an important role Non-OECD countries face significant challenges in terms of knowledge gaps, lack of understanding, governance, human & financial constraints resources for effectively promote and support EnMS and ISO 50001 39

Monitoring and Evaluation of policy effectiveness Challenge with all policies adopted is to determine how they contribute towards meeting national targets >> how to monitor and evaluate the policies that are adopted When planning an EE policy package, whether it has quantitative targets or not, proper planning and budgeting for monitoring mechanisms Establish baseline conditions and a methodology to evaluate the impact of the adopted policy or programs If targets are quantitative, how to reconcile enterprise level MRV with sectorial targets 40

INSERT THE TITLE OF YOUR PRESENTATION HERE 5. Lessons from UNIDO Programme 41

Quiz 3 Stakeholders Question 7 Who are the key stakeholders to consider when analyzing the EnMS adoption? a) Regulator b) Certification bodies c) Technical experts d) Industries Question 8 Which is the key govt. challenge to adopt mandatory targets? a) Establishing metrics b) Drafting regulations c) Controlling and enforcing industries d) Collecting and analysis data Question 9 What does it mean to be a certified energy manager? a) Having completed an EnMS course b) Completing an accredited certification process c) Having a lot of EnMS experience d) Graduating as an energy engineer Question 10 What is the purpose of monitoring, reporting and verification of energy use? a) Assessing sectorial energy consumption (govt.) b) Complying with regulation (enterprise) c) Check step in the Deming's cycle d) Controlling energy performance 42

UNIDO EnMS Implementation Programme Objectives 1. Transfer international best-practices for EnMS/ISO 50001 implementation in industry to groups of national EE experts 2. Promote and support EnMS and EE implementation in manufacturing enterprises 3. Catalyze and contribute to the transformation of national market for industrial energy efficiency services & products Reduce GHG emissions Increase competitiveness 43

UNIDO Program on Energy Efficiency As of June 2016 Operational in 17 countries Planned activities in 10 countries Operational South Africa Moldova Russia Turkey Ecuador Malaysia Thailand Viet Nam India Philippines Egypt Indonesia Iran Ukraine Colombia Macedonia Myanmar China Planned activities Other donors Swiss State Secretariat for Economic Affairs UK Department for International Development Government of South Africa Government of Italy 44

UNIDO IEE-EnMS-ESO Programme Operational in 17 countries (as of June 2016) Decision-makers reached Enterprises trained EnMS/ESO Consultants trained EnMS/ESO Enterprises with EnMS Annual Energy savings (GWh) 2008 2012 2016 5,000 + 7,000 + 3,000 + 600 + 700 + 250 + 200 + 270 + 35 45

How much energy is 7,000 GWh? Annual energy consumption of 1,160,000 EU households Annual energy production of 1,700 MW wind farm CO2 emissions of 1,750,000 middle class cars (running 12,500 km per year) 46 46

ISO 50001 EnMS UNIDO Experience WHAT HAS WORKED? Securing and focusing on initial national champions Building the enough national consultants EnMS expertise and skills to ensure successful implementation (long-term coaching and support) Being prescriptive and providing good guidance but also be flexible and adaptive Providing substantial EnMS expert support to companies to keep on track and monitoring change and progress Advocating with top management the need for staff training and competency development Rewarding change of practices and performances Identifying the right drivers or catalyst for change 47

ISO 50001 EnMS UNIDO Experience LESSON LEARNT 1. Top management engagement is necessary for EnMS & EE implementation but it is not always sufficient (personal and social norms can interfere) 2. Cultural context is an important factor in transferring knowledge and embracing change 3. Cultural context can vary substantially from country to country lessons learned in a country may not apply or become misleading in others 4. Need to minimize enterprises uncertainty about proposed new scenario 5. Communication and partnership/relationship management are critical 6. ISO 50001/EnMS means CHANGE and it is not about technology and engineering, but mainly about people, processes and practices... for many that Change is going to be bigger and more difficult! 48

EnMS/ISO 50001 - Looking ahead The CHALLENGES Achieving impact and market credibility Policy and Conformity assessment frameworks for EnMS/ISO50001 Understanding What is energy performance? What does it take to implement EnMS? Conformity Assessment Competent Auditors Credible Certification and Accreditation Bodies Policies Nationally appropriate Work with industry EnMS Global Dissemination Release of ISO 50001 49

International Context Ensure access to affordable, reliable, sustainable and modern energy for all Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation Intended Nationally Determined Contributions Safeguarding the environment efficient use of productive resources and the decoupling economic growth from environmental degradation 50

EE Targets at different levels Global Regional National 7.3 By 2030, double the global rate of improvement in energy efficiency EU Energy Efficiency Directive (2012): s a set of binding measures to help the EU reach its 20% energy efficiency target by 2020 CEM countries (2016): drive to achieve 50001 global certifications by 2020 WeCommit Campaign (SE4A-2015): pledge to support SDG7 Which of your countries has set targets? 51

Conclusions Achieving impact and market credibility Policy and Conformity assessment frameworks for EnMS/ISO50001 ISO 50001 s success in delivering expected benefits and impact to organizations and countries will depend on: 1. The availability of competent professionals to guide and assist organizations in implementation Policy 2. Credible demonstration to organizations and the market of the tangible benefits of EnMS/ISO50001 ISO 50001 EnMS 3. The level of policy support granted and/or regulation attached to the implementation EnMS/ISO50001 Conformity Assessment 52

Quiz 3 Stakeholders Question 7 Who are the key stakeholders to consider when analyzing the EnMS adoption? a) Regulator b) Certification bodies c) Technical experts d) Industries Question 8 Which is the key govt. challenge to adopt mandatory targets? a) Establishing metrics b) Drafting regulations c) Controlling and enforcing industries d) Collecting and analysis data Question 9 What does it mean to be a certified energy manager? a) Having completed an EnMS course b) Completing an accredited certification process c) Having a lot of EnMS experience d) Graduating as an energy engineer Question 10 What is the purpose of monitoring, reporting and verification of energy use? a) Assessing sectorial energy consumption (govt.) b) Complying with regulation (enterprise) c) Check step in the Deming's cycle d) Controlling energy performance 53

INSERT THE TITLE OF YOUR PRESENTATION HERE 6. Designing a EnMS support Policy Programme 54

Part II Breakout groups Each group will prepare a plan for their EnMS Scheme for Country A and Country B Guiding questions: How can policy instruments support the introduction of EnMS? Who are the necessary stakeholders that have to support the scheme? What are the minimum institutional requirements and capacities needed to ensure that EnMS are an effective tool for industry? 55

10 key ideas Quiz Answers Why EnMS? 1) Reasons to adopt EnMS >> systematic improvement of energy performance 2) What is improved? Choosing the right metrics >> energy performance rather than EE or energy intensity 3) Barriers to adopt EnMS >> unique in each case, but technical are normally the most challenging Support policies? 4) Voluntary adoption>> robust adoption rather than certification in earlier stages and lower cost for SMEs 5) Support schemes with third party verification, such as enterprise recognition programs have shown positive results, reducing costs for SMEs 6) Monitoring and evaluation of policies >> to show how measures meet the intangible benefits, but also translate into reduced KWh, t CO2 or USD 56

10 key ideas Quiz Answers Elements to adopt EnMS 7) Who are the stakeholders? >> engagement of different government bodies and enterprises is key to promote action 8) What are the existing capacities of different stakeholders? >> barriers analysis show that for enterprises technical barriers are key 9) Personnel certification >> the notion of trust for competent workforces 10) MRV at the enterprise level and ME of the policy program >> being able to track performance is necessary for adoption and validate budget spent to achieve energy savings 57

Perceived barriers industry responses 58

Thank you for your attention! For more information: Bettina Schreck Industrial Energy Efficiency Division UNIDO Vienna International Centre P.O. Box 300 A-1400 Vienna, Austria Tel: 0043 1 26026 3032 E-mail: b.schreck@unido.org 59