Using Financial and Market-based Mechanisms to improve Building Energy Efficiency in ChinaThere’s a new roadmap that looks interesting for helping China improve energy efficiency in buildings.  According to UNEP buildings apparently account for 42% of Chinese energy consumption, and China already has done a lot of legislating on energy efficiency — current building codes demand that new residential buildings are 50% more efficient that those built in 1980-81. But the energy use in new high-grade shopping centres, office buildings and commercial space is high compared to similar buildings in the US and Europe.

So this roadmap sets out a list of short-term and longer term measures that encourage China to fully implement the codes they’ve got in place, and to try and harness the power of the market through energy pricing and clear appliance labelling among other things.

The suggested actions for future policy direction in China to further improve building energy efficiency are: [taken from the full report, which is available for free download in English or Chinese]

STEP 1 – Short-Term actions:
These are actions that are already partly underway, or that have already been introduced but where implementation could be improved or that could be introduced relatively simply. Once these measures are well- established, the scene is set for the introduction of more market based measures.

  1. Strengthen the implementation of energy conservation codes and standards on newly-installed buildings and newly-added energy use equipment.
  2. Strengthen and complete the capacity of intermediaries involved in building energy conservation.
  3. Conduct further research into building energy conservation for existing buildings and establish market-based financing mechanisms
  4. Complete energy price reforms
  5. Establish a system for building energy data collection

Step 2 – Longer term actions :
These are actions that would be a bigger shift in policy direction and therefore require significant research and investigation before implementation. However, it is suggested that such a shift would result in larger and often more cost-effective energy savings.

  1. Change the method of building energy efficiency improvement from a measures-based approach to an energy efficiency index approach, and provide a good macro-policy environment for the implementation of market- based incentive mechanisms on building energy efficiency.
  2. Communicate building energy consumption to building users and occupiers
  3. Strengthen and complete the long-effect incentive mechanisms for building energy conservation

Step 3 – Use of the CDM
Despite the barriers identified above, it is suggested that the CDM could have a role in developing building energy efficiency projects in China, for example:

  1. CDM finance could help to overcome split incentives whereby those who invest in the energy efficiency project are often not those who benefit from low running costs once the measure is installed. Through the CDM, the project owner (who invests in the energy efficient product) can, in many cases, receive CDM revenue rather than the party who is using the energy efficient product (Figueres and Bosi, 2006).
  2. CDM registration could provide reputational benefits to project owners as well as financial ones as the project would receive global recognition as a low carbon’ buildings project.

The report is available in English or Chinese and it makes for some interesting reading.  The document itself is the outcome of a REEEP project.

Feedback is – as always – highly welcome :-)

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