From top-down to bottom-up; two ways to monitor energy-efficiency in Dutch voluntary agreements

Panel: 7. Monitoring and evaluation

This is a peer-reviewed paper.

Author:
Christiaan Abeelen, NL Agency, The Netherlands

Abstract

Energy-intensity is usually monitored top-down, using energy and production data. The resulting change in energy-intensity is influenced by changes in volume and character of the economy. Corrections are necessary to decompose the observed change in energy-intensity in separate effects. Usually three effects are identified: volume, structure and energy-efficiency. An alternative method uses a bottom-up approach. This method sums up the effects of individual measures. Although this might sound easier, this method has its own drawbacks. The difficult part in this approach is to rule out overlapping effects of different policy instruments. Simply adding up the effect of several instruments is sure to give an overestimation.

For most policy makers these methodological issues are irrelevant. They will see no difference between energy-intensity, efficiency or savings, and are just interested in the effect of their policy measures. What method is most interesting for them?

The long-term agreements on energy-efficiency in the Netherlands industry have long used a top-down method, but changed to a bottom-up method in 2009. The many ‘external’ factors influencing the energy-intensity in the top-down method led to complaints by the covenant partners, who could not identify their efforts in the observed results. Therefore a new method was developed, which focuses on individual projects by companies. As was to be expected, this led to other complaints. Interestingly, the change in method happened at the time of economic crisis. The drop in production levels and lower capacity utilization resulted in a higher energy-intensity, but also affected the investments by companies.

After two years experience with this new method, it is time to evaluate. This paper explains the reasons behind the change and focuses on advantages and disadvantages of both methods. Can we answer the question whether there is a ‘real’ efficiency?