Causal Model of Private Investment Decision

If the objective is to maximize private investment in EETs at a minimum cost to the consumer, we need to find out which factors (drivers and barriers) influence private investment decisions. But a list of factors is not sufficient. We need to know the relative contribution (causal weight) of these factors in terms of influencing investment decisions. Only then we would be able to design and prioritize measures to mobilize private capital for clean technologies. There are two types of measures...

Scientific Knowledge

In general, sceptics and supporters agree that there is a need for more knowledge on climate change, but they disagree on how much certainty has been achieved already, and how much is needed. Supporters believe that there is a sufficient basis of established facts to justify measures on climate change now. George Marshall argues that waiting for a complete scientific understanding will not be accepted as an excuse by future generations affected by global warming. Moreover, he states that '( )...

Drawbacks of Energy Efficiency

While the benefits seem sufficient to justify investment in energy efficiency, individuals typically do not use societal criteria when making personal Figure 5.1 Methodology of Selecting Projects Figure 5.1 Methodology of Selecting Projects or business decisions. Consequently, if policy makers want individuals or corporations to invest in EE so that society can realize the benefits, they have to address the drawbacks that inhibit individuals or business houses from making these investments. It...

Relationship between Banks and ESCOs

ESCOs are dependent on local financing. Several models can be used 35 Partial loan guarantee to interest local banks Customers repay the developers of successful EE projects. Whichever financing model is used, ESCOs have to find a bank that understands efficiency financing. Some banks have proved that it is possible to save money by being efficient. For instance, the investment bank Salomon Brothers has complex programmes on recycling, waste reduction, energy efficiency, environmental education...

Level of Actors Actors at the Micro Level

The first 'actor' to look at is the consumer whose technology choices depend on the income, needs, prices, costs and availability of equipment and fuel, on the 'status value' of energy sources ('for example, Liquefied petroleum gas LPG is more modern') and on other factors. If we can find out the intensity of these choice factors it would help in predicting future behaviour. There are also NGOs who try to help the consumer in providing information about various energy technologies,...

Structure of the Causal Model

The structure of the causal model is illustrated in Figure 6.4. The causal model links the stimulation mechanisms (the independent variables) with the private investment response (the dependent variable) through the determinants of private investment (linking variables in the causal pathway). The input variables (stimuli mechanism) are categorized into macro, meso and micro. The variables are ordered from those that stimulate the drivers 17 Cost effectiveness is one of 10 operational principles...

Alternative Explanations of Climate Change

Supporters are not convinced about most alternative explanations of observed warming trends forwarded by sceptics. For example, supporters argue that there are not sufficient data to support the conclusion that the warming is due to sunspot activity, since satellite monitoring of the sun started not until the late 1970s.67 They also point out that the warming cannot be explained by the theory of long-run fluctuations, as going by this theory, the world would currently be in a cooling phase....

Internal and External Performance Variables

The performance of MIs is affected by internal and external drivers, and constraints. Internal drivers and constraints are characteristics of organizational capacity, which include individual capabilities as well as factors such as availability of funds, priority given to sustainable energy, openness of organizational culture, like the ability and willingness to collaborate with other institutions, and other variables. External drivers and constraints are variables pertaining to other...

Influence of Actors and Factors

Technology choice analysis is facilitated by a state diagram depicting the influence of various factors and the corresponding actors. Figure 4.5 describes the Actor Factor Influence Linkage state. Different types of actors, level of influence (low or high), and so on, are depicted. Household budget directly influences the fuel choice, whereas availability and price influence it indirectly. Policy makers have a great influence directly as well as indirectly. Actually the nature of influence can...

The Process

Diffusion is the process by which a technology is adapted and gains acceptance by the consumers. The factors influencing the diffusion include (a) technology appeal, (b) how information about the technology is communicated, (c) time and (d) the nature of the social system into which the technology is being introduced. To increase the diffusion process, it is important to investigate how these factors interact to facilitate or impede the adoption of a specific technology among members of a...

Rationale for EE Intervention

Nearly all devices and systems are less energy efficient in practice than their maximum efficiency in theory. There is always potential for improvement. Thus, few things are truly energy efficient. A device or system can only be more or less energy efficient than the alternatives at a given time, in a given situation. Thus, the technical potential can be defined as the achievable savings resulting from the maximum EE improvement available at a given time, regardless of cost considerations....

Externalities as Benefits and Drawbacks of Energy Efficiency

This section illustrates the large number of externalities in energy efficiency, since EE provides external benefits or imposed external costs in addition to financial outcome and energy production. As suggested in Table 5.9, the positive externalities are substantial. The table shows that externalities exist on a local, national, regional and global level. Institutions, such as the GEF focus mainly on global externalities. This contrasts with the fact that national and local benefits and the...

The Choice of Discount Rate

There are three types of capital investments Those that have a net economic cost, those that are costless and those that yield a profit. Mobilizing private capital is not different it can be costly, costless or profitable. How much money should be invested in climate change mitigation or in mobilizing private capital for climate change mitigation partly depends on the discount rate. Discounting converts the (full) values of the impacts that occur at different points of time into common units,...

A2 The Concepts of First and Second Law Efficiency

The basic difference between both concepts is that while first law efficiency solely relates to the specific technology applied in order to satisfy certain tasks, for example, illumination and space heating, the concept of second law efficiency takes into account both the actual technology employed and the technology that would theoretically be the best for the same task. Our following example on whether to heat a house with either electric furnaces or heat pumps illustrates the difference...

Asia Pacific Partnership on Clean Development and Climate

The Asia-Pacific Partnership on Clean Development and Climate (APPCDC) brings together Australia, People's Republic of China, India, Japan, Republic of Korea, the United States and Canada to address the challenges of climate 106 Commission of the European Union, Proposal for a Directive of the European Parliament and of the Council amending the Directive establishing a scheme for greenhouse gas emissions allowance trading within the Community, in respect of the Kyoto Protocol's project...

The UN Framework Convention on Climate Change UNFCCC

Adopted on 9 May 1992, the UNFCCC represents a landmark international agreement acknowledging the urgent need for the international community to address the growing risk of climate change. The UNFCCC establishes as 50 In the UK, the Royal Commission into Transport which recommended, inter alia, improving the fuel efficiency of UK cars by 40 per cent by 2005. Hamer 1994, 6. 51 The European Car Manufacturers promised to cut their CO2 emissions from new models by 25 per cent. This voluntary...

Conclusion

EETs are now somewhere between the stage of pure government as well as private provision. In this intermediary stage, mobilizing private capital can be cost-effective because projects are almost profitable and require only relatively small supportive interventions. Governments may use financial subsidies, but they may also focus on setting the framework conditions and incentive structures for the private sector. Politically, it is sometimes easier to provide financial incentives such as grants,...

The Organizational Capacity Model

The organizational capacity model explains performance in terms of the ability and efficiency of institutions. In this model, it is useful to distinguish between MIs that are oriented towards operational activities and others that focus to a greater extent on normative activities. In practice, most organizations have both normative and operative functions, but some organizations like the World Bank concentrate more on the operative side of the spectrum, whereas the UN agencies generally tend to...