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Nudge, don’t force firms to be energy efficient, says International Energy Agency

Industry is more likely to improve its energy efficiency if government conservation schemes are consensual rather than mandatory. That is the conclusion of a new report by the International Energy Agency (IEA) and Institute for Industrial Productivity (IPP).

The IEA and the IIP examined the voluntary (or long-term) agreements between energy authorities and industrial end-users as implemented in Ireland, Sweden and Denmark since the 1990s.

The report states one main reason for the success of these is that do not force businesses to be energy efficient. Instead, “they effectively harness the private sector’s motivation to make financially attractive investments and contribute to ensuring and communicating a sound business case for energy efficiency in industry.”

Programmes in all three of those countries have a flexible and consensual character. And as a result, said the IEA and IIP, they have improved industrial energy efficiency and decreased CO2 emissions.

Tax relief, assistance to join the programmes, grants, effective reporting systems and networking activities are cited by the organisations as the most effective mechanisms.

See the report here.

By Michael Kosmides