Terms of Reference

Energy Efficiency Working Group

Introduction

The Energy Sector Sustainability Table (ESST) has agreed that a working group should be struck whose purpose is to assist the Table in developing a perspective on energy efficiency in Canada. The group would be termed the Energy Efficiency Working Group (EEWG).The proposed terms of reference for this group are underpinned by the following considerations:

• The strength of the ESST is not its expertise in any one aspect of energy and environment but rather its breadth and diversity and its capacity to develop a balanced, integrated perspective.
• It is important to avoid any approach which duplicates the work of other bodies or processes.
• As a corollary, the approach needs to rest on a solid base of information concerning what efforts are already underway respecting energy efficiency and it should be complementary to those other efforts.
• While the table or the working group may identify specific near term measures that could be recommended, the ESST’s primary mandate centers on developing a long term, integrated view on energy sustainability and this fact needs to guide the working group’s efforts.

Scope

In approaching the issue of energy efficiency the working group should consider the following dimensions of energy efficiency as a public policy issue.

• Several terms are used to encompass the subject matter including energy efficiency, conservation and demand side management. Terminology aside, the fundamental question at issue is how to induce changes in the relative energy intensity[1] of the economy through efficiency improvements (that is, leaving aside structural factors, service levels or weather).
• The work encompasses all energy use including energy production, transportation and transformation and all end use sectors.
• Energy efficiency (reducing the need for energy all other things being equal) is a core aspect of both energy policy and environment policy. As such, efficiency policy should be driven by several public policy objectives including:
• Optimizing the use of energy resources
• GHG reduction
• Mitigation of other environmental stresses - air emissions and effects on land, water and habitat
• Managing energy costs including effects on both consumer welfare and competitiveness
• Reducing the need for new energy supply infrastructure
• The potential to improve energy efficiency is a function of numerous factors, all of which need to be taken in to account:
• The physical reality – the why, where, how much, who, and when of energy use and the technological landscape affecting energy use
• The economic reality – changing supply, demand and price conditions
• The socio-cultural reality – what it is that drives and impedes consumer and investor behavior
• The political reality – the art of the possible in a pluralistic political system
• The jurisdictional reality – who does what and who has the authority to do what
• The range of possible approaches – what, at a fundamental level, are the potential policy instruments and how effective and efficient are they at changing behavior
• Experience – what has been learned from thirty years of efforts in this realm

Output

The essential output of the work should be a foundation paper aimed at enhancing policy maker understanding of energy use and energy efficiency and providing insights that might guide governments in developing efficiency policy. Beyond that, it is desirable that the EEWG provide some response to the question: “what would success look like”? The ultimate product of the work could take the form of a set of possible national objectives respecting energy efficiency, taking into account the regional and sectoral diversity of energy use in Canada. Such objectives may or may not extend to specific targets and timeframes. Precisely how specific or quantifiable are the objectives can be allowed to emerge as the work proceeds. [2]

The EEWG may identify areas where it believes specific recommendations are called for respecting policy, programs, regulations or fiscal measures or areas where more effective coordination among agencies and others may be advisable. These recommendations might be generated as an ongoing part of the work or may form part of a final report.

The EEWG will likely uncover gaps in the knowledge base and may want to offer recommendations with respect to what is needed to fill the gaps. 

The foundation will need to include the elements which follow (and others as the EEWG determines):

The basic facts: The essential facts that describe energy use in Canada in recent historical context – trends, sectoral breakdowns, evolving patterns in energy intensity, energy prices, etc. A primer along these lines would be essential to any informed discussion.

The institutional landscape: It is important for several reasons (most notably as information sources for the EEWG itself) to have a basic factual picture with respect to what agencies or other bodies are active in promoting energy efficiency, delivering programs, regulating or taxing as well as what processes (intergovernmental, government/stakeholder) are underway.

Assessment of potential:Considerable work has been done on the potential for energy efficiency improvement (technical, economic, realizable), some of it fairly recent. A synthesis and assessment of this body of work might have unique credibility and might help address some of the myths on both sides of the debate.

Barriers to realizing the potential: The factors that inhibit the realization of both economic and technical potential are reasonably well known in the literature but not well understood at the policy maker level. What is needed, again, is a synthesis. 

Conditions needed to realize the potential (policy, prices, markets, government instruments)– The efficiency debate is often dominated by one or another perspective as to the efficacy of prices on the one hand or government programs, tax measures and regulations on the other. Based on the earlier elements it might be possible to develop a think piece which could usefully add some nuance to what is otherwise often a dialogue of the deaf.

Lessons learned (reflections based on experience) –It may be possible to pull together a variety of lessons learned from Canadian and international experiences with government programs, utility DSM programs, regulatory measures and other measures and see what broad conclusions might be drawn.

The above output and effort are seeking to address the following issues:

• energy efficiency best practices domestically and internationally;
• why energy efficiency is not occurring in a significant way inCanada ;
• an energy efficiency “performance band” identifying a minimum level of expected improvement in energy efficiency as well as an upper threshold of what “aggressive energy efficiency” might provide;
• the options that exist to “make energy efficiency happen” inCanada ; and
• evaluation of the above options based on a defined set of criteria.

Composition and Initial Tasks 

The group should consist of ten to twelve (at the outside) members made up approximately half and half of members of the ESST (or their representatives) and others. Additional members should be selected both to add expertise in energy end use and efficiency and to ensure a balance of perspectives both sectoral and regional. Annex A sets out recommendations on possible membership and Annex B outlines the general principles used to establish the EEWG’s composition. The group should likely have two co-chairs, one from industry and one from civil society, with both, ideally, ESST members.

The EEWG should be supported by an individual from the Secretariat as well an expert in energy end use analysis and relatively sophisticated research, synthesis and writing capabilities. It is unclear whether much additional consulting support would be needed; since the main point of the work is synthesis and interpretation there are good reasons for keeping the support as “tight” and as closely linked to the EEWG as possible.

The first tasks of the EEWG should be to:

• recruit a research manager
• develop a detailed feasibility assessment of the requested work
• develop a proposal for any additional resources required
• outline a schedule for carrying out the work and develop an annotated outline of what it expects its report to cover

The EEWG should provide a report and recommendations on these matters to the ESST no later than late summer 2006 and earlier if recruitment of the research manager can be expedited.