Best Practices in Designing and Implementing Energy Efficiency Obligation Schemes (2012)

An energy efficiency obligation (EEO) is a regulatory mechanism that requires obligated parties to meet quantitative energy saving targets by delivering or procuring eligible energy savings produced by implementing approved end-use energy efficiency measures. The requirement to meet quantitative energy saving targets distinguishes EEOs from other similar mechanisms, such as a general requirement to acquire all cost effective energy efficiency with no target specified. Governments in various jurisdictions around the world have endeavoured to improve end-use energy efficiency, and in some cases also achieve other objectives, by designing and implementing schemes that place EEOs on particular parties.

These EEO schemes share three key features:
• a quantitative target for energy efficiency improvement;
• obligated parties that must meet the target; and
• a system that: defines the energy saving activities that can be implemented to meet the target; measures, verifies, and reports the energy savings achieved through these activities; and confirms that the activities actually took place.

Typically obligations in EEO schemes are placed on providers of networked energy (e.g., electricity and natural gas distributors or standalone retail suppliers). Obligations can also be placed on providers of other energy forms (e.g., LPG, heating oil, transport fuels, district heating), and even on end users of energy. In some jurisdictions, energy savings to meet the obligation are delivered by a third party “energy efficiency utility”. This report considers only EEO schemes that place obligations on energy providers, that is, entities that supply energy to end-users. This report covers 19 EEO schemes implemented in a range of jurisdictions around the world. The table in the Appendix (page 116) summarises and compares key design parameters among these schemes. This table and the Executive Summary detailed case studies of the schemes themselves in section 3 of the report (commencing on page 8) demonstrate that
there are many different ways to design and implement EEO schemes.