Engineering Management

The Belgian Science Policy (BELSPO) Forum project aimed to decide what kind of model-based
decision support is needed to develop policy making for the transition to a low carbon economy.
Starting from decision-support experiences gained in two decision-support methodologies using
bottom-up energy models (TIMES-TUMATIM and SEPIA-LEAP), and inspired by Stanford’s Energy
Modeling Forum (EMF), six intermediaries, who are responsible for communicating the results of
models to decision makers, were asked to pass judgment on both models. Firstly, the relevant policy
questions the decision makers want answered were revealed in the course of the Forum process.
Secondly, the extent to which the existing models can provide meaningful answers to these questions
was explored. In the end, it was established that neither of the two existing models is well suited to
representing uncertainties or finding robust strategies under deep uncertainty. As models depicting a
radical system change over the next 50-100 years must necessarily deal with deep uncertainties, new
research methodologies are needed to improve adaptive policy making.

Energy benchmarking is a practical management tool to evaluate and improve the energy performance of an industrial firm, possibly revealing considerable potentials for energy savings and for reduction of emissions to the atmosphere and biosphere. Existing energy metrics used for energy benchmarking however are strictly limited to measuring energy
efficiency, completely disregarding positive or negative effects energy savings may have on other environmental pressures (use of depletable resources other than energy, emissions of
pollutants , effluents or waste). We therefore propose investigating the use of technical efficiency measures as energy benchmarking tools. Technical efficiency is explored from both
an engineering and a micro-economic approach, although we limit our discussion to the nonparametric mathematical programming performance measures. Particular attention is given to the inclusion of undesirable outputs or ‘bads’ in the existing performance measures. We conclude with a cursory review of empirical research done in the field of environmental
performance indicators (EPIs), mainly in the sector of electricity generation and pulp and paper mills.

We estimate demand curves for electricity efficiency for the years 1991-1997 on a sample of 20 high-income OECD member states, with 1995 as focus year. Limiting the analysis to
electricity end-use offers major advantages in data quality and comparability of the included economies, while electricity anyhow is a leading energy end-use indicator. Energy/capita written as GDP/capita x Energy Intensity helps in distinguishing the energy conservation from the energy efficiency discussion. Only efficiency is studied here. The long-run price elasticity of the demand for electricity productivity is estimated at about –
1.00. Adjusting for divergent industrial structures slightly lowers the estimates but does not blow up results and conclusions. The latter confirm economists’ wisdom “prices do matter”, also in the market of the dispersed, diffuse and hidden use of electricity. The high elasticity and the composite character of the end-use prices (including e.g. rents and taxes) suggest that high end-use prices do not have to harm the economy or the people, because the share of (real) GDP spent on electricity is not higher for a high-price than for a low-price country. As a wink to Nordhaus’ backstop supply technology, we stretch our demand curves to add the notion of “backstop end-use efficiency” level, i.e. the intensity enforced by the price charged to cover the cost of the backstop supplies. When this costing price is at 0.40 $-95/kWh, the corresponding intensity is about 75 kWh/1000$-95 GDP. This backstop target is a useful
benchmark in climate change negotiations. Actual electricity sector liberalisation drives endusers away from the target

The paper provides details on green certificate systems in Belgium. The Flemish region has established a system and the Walloon region is preparing a slightly different one. The lack of uniformity and consequently of transparency in one country emphasises the need for more EU leadership in the field.
The main part of the article analyses the established Flemish system. Green certificates are complementary to other instruments that promote renewable electricity, e.g. direct subventions on the feed-in price of green electricity or direct
subventions on capital investments. Certificates execute a forcing effect on the actual development of green power if the imposed shares of green power in total sales are significant and if the fine level is at the height to enforce the quota.
If the fine is too low the incentive effect turns into a financing tax effect. When the green certificate system does the job it is designed for, i.e. operating at the edge of the RES-E development and organise the transition from a non sustainable to a sustainable power system, certificate prices will be high and reduce end-use consumption of electricity. A
segmentation of the RES-E certificate market along the various RES-E technologies is a necessity to keep the system affordable, effective and efficient.
For harmonising the European market for green certificates
and for installing the equimarginal cost principle among RES-E generators within the same technology group, one can think of two solutions. Either a single European green certificates market is established, or (yearly) optimal quotas are assigned to the various member states. Both solutions require an intensive follow-up of cost structures and of public policy measures (subventions) in all member states, but given the infant state of understanding and experience isolating regional and national markets may be best in the nearby years.

Voluntary approaches play an important role in reducing industrial energy use and CO2-emissions. Benchmarking can provide a starting point for negotiating targets, and are an added value to a monitoring program. Indicators are perfect for identifying the performance gaps, and to track performance over time. However, indicators at the firm level are still characterized by a low degree of standardization. Lack of comparability makes benchmarking very difficult. Indicators measure changes in one aspect (e.g. energy use) as if they were completely independent of changes in other aspects (e.g.
waste generation). We argue that integrated indicators, based on micro-economic productivity theory, may one day assume the role of certified tools in the field of flexible policy instruments.

The electricity production sector is a major source of emissions, in particular SO2, NOx and CO2. In the first part of the paper we briefly discuss the electricity generation system in Belgium. In the second part we discuss abatement technologies for SO2 and NOx. In the third part we deal with more general energy strategies, encompassing the reduction of CO2 emissions.