Model for Effectiveness of Policy Instruments for the Energy-Saving in Industry (MEI-Energy)

The model describes the investment behaviour of firms within an industrial sector towards energy-saving techniques. Industrial firms are spurred on to invest in such techniques by several factors, based on the following four categories:

• technical energy-saving measures (e.g. complexity, investment costs)
• the industrial sector (e.g. innovation efforts, willingness to invest)
• social surroundings (e.g. social pressure, activity of environmental interest groups)
• policy instruments and policy environment (e.g. levies, subsidies, voluntary agreements, enforcement)

Guided strongly by these factors, firms decide whether they will or will not implement an energy-saving technique. A diffusion curve can be constructed per technique on the basis of two types of decision-making:

1. an economic-rational decision based on quantitative criteria such as energy prices, depreciation terms of techniques, investment costs etc.;
2. a 'softer' decision-making process in which such factors as attitude of the sector towards the environment and the pressure exerted by policy instruments play an important role (the so-called 'driving forces')

The model calculates the diffusion curve per technique per sector. The diffusion curves of all techniques are aggregated to compute the total energy saving of a sector.

Since policy instruments are central to the model, the Centre of Clean Technology and Environmental Policy (University of Twente) has been asked to review the model. The results of the review and translated comments on the model are included here.