Market-Based Instruments for Energy Efficiency

Commissioned by G7 energy ministers, this report presents the first global overview of market-based instruments (MBIs) for energy efficiency, such as auctions, energy efficiency obligations on utilities and white certificate programmes. IEA research found that the number of MBIs has quadrupled over the last ten years, while investment stimulated by them has risen six-fold, to USD 26 billion in 2015. What distinguishes MBIs from other policy instruments is that, by giving market actors the freedom to choose the measures and delivery routes that work best for them, the market as a whole is able to discover the most cost-effective way to achieve the outcomes set out by policy makers. That freedom puts a premium on good policy design and implementation, including strong monitoring, verification and evaluation. And, as this report shows, sharing knowledge across jurisdictions will be central to the success of the next wave of policy making in this area.