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How do firms consider non-energy benefits? Empirical findings on energy-efficiency investments in Swedish industry
Linköping University, Department of Management and Engineering, Energy Systems. Linköping University, Faculty of Science & Engineering.
Linköping University, Department of Management and Engineering, Business Administration. Linköping University, Faculty of Arts and Sciences.
2016 (English)In: Journal of Cleaner Production, ISSN 0959-6526, E-ISSN 1879-1786, Vol. 113, 472-482 p.Article in journal (Refereed) Published
Resource type
Text
Abstract [en]

When industrial firms invest in energy efficiency, the effect may go beyond energy cost savings and produce additional non-energy benefits as well. However, there is a lack of knowledge regarding experiences in non-energy benefits and the extent to which these are acknowledged by industry. This study attempts to explore firms perspectives on non-energy benefits of industrial energy-efficiency investments and if and how non-energy benefits are considered in the investment process. Moreover, this study also explores investment motives and critical aspects of adopting energy-efficiency investments. Based on a questionnaire and interviews with representatives of Swedish industrial firms, the results indicate that energy efficiency seems to be an important issue for the firms, but profitability and payoff appear to be the most important factors for adopting an investment, implying that it is often difficult to meet the payoff requirements with energy cost savings alone. In the meantime, various non-energy benefits are observed, but there seems to be a lack of knowledge of how these should be quantified and monetised. To facilitate such an assessment of non-energy benefits and to include them in the investment analysis, a measurement framework is provided. It is concluded that including non-energy benefits in the investment analysis can contribute to a framing of energy-efficiency investments that can meet the firms requirements for profitability assessment, which can further enhance opportunities for energy-efficiency investments in industry. Thus, the study contributes with new insights into the energy-efficiency investment process and the extent to which non-energy benefits are considered, along with the methods for measuring them.

Place, publisher, year, edition, pages
ELSEVIER SCI LTD , 2016. Vol. 113, 472-482 p.
Keyword [en]
Energy efficiency; Investments; Non-energy benefits; Explorative study; Investment decisions
National Category
Mechanical Engineering Economics and Business
Identifiers
URN: urn:nbn:se:liu:diva-126262DOI: 10.1016/j.jclepro.2015.11.070ISI: 000370993200046OAI: oai:DiVA.org:liu-126262DiVA: diva2:913431
Note

Funding Agencies|Swedish Energy Agency; Department of Management and Engineering at Linkoping University

Available from: 2016-03-21 Created: 2016-03-21 Last updated: 2016-10-10
In thesis
1. The Investment Process for Capital Investments: The case of industrial energy-efficiency investments and non-energy benefits
Open this publication in new window or tab >>The Investment Process for Capital Investments: The case of industrial energy-efficiency investments and non-energy benefits
2016 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

Capital investments play a crucial role for the business of every firm. In an industrial context, energy efficiency is an important means to meet future energy needs and in the same time reduce climate impact. In this thesis, the investment process for capital investments is therefore studied by addressing the case of industrial capital investments improving energy efficiency. The thesis specifically aims to illuminate how additional benefits, i.e. non-energy benefits, are and can be acknowledged in the investment process by applying an ex-ante perspective. The thesis holds the decision-making process as unit of analysis and aims to contribute with insights on firm level. Especially in an energy-efficiency context, such a process perspective has only been scarcely applied.

The thesis is based on a literature review and two empirical studies. The literature review is the starting point of the thesis and reviews the literature on benefit concepts and investment behaviour of energy-efficiency investments. It is then followed by an explorative study in which thirteen industrial Swedish firms are interviewed on how they consider non-energy benefits. Investment motives and critical aspects for adopting energy-efficiency investments are also addressed. It also includes a questionnaire, distributed and collected during a networking event for energy-intensive firms within Swedish manufacturing industry. The second empirical study is a case study conducted at a Swedish pulp and paper firm. It aims to take a comprehensive perspective on the investment process as well as to analyse how and when non-energy benefits are acknowledged in the investment process. This case study approach  enables participants at different levels in the organisation to be engaged in the study and new perspectives to be addressed.

The results indicate a general investment process passing through the phases identification, development and selection. Investment motives, information, internal coordination and external actors appear as key aspects of the investment process. Energy-efficiency investments are primarily initiated due to cost-savings motives. However, the subsequent investment process appears as consistent for all investment categories; the investment process described here is thus not specific for energy-efficiency investments only. The results instead indicate an investment process influenced by investment size; it influences the extent to which information is collected and assessed before making the decision, i.e. level of procedural rationality, as well as how the investment project is coordinated within the firm. Last, suppliers are involved in the investment process to a large extent from an early stage.

Regarding non-energy benefits, the results indicate that various benefits have been observed but far from all are acknowledged in the investment process. They are to a larger extent acknowledged for larger investments when more resources are devoted to the investment process. Quantifiable non-energy benefits improve the business case for energy-efficiency investments and non-energy benefits should thus be quantified to the extent possible. Yet, nonenergy benefits characterised by a lower level of quantifiability could still be important, such as benefits related to work environment, and should therefore be considered. However, the findings indicate a frequent use and reliance upon an investment manual, implicating a need for simplicity when addressing the additional benefits. This indicates that there should be an emphasis on a limited number of main benefits, rather than seeking to acknowledge all possible benefits.

Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2016. 60 p.
Series
FiF-avhandling - Filosofiska fakulteten – Linköpings universitet, ISSN 1401-4637 ; 117
Keyword
Investment process, investment decision making, capital investments, energy efficiency investments, non-energy benefits, industry.
National Category
Business Administration Energy Systems Social Sciences Interdisciplinary
Identifiers
urn:nbn:se:liu:diva-126367 (URN)10.3384/lic.diva-126367 (DOI)978-91-7685-790-8 (ISBN)
Presentation
2016-04-08, ACAS, Hus A, Campus Valla, Linköpings universitet, Linköping, 10:00 (Swedish)
Opponent
Supervisors
Available from: 2016-03-23 Created: 2016-03-23 Last updated: 2016-04-26Bibliographically approved
2. The Non-Energy Benefits of Industrial Energy Efficiency: Investments and Measures
Open this publication in new window or tab >>The Non-Energy Benefits of Industrial Energy Efficiency: Investments and Measures
2016 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

Improved industrial energy efficiency is viewed as an important means in the reduction of CO2 emissions and climate change mitigation. Various energy efficiency measures for improving energy efficiency exists, but even evaluated as cost-effective, there seems to be a difference between the energy efficiency measures that theoretically could be undertaken and which measures that actually are realised. On the other hand, industrial energy efficiency measures might yield extra effects, denoted as non-energy benefits, beyond the actual energy savings or energy cost savings.

Based on interviews and a questionnaire, results showed that the Swedish industrial firms studied had observed various non-energy benefits. However, few of the non-energy benefits observed were translated into monetary values and included in investment calculations. Results indicated that this non-inclusion could be explained by lack on information on how to measure and monetise the benefits, but even if not translated into monetary values, some of the non-energy benefits were sometimes used qualitatively in investment decisions. The utilisation of the benefits seemed to depend on the type and the level of quantifiability among the perceived benefits.

This thesis has also explored energy efficiency measures and non-energy benefits for a specific industrial energy-using process – compressed air. A literature review on energy efficiency in relation to compressed air systems revealed a large variation in which measures that could be undertaken to improve energy efficiency. However, few publications applied a comprehensive perspective including the entire compressed air system. Few non-energy benefits of specific energy efficiency measures for compressed air systems were identified, but the study provided insights into how non-energy benefits should be studied. This thesis suggests that energy efficiency and non-energy benefits in compressed air systems should be studied on specific measure level to enable the observation of their effects. However, the studies also addressed the importance of having a systems perspective; the whole system should be regarded to understand the effects of energy efficiency measures and related non-energy benefits.

Place, publisher, year, edition, pages
Linköping: Linköpings universitet, 2016. 64 p.
Series
Linköping Studies in Science and Technology. Thesis, ISSN 0280-7971 ; 1760
Keyword
Industrial energy efficiency, energy efficiency measures, energy efficiency investments, non-energy benefits, compressed air
National Category
Energy Systems
Identifiers
urn:nbn:se:liu:diva-131831 (URN)10.3384/lic.diva-131831 (DOI)9789176856727 (ISBN)
Presentation
2016-10-28, ACAS, A-huset, Campus Valla, Linköpings universitet, Linköping, 12:29 (Swedish)
Opponent
Supervisors
Funder
Swedish Energy Agency
Available from: 2016-11-09 Created: 2016-10-10 Last updated: 2017-05-04Bibliographically approved

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