Recommendations on where to use bottom-up and top-down methods
EMEEES has been able to confirm that evaluation of energy efficiency improvement measures and calculation of ESD energy savings is possible. In summary, we recommend to use the following methods:
- Top-down calculation methods can be used for electric appliances and vehicles, for which there is a well-defined statistical indicator of the average specific annual energy consumption per unit of appliance or per vehicle, and for solar water heaters. In these cases, the indicator is well-suited to capture the effects of the whole package of measures, including multiplier (market transformation) effects.
Bottom-up calculations are possible for appliances and vehicles, too, but it is often difficult to calculate multiplier (and free-rider) effects with them. For top-down calculation on appliances and vehicles, a reference trend can be defined for these specific energy consumption indicators to calculate additional energy savings; this reference trend should either be an EU harmonised trend or a national trend based on an EU harmonised coefficient (e.g., for elasticity to increases in market energy prices). Furthermore, the base year value may be assumed to be a proxy for the correct reference trend for calculating all energy savings for these indicators.
- Top-down methods are the way to calculate the effects of energy taxation and add them to the effects of bottom-up calculations for a sector, but only if these bottom-up calculations exclude free-rider effects. The energy savings due to taxation must not be added to results of top-down calculations on sectors or end-use equipment, if the latter already include an analysis to calculate the effects of energy taxation.
- It is the best and often the only possible way to use bottom-up calculation methods for all other end-use sectors, end-uses, and energy efficiency improvement measures. This is particularly the case for buildings, for the industry and tertiary sectors with their larger final consumers that are easier to monitor, and for modal shifts and eco-driving in transport.
In these areas, structural effects can often not be corrected for in top-down indicators, or it will need costly bottom-up modelling and gathering the necessary data for that modelling to do the required corrections: Neither of the two reference trends mentioned above for appliances and vehicles are usually possible for top-down indicators measuring the energy consumption of a sector per unit of production or per employee. For indicators measuring the diffusion of energy-efficient transport modes or combined heat and power in industry, the situation will depend on the country. For most of these sectoral or diffusion indicators, some Member States may see ‘apparent total’ savings when comparing the current value of an indicator with its value in the base year, while others may not. The reason for this is that either these countries really do not have savings, or their savings are hidden by structural changes that cannot be corrected for due to lack of data. Using ‘apparent total’ savings as a proxy for all energy savings for these top-down indicators would, therefore, lead to inconsistent and arbitrary measures of energy savings between Member States. This will disable the use of top-down methods in such cases.
By contrast, bottom-up calculations are usually feasible.
Bottom-up calculation needs specific monitoring but can provide information on the effectiveness and cost-effectiveness of measures, on potential improvements, and on greenhouse gas emission reductions additional to baseline projections. However, calculation of multiplier and free-rider effects with bottom-up methods can be costly, particularly for appliances and vehicles, for which the multiplier effects are particularly important. Furthermore, they work into the opposite direction, hence partly cancel out each other. Calculation of both multiplier and free-rider effects could, therefore, be restricted to measures either yielding at least 40 million kWh of annual electricity savings or 100 million kWh of annual energy savings of other fuels, or at least 5 percent of a Member State’s ESD energy savings target.
Top-down calculation starts from using existing statistical data and can be easier to apply, particularly in areas, for which many and overlapping energy efficiency improvement measures exist. However, it is often difficult to define the reference trend as stated above, or the indicator is not showing energy savings at all without costly corrections.
Therefore, the quality of data available in a country will finally determine which bottom-up or top-down methods are best to apply for evaluating the energy savings for the ESD from a sector, an energy end use, an end-use action, or a measure.