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Motives for Using Agreements in Energy Policy

Panel: Panel 3: Energy Efficiency options for industry

Author:
Signe Krarup, AKF, Institute of Local Government Studies, Denmark

Abstract

Why do governments try to influence industry? energy consumption through agreements and why do industry sign agreements, though it is voluntary to participate?

A growing number of countries have begun to use agreements in their energy policy instead of more traditional kinds of regulations like taxes and standards. Here agreements mean that the authorities and industry negotiate and sign a contract about targets for energy savings, e.g. improved energy efficiency or reduction in energy use, and different means to achieve these targets. However, in many ways these agreements differ, e.g. by the means, sanctions or the monitoring system, even though they are all called "agreements".

The reason for using agreements seems, however, not clear. So the question is first and foremost, why do the authorities choose agreements in the first place? And secondly why do the firms or industrial organizations choose to sign an agreement? To understand agreements we therefore need a better knowledge of the incentives or motives from the different participants to engage in such a policy formulation process and to sign an agreement. Here one argument could be that this is a more effective way to achieve energy savings. At the moment we are trying to answer some of these questions through a case study of different kinds of agreements and in this way be able to describe some of the mechanisms behind agreements. A country? regulation tradition and the cooperative tradition between industry and authorities might explain some of the differences in the "agreement designs".

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