What’s wrong with energy efficiency? – A comparative analysis of the barriers to municipal investments in energy efficiency in Bulgaria, the Former Yugoslav Republic of Macedonia and Hungary

Panel: Panel 1. Energy efficiency – a strategic choice for Europe

Authors:
Silvia Lazarova, Central European University
Konstantin Dimitrov, University of Skopje

Abstract

It is widely recognized that many cost-efficient opportunities to employ end-use energy efficiency measures exist in countries in transition (CITs) and that municipal authorities have an essential role to play in taking these opportunities. For a number of reasons, however, local authorities do not always do this.

The purpose of this paper is to review, compare and critically assess the determinants that influence the motivation of local authorities in Bulgaria, Macedonia and Hungary for investing in energy efficiency interventions. The factors are examined by looking at the existing barriers that hinder energy efficiency investments at a municipal level and especially those barriers that are directly related to the current status of local government. Two broad groups of problems are discussed here: local functions, especially energy-related tasks of municipal authorities, and finance. We explain how inconsistencies within these two areas influence the motivation of local authorities for investing in energy efficiency and their capacity to do so. We argue that greater decentralisation is the first step in giving local authorities the incentive to reduce wasteful expenses from the municipal budget.

Based on the analysis and the comparison, we give recommendations for concrete policy action in each country to remove the existing obstacles that inhibit local authorities from making cost-efficient investments in energy efficiency improvements. Municipal ownership of streetlighting and district heating (DH) systems, and establishing legal mechanisms to guarantee that municipalities can retain and re-invest the savings made as a result of energy efficiency investments are among the recommendations.