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Not a MyNAP member yet? Register for a free account to start saving and receiving special member only perks. This paper addresses the suitability of institutional arrangements for development and implementation of Polish energy policy. Historical arrangements and current directions are presented concerning the production and delivery of coal, synthetic gas, natural gas, coke-oven gas, crude oil and derivatives, electricity, and thermal energy. Proposals are presented for new institutional arrangements in the transition to a market economy to implement energy and environmental policies. In centrally planned economies, economic efficiency was not the primary criterion in the valuation of economy activities. Thus, institutional support for development of the energy economy was based first of all on political factors. Consequently, consideration of energy production and delivery took precedence over matters related to energy consumption, and the institutions dealing with production and delivery occupied a higher position in the organizational hierarchy. The energy crisis of brought about new research on complex energy problems that included consideration of energy conservation activities and substitution of energy carriers. At this time, research activities aimed at improving the efficiency of the whole energy economy including energy supply policy, energy conservation policy, and environmental policy. By , these activities had elevated energy conservation problems to a level of. However, reorganization of government research programs in resulted in decreased emphasis on energy efficiency. During most years since the second world war until the reorganization in , energy production and delivery were directed by the Coal, Energy, and Chemistry ministries. Early in the s, the Coal and Energy ministries were merged Fig. The ministries contained offices working with energy problems in each sector: iron and steel, metal industry, chemistry, consumer goods, transportation, residential buildings, and agriculture. Energy consumption problems were coordinated at first by a Department for Inspection in the Energy Ministry, and later, in the beginning of the s, by a special section of this Ministry PiGPE called the State Inspection of the Fuel and Energy Economy. Then, in , after the passage of a new energy economy bill by the Polish parliament, the scope of the GIGE was reduced when it became the Energy Conservation Department within the Ministry of Materials and Fuels. In , the Industry Ministry was created, and energy problems were handled by the Energy Economy Department Departament Gospodarki Energetycznej which was quite limited in scope. Presently, the fundamental aim of the Polish government is to achieve the free market economy. Their duties are: inspection of energy consumption methods in industry, analysis of energy consumption parameters, and advice on development projects on energy consumption in industry. The primary institution in the Polish government for creating and implementing energy policy is the Ministry of Industry through the Energy Economy Department. Within this department are 40 persons divided among 6 teams Fig. Since the beginning of the new democratic government in , the Department has developed a very liberal market-based. Unfortunately, the policies emerging from the Ministry of Industry emphasize the development of energy production and delivery, as in the past, and opportunities for energy conservation are being missed. Actually, more support for such activities is coming from other Ministries, especially the Ministry of the Environment, the Central Planning Office, and the Ministry of Building. The Central Planning Office has organized a program for Rational Energy Policy, which aims at providing a basis for optimization of decision making processes in the energy economy during the transition period. The Ministry for Environmental Protection Fig. The Foundation will help to develop energy conservation policy and promote the use of energy efficient new technologies. Another initiative, sponsored by a group of power engineers in industry and the Polish Academy of Sciences, involves the organization of the Polish Association for Energy Economics St. One commission of the Association will prepare alternative solutions for energy conservation policy. Poland needs to organize new institutional support for energy conservation activities during the transition period from a centrally planned economy to a market economy Fig. An ongoing debate involves whether the government should continue to house energy programs within the Ministry of Industry or else organize a new institution independent of the Ministry. In either case, additional obstacles are presented by the shortage of competent staff, which is a result of the previously mentioned decreases during the s in government and scientific institution employment of professionals working on energy conservation policy problems. The developing trends of the whole Polish economy will have much influence on the organization of a central institution for energy conservation policy. Also, future development of Poland's environmental policy will affect institutional developments. Presently, these connections are not quite clear. Along with questions about the organization of central institutions, there are important concerns about the organization of regional support for energy and environmental problems. The currently operating regional inspection teams were created during the centrally planned economy in Poland, and therefore their scopes are limited. In the region of Silesia, an Energy Conservation Agency has been organized to address a great range of environmental protection and energy conservation problems in this province. This Agency is willing to collaborate with the United States, Germany, and France on a complex energy conservation and environmental. We expect that other provinces will organize similar institutions, and therefore the work for Upper Silesia can serve as a model for institutional development throughout Poland. Another debate involves the application of scientific research to methods for optimal decision making on energy policy, energy conservation policy, and environment protection policy. Our experiences during the first two years of transition have identified a shortage of diagnostic methods for formulating optimal policies. We are also concerned that the experiences of developed countries are only partially adaptable to our situation. Nevertheless, we expect that one of the most important components in the efficient development of a Polish energy economy will be collaboration with developed countries. The main task for the Polish government in transition is to create and implement a stabilization program aimed at:. This report discusses the role of the government in creating energy efficiency policy at various levels. It presents key recommendations regarding current energy efficiency initiatives. Two years ago the Polish economy was in disarray. Upon assuming power in September , the new government immediately undertook the task of restructuring the economy. The more urgent tasks were to control inflation, strengthen domestic currency, remove price distortions and eliminate monopolies. The program has had significant results based on data now available from Inflation subsided substantially. Price increases were reduced from a monthly rate of The state budget was balanced, and real interest rates became positive. The black market for foreign exchange was totally eliminated. Private sector output was up by 8 percent in in spite of a recession, and exports tripled. The government's current policy for reforming the energy sector consists of the following elements:. The Ministry of Industry and Trade has identified key actions for implementing these strategies listed below. These specific initiatives are under way at the Ministry of Industry and are very important for restructuring of the energy sector and energy efficiency. However, demand-side measures have been seriously neglected. One reason for this imbalance is the belief that pricing policies and market mechanisms are adequate to address Poland's need to become more efficient. Also important is the influence of government decision makers and aid agencies that traditionally emphasize supply-side measures. There is also a lack of qualified staff in government ministries to address demand-side issues. Energy efficiency does not happen on its own. The role of the government is to take initiatives. These include:. The objective of the task. These initiatives are listed below. Providing incentives for home energy savings by assisting residential district heating consumers to save energy and money in some 5. Obtaining new loans for efficiency investments by creating a fund for energy efficiency investments to be drawn on by utilities for energy savings measures in the residential, industrial, and public buildings sectors. Technical assistance should be provided to promote the use of these funds, and to enable consumers to use them. Helping schools cut energy costs by providing emergency energy assistance to schools and municipalities. Capturing methane leaks from coal mines beginning with cost-sharing demonstration projects utilizing coal-bed methane as a fuel. The projects should demonstrate to the private sector that producing coal-bed methane for local markets can be profitable, and should stimulate more rapid development of a national energy resource which can reduce imports, reduce energy-related pollution, reduce greenhouse gas emissions, and save money. Establishment of a National Utility Agency to promote least-cost solutions to create a Utility Least-Cost Program for the Polish electric and heat industry. The agency will be accountable to an appointed National Utility Council. Industrial energy efficiency policy became a concern of government policy makers in Poland more than 3 0 years ago when the first Energy Management Act was enacted. Its duties were limited to distribution of fuels, regulation of energy carriers according to a Central National Plan , and research on energy use by sectors of the economy and, at the regional level, by large industrial energy users. The participation of universities in research projects on energy efficiency improvements in industry was controlled by the Office for Technical Progress and Science. The universities also participated in research projects financed by Ministry of Higher Education or by industrial enterprises. This paper contains an overview of industrial energy efficiency policy including: government activities on energy policy, specific government programs, sectoral industry programs, issues relating to program financing, implementation of energy policies, the role of universities and other research centers, and requirements for application of research results in industry. The paper concludes with proposals for changes in law, in energy policy and its implementation, organization of research and other activities to improve the effectiveness of energy efficiency policy in Poland. The duties of the Polish government in relation to the national economy are well established. At least four areas of activity can be singled out:. Industrial energy efficiency policy considers two basic factors: energy consumption per unit of GNP Gross National Product , and environmental protection. The universities' basic responsibilities are:. In the light of these responsibilities, the universities should participate actively in the improvement of industrial energy efficiency. Presently, private industry in Poland has only a small share in GNP. Thus, until the time of widespread privatization of public industry, it will have only minor influence on the results of governmental energy policy. On the other hand, energy policy developments will effect the privatization process. Access to energy supplies by private consumers is determined by the monopolized energy suppliers electricity, natural gas, and district heating and by government, which sets energy prices. Industrial energy efficiency policy became a concern of government policy makers in Poland more than 30 years ago when the first Energy Management Act was enacted and the Head Inspection Office on Energy Management was set up. However, this agency's authority was subservient to the Ministry of Mining and Energetics and the Central Planning Commission. Presently, legislators are developing new energy policy to consider energy management problems for the conditions of an economy in transition to the free market, accounting for the monopoly status of energy suppliers. One proposal calls for the creation of a central institution to develop energy policy and to oversee the development of the country 's energy system, including modern energy management. This institution should be independent of the energy carriers, generating industries, and distributors and should act in the public interest. The primary tasks of this institution should be:. The responsibilities of the central energy institution should be specified by the Prime Minister or by the Ministry of Industry. Furthermore, new legislation should determine the duties and range of activities of the Ministry of Industry regarding operative decisions in energy management and implementation of energy policies. Following are several considerations involved in the creation of energy efficiency policy. The energy suppliers and transmission and distribution networks will be privatized and regulations will be changed. Energy price parity for households and industrial consumers will occur in the long term. Network deliveries of electricity, natural gas, and heat will be partially decontrolled in the long term. Environmental protection through energy demand reduction and energy efficiency improvement will occur. The above mentioned principles and strategies will promote energy efficiency on both the supply and demand sides of the market equation. However, more can be said about the demand side. Necessary demand side policies and key actions for improvement of energy efficiency include:. Progress on the above problems and targets can be accomplished in collaboration with universities and research centers. During the last two years the relationship between government and universities has changed, particularly in the area of scientific research. These changes involve more participation of universities in the development of science and technology. Eighteen state universities are involved directly in energy education. The categories of instruction include: thermal and electrical technologies, including utilization, management, and control; house and district heating; air conditioning and ventilation systems; and industrial energetics. Fourteen universities in Poland include postgraduate studies known as graduate studies in the U. There are more than seventy different programs related to industrial energetics, and energy policy and management. The fields of doctoral studies are determined by the interests of candidates for the doctoral degree and professors. Generally these studies concern scientific, theoretical, and experimental research. However, remarkably few doctoral dissertations concern practical applications for the improvement of energy efficiency, energy management, or policy. Expertise is particularly lacking in the areas of:. Some areas of energy education require development, integration, and evolution in response to our changing political and economic conditions:. University research activities are presently regressing because of fundamental changes in governmental support and little interest among industries state-owned and private , municipal authorities, and other energy consumers. The government has terminated all central developmental research programs. The Scientific Research Committee introduced a new organizational and financing system for research that eliminated established, effective, and coherent research projects in energetics. A new system of support for projects by individual investigators is now being implemented. These projects are not subordinated to a strategic program. Such projects are of course useful, but they do not solve the problems necessary for supporting decisions related to strategic goals and directed towards improving energy efficiency for reducing energy consumption per unit of GNP. The termination of governmental strategic central research programs can cause:. In conclusion, the field of energetics is one for which the government has the responsibility to organize and finance research activities aimed at strategic goals. University energy research activities supported by the government are an essential component of such research. Polish energy management is in a condition determined by factors that result from many years of a centrally planned economy:. Energy prices were set to achieve certain policies and had little relationship to costs of production or the price of purchases on the world energy market. During last two years, as Poland attempts to change its economic system to a free market, prices have increased towards those of the world market level and are beginning to reflect the costs of their production, delivery, and distribution. The goal of recent changes is to establish proper pricing structures and levels so that funds can be secured for future development of the energy sector. New policies also aim to change the energy consumption structure and force end-users to decrease their energy consumption. The analysis presented here involves primarily the energy suppliers ' point of view. Less attention in devoted to end-users' needs and opportunities to produce goods and services with less energy. Prices are important factors influencing consumer behavior. Energy prices are especially important because energy is a part of every human activity. During the period of the centrally planned economy, Poland had a policy of low energy prices. Prices for fuels and energy were state controlled, and as a rule, there was no connection between prices and the cost of production. Prices were not a good basis for economic decisions both on the national and microeconomic levels. The transition from a centrally planned to a market economy requires that we adjust the Polish system of energy prices to world market prices. However, our ability to select the best route to a new economic system is limited by factors created during the past 40 years, including the structure of the Polish energy balance, petroleum fuels imported mainly from the USSR, and other relics of the previous economic system including state ownership of industry. Prices play an important role in the energy market. The principal functions of energy prices are to cover costs of production, to provide a basis for substitution of fuels, and to distribute the benefits of energy use among energy producers and consumers. There are four main methods for determining energy prices: cost of production, comparison of the usefulness of different energy carriers, balancing supply and demand, and comparison of domestic prices to world market prices. In the past, the costs of production were estimated, but this information was used only to calculate the level at which energy was subsidized. Administrative methods, rather than price, were used to control energy consumption. The transition period from a centrally planned economy to a market economy in Poland is characterized by rapid price increases for all energy carriers. The high growth rate in energy prices implies increasing energy costs for industry and decreasing real values of monthly wages for the population. Although energy prices are still not high enough to cover the costs of production, transportation, and distribution, they are high enough to create great difficulties for many manufacturers and individual consumers struggling to pay their bills. The deep restructuring of all branches of the energy sector has eliminated previously existing organizational ties between the central planning board and energy producers and suppliers. Simultaneously there remain in existence previous arrangements for energy delivery and use that continue to support the monopoly position of energy suppliers. The existing arrangement of energy sector ownership, with the state having the contradictory roles of owner of industry and energy carriers and regulator of methods of energy use, makes it difficult to introduce the most effective system of energy prices. In practice, this system leads to neglecting the interests of energy users in favor of energy security for the whole national economy. There is a need for the formulation of a new Polish. These priorities must take into account the interests of energy end-users in industry and agriculture as well as individual consumers with the goal of optimizing the development of the entire Polish national economy. We believe that energy pricing policy is the best tool for implementation of improved methods for demand side management and energy conservation. The existing system of energy prices and tariffs must be changed, especially for electricity, gas, and district heating, so as to stimulate development of energy conservation enterprises and to make it possible for end-users to influence the behavior of energy suppliers in ways that improve the quality and reliability of delivery. Measurement systems for all energy carriers must be improved and increased in number so that the relationship between the quantity of energy used and energy bills will be apparent. The transformation of the Polish economy from a centrally planned to a market economy requires that domestic prices for energy carriers be adjusted to the real costs of their production or purchase. Our ability to choose the best way to change from the previous system of cheap energy to world market prices is limited presently by the poor state of the Polish economy. Deep restructuring of the energy sector provides great opportunities for specific projects in the energy sector. Establishing proper energy prices is important for implementation of a new national economic policy. Analyses that have been performed in this domain mainly represent the energy producers' point of view. They are directed primarily at determining the level of energy subsidies. There is no lobby for energy end-users, and there are no analyses concerning how energy price increases influence industry and agriculture or the society's situation regarding future prosperity. The problem of setting prices and tariffs should be the subject of serious analyses which must produce verifiable results. The goal is an energy price system similar to that existing in developed countries, but the way it is achieved must be adapted to present Polish limitations, including the structure of industry and agriculture and the level of national income per capita. These goals will not be achieved by simply eliminating existing subsidies, for example to the coal industry or district heating suppliers. As Poland's economy modernizes and grows, the demand for energy services for people is likely to rise quickly, as it has in other countries, including the United States. Demand for energy services could be accompanied by an increase in energy demand, as it was in the United States before , or could be achieved with absolute reductions in energy consumption, as is likely to be the case in California and perhaps the rest of the U. Since the early part of the century, the fraction of U. For the last fifteen years, this trend has continued despite improvements in equipment energy efficiency in the people-related sectors. The rising demand for energy services that might confront Poland in the near future is illustrated in Figure 1. This figure shows a 6. Had this curve been extrapolated to , as virtually all American utilities were doing in the mids, it would have implied the need for , MW nationally to power refrigerators -- equivalent to the installed capacity of the entire U. In the case study of refrigerators presented above, California set efficiency standards for refrigerators in Successive modifications of the standards required reductions in energy consumption in , , , and The result, as illustrated in Figure 2 , is a two-thirds reduction in energy consumption per unit between and , resulting in a stabilization of energy use for refrigerators at the mids level of 21, MW. The turnover of refrigerators, coupled with even higher efficiencies that are expected in the mids, will lead to significant absolute declines in energy consumption for this end use, despite population growth and continued increases in refrigerator size and features. Similar gains in efficiency have been achieved, and similar declines in total energy use are achievable, in virtually every other people-related end use sector. Similar types of analyses can be done for any major country or region, and current evidence suggests similar results will follow: that economic growth will be better served by stable or declining energy consumption than by continued growth in energy. This was accomplished through a relatively limited number of national energy policies applied with varying levels of commitment and coupled with some modest price response. States or regions that made consistent efforts to improve energy efficiency did substantially better than the national average. State efforts to regulate the fuel efficiency of motor vehicles are preempted by federal law in the United States. Similarly, most of the decisions on funding railway expansion versus new highways see Section 4. Figure 7 and Figure 8 focus on those areas where states could exercise independent policy action. As illustrated in Figure 8 , electricity consumption per capita in California declined steadily over the period of record, in contrast with the United States as a whole, where electricity consumption per capita grew at 1. It is likely to increase in the future, as California implements new policies to further exploit its efficiency resources. These results show that the theories and projections described in Section 2 above can be translated into practice in a real world setting. The primary area of difference between California and the rest of the nation was in that state's standards for buildings and appliances. California estimates that these standards will save 14, MW by the year , compared with the total electric demand today of about 40, MW. Building, appliance, and vehicle standards can be set at the regional or national level. The level of efficiency required generally has been based on economic analysis. Such standards have been found to be enforceable with very high effectiveness, provided that intelligent efforts at enforcement are made. Incentives can supplement standards in several ways. Rebate levels increase rapidly as the savings increase. These programs appear to be achieving remarkable success. Graduated fees on inefficient vehicles coupled with rebates on efficient cars are predicted to create for the first time a market in energy efficiency in vehicles. Recent research suggests that the amount of vehicle kilometers traveled VKT per capita is highly dependent on the infrastructure of urban development and transportation facilities. Increases in mass transit usage by one passenger kilometer appear to reduce overall VKT by 4 to 8 vehicle kilometers or more, by affecting land use patterns. Thus, national policies and economic incentives to encourage high density and mass transportation appear able to reduce energy consumption substantially at any given level of vehicle efficiency. Previous systems of regulation in the United States provided utilities a financial incentive to increase their sales of energy regardless of its social benefit. New utility regulatory policies adopted in New England, California, and other parts of the United States, provide that the utilities' least-cost resource plan is also its most profitable plan. These policies can change a utility's perspective on encouraging efficiency, bringing the utility industry financial power and personnel infrastructure to bear on improving efficiency. This is likely to have a dramatic effect in the future. Different economic, social, and cultural conditions provide different points of leverage for the individual and corporate decisions that determine future energy consumption. Policy research for each country or region to determine what those points of leverage are and how policies can best encourage energy efficiency can make a substantial difference in how many efficiency-encouraging policies are adopted. Economists have made a strong case for the benefits of setting energy prices at their full marginal cost to society. This cost should include not only the market price, but also the value of energy-related externalities, such as air pollution and economic stability e. In Poland, as in most countries, the price of energy to the consumer falls significantly below the economically preferable level. Raising energy prices is an important component of a rational energy strategy. However, it is not the only component needed, or even the most important one. Market failures prevent even privately optimal choices on energy efficiency from being made. In some cases, measures with payback periods of less than a year are routinely overlooked by the market. Raising energy prices will not induce much efficiency if energy price is not the principal motivator to begin with. For most energy efficiency decisions, it is not. Many analyses over the past 20 years of the costs and savings from new energy efficiency technologies have shown the potential for large improvements in energy efficiency, leading to predictions of stable or declining aggregate energy consumption. These efficiency potentials have been realized to a great extent in regions that have made conscious efforts to implement energy efficiency policies. Based on this experience of practical success, the most effective types of policies have been described. The degree of success of these policies--both the ability to get them implemented, and their effectiveness once implemented--have been surprising to most energy analysts. The weight of opinion has generally been skeptical of the ability to replace supply-side investments with efficiency improvements on a macroeconomic scale. Recorded energy intensity reductions and reduced growth rates for overall energy have tended to be at or above the most optimistic end of the range of analysis projecting future trends and scenarios. Thus, it is plausible to project significant reductions in energy consumption for Poland based on the adoption of policies that have proven to be politically feasible and economically workable in other regions. Sources: Borg and Briggs for California residential and commercial sector energy, U. Energy data, U. Figure 1. California's building and appliance standards and progressive energy policies have significantly reduced per capita electricity use over the past decade. In the average Californian used kWh less than in , while in the average American used kWh more than in Population data— Statistical Abstract of the United States, ed. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website. Jump up to the previous page or down to the next one. Also, you can type in a page number and press Enter to go directly to that page in the book. Switch between the Original Pages , where you can read the report as it appeared in print, and Text Pages for the web version, where you can highlight and search the text. To search the entire text of this book, type in your search term here and press Enter. Ready to take your reading offline? Click here to buy this book in print or download it as a free PDF, if available. Do you enjoy reading reports from the Academies online for free? Sign up for email notifications and we'll let you know about new publications in your areas of interest when they're released. Get This Book. Visit NAP. Looking for other ways to read this? No thanks. Page 6 Share Cite. This page in the original is blank. Page 7 Share Cite. Page 8 Share Cite. Page 9 Share Cite. Page 10 Share Cite. Page 11 Share Cite. Page 12 Share Cite. Page 13 Share Cite. Page 14 Share Cite. Page 15 Share Cite. Page 16 Share Cite. Page 17 Share Cite. Page 18 Share Cite. Regulatory reform, including: antimonopoly regulation of electric and gas transmission encouraging bidding for electric power supplies These specific initiatives are under way at the Ministry of Industry and are very important for restructuring of the energy sector and energy efficiency. Implementation of Policies. Page 19 Share Cite. Page 20 Share Cite. Page 21 Share Cite. Page 22 Share Cite. The universities' basic responsibilities are: higher education, development of science and technology, and research activities including the needs of industry and consumers. Page 23 Share Cite. The energy sector is in the process of reforming and restructuring. Market pricing of energy will be introduced. Subsidies for energy producers will be eliminated. Page 24 Share Cite. Page 25 Share Cite. Expertise is particularly lacking in the areas of: utilization of energy, energy measurements, automatic control, energy auditing, energy management, energy economy, energy policy, environmental protection through increased energy efficiency, development of energy-efficient technologies, and planning of national and regional energy systems. Some areas of energy education require development, integration, and evolution in response to our changing political and economic conditions: methods for developing and establishing comprehensive energy management, modern energy auditing, energy demand forecasting, energy system planning using least-cost methods, energy management control systems,. Page 26 Share Cite. Page 27 Share Cite. Page 28 Share Cite. Page 29 Share Cite. Page 30 Share Cite. Page 31 Share Cite. Figure 2. Page 32 Share Cite. Figure 3. Page 33 Share Cite. Figure 4. Page 34 Share Cite. Figure 5. Page 35 Share Cite. Figure 6. Page 36 Share Cite. Figure 7. Page 37 Share Cite. Figure 8. Page 38 Share Cite. Figure 9. Page 39 Share Cite. Figure Page 40 Share Cite. Page 41 Share Cite. Page 42 Share Cite. Page 43 Share Cite. Page 44 Share Cite. Page 45 Share Cite. Page 46 Share Cite. Page 47 Share Cite. Building, Appliance, and Vehicle Efficiency Standards. Page 48 Share Cite. Page 49 Share Cite. Page 50 Share Cite. 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