Two Paths to Transforming Markets through Public Sector Energy Efficiency: Bottom Up versus Top Down

ABSTRACT The evolution of government purchasing initiatives in Mexico and China, part of the PEPS (Promoting an Energy-efficient Public Sector) program, demonstrates the need for flexibility in designing energy-efficiency strategies in the public sector. Several years of pursuing a top-down (federally led) strategy in Mexico produced few results, and it was not until the program was restructured in 2004 to focus on municipal-level purchasing that the program gained momentum. Today, a new partnership with the Mexican federal government is leading to an intergovernmental initiative with strong support at the federal level. By contrast, the PEPS purchasing initiative in China was successfully initiated and led at the central government level with strategic support from international experts. The very different success trajectories in these two countries provide valuable lessons for designing country-specific public sector energy-efficiency initiatives. Enabling conditions for any successful public sector purchasing initiative include the existence of mandatory energyefficiency performance standards, an effective energy-efficiency endorsement labeling program, an immediate need for energy conservation, a simple pilot phase (focusing on a limited number of strategically chosen products), and specialized technical assistance. Top-down purchasing programs are likely to be more successful where there is high-level political endorsement and a national procurement law in place, supported by a network of trained purchasers. Bottom-up (municipally led) purchasing programs require that municipalities have the authority to set their own purchasing policies, and also benefit from existing networks of cities, supported by motivated municipal leaders and trained purchasing officials