Process and impact evaluation of PFE – a Swedish tax rebate program for industrial energy efficiency

Before the minimum tax directive (2003/96/EC) took effect in 2004, Swedish industries had enjoyed untaxed electricity for over a decade. While the introduction of the tax increased costs for many companies, energy intensive industries were eligible for exemption if they entered an agreement on energy efficiency. Sweden quickly implemented the directive and simultaneously launched the Programme for improving energy efficiency in energy-intensive industries (PFE). Since then, over 100 companies have entered the five-year voluntary agreement which requires participants to do energy audits, implement energy management systems and make profitable investments. PFE has been hailed as a major success. Participants cite it in bringing organisation and structure into their energy management activities. Companies and industry associations now advocate for policies of this kind to receive precedence when targeting increased energy efficiency. According to ex-ante estimates PFE has resulted in gross annual electricity savings of at least 1 TWh, equivalent to 3 percent of the total consumption of participating companies. This paper presents an intermediate program evaluation focusing both on the PFE process and impact; it evaluates under what conditions the program meets stated objectives. It is evident that gross and net impact will deviate significantly from the officially reported results. Considering EU energy saving targets, the development of policy for energy efficiency in industry as well as monitoring and evaluation to assess program impacts is becoming increasingly important. This paper contributes to this process through an in-depth understanding of PFE, and more broadly to voluntary agreements of similar kind