FEEM working papers "Note di lavoro" series
2012 .035

Return on Investment from Industrial Energy Efficiency: Evidence from Developing Countries


Authors: Ludovico Alcorta, Morgan Bazilian, Giuseppe De Simone, Ascha Pedersen
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Keywords: Energy Efficiency, Energy Investment, Energy And Development, Industrial Development
JEL n.: O14, Q41, E22, C58

Abstract

Energy efficiency is a foundation of any good energy policy. The economic, security, and environmental benefits of energy efficiency have been recognized for decades. We explore energy efficiency policy insights derived from survey work in developing countries in 119 projects across nine manufacturing sub-sectors. The methodology utilises financial return calculations to highlight gaps and opportunities for meeting the potential of energy efficiency projects in the manufacturing sector. We find a generally very high level of internal rates of return at a project level - with payback periods ranging from 0.9 to 2.9 years; but note that these metrics do not always appropriately influence corporate decision-making for a number of well-understood reasons.

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