Shining the light on energy conservation : a synthesis of six country studies

The evaluation found that the projects achieved `a big bang for the buck" during the period of USAID support. The projects had significant economic benefits and measurable environmental gains as well. Less clear was the outlook for institutions supporting energy conservation. The biggest stumbling block was the spread of conservation technology. Economic rates of return, which economists agree should be no less than 15%, were above the minimum, with the possible exception of Jamaica (where the rate is between 2% and 33%). Hungary (with a return of 165%) and Czech Republic (with a return of 50%) had excellent returns. In addition, the Czech and Hungarian programs had quick payback (the time it took for participating countries to recover their investments), and the payback for firms in Pakistan and Philippines was also strong. Payback data were not available for Guatemala and Jamaica. The projects helped reduce energy consumption, which, in turn reduced air pollution and production of greenhouse gases. In terms of the cost-benefit of installing conservation equipment, it seems that over the life of the equipment, pollution benefits equal 4-8 times the investment costs. Pollution benefits are almost a gift, since energy conservation equipment was installed by factory managers as a way to save on their fuel bill. In most cases, energy benefits were sustained at the original project sites, even after USAID assistance ended. Projects have been sustained where factory managers have realized their financial stake in energy conservation. In Hungary, for example, where privatization created profit incentives, all investments were generating a high rate of return, and in several cases the plants were expanding their energy conservation efforts. Moreover, all the energy managers trained by USAID were still in the energy business, and had received follow-on energy business, and follow-on energy contracts and related engineering jobs. In the Czech Republic and the Philippines, evaluators found firms using equipment effectively, even installing new equipment. That was principally because managers saw higher profits from adopting the technologies. In Pakistan, sustainability suffers, primarily because the budget limits dissemination of technical information. In Guatemala, the regional technology institute lacks plans to reach a broad spectrum of energy users. In Jamaica, few government or business leaders appear interested in energy conservation, and there is little incentive to continue using energy-conserving technologies. In no country has widespread replication taken place. Hungary, the Czech Republic, and the Philippines lack the private sector institutions that generally spread conservation technologies. The regional institute in Guatemala targeted large energy users, limiting replication by a broad range of smaller users. Lack of incentives and of energy institutions limited the spread of technologies generally.