Abstract
Increasing energy efficiency and savings will play a key role in the achievement of the climate and energy targets in the European Union (EU). To meet the EU’s objectives for greenhouse gas emission reductions, renewable energy use and energy efficiency improvements, its member states have implemented and will design and implement various energy policies. This paper reviews a range of scientific articles on the topic of policy instruments for energy efficiency and savings and evaluates the strengths and weaknesses of different measures. The review demonstrates the variety of possible instruments and points to the complex policy environment, in which not a single instrument can meet the respective energy efficiency targets, but which requires a combination of multiple instruments. Therefore, the paper in particular focuses on assessing potential interactions between combinations of energy efficiency policies, i.e. the extent to which the different instruments counteract or support one another. So far, the literature on energy efficiency policy has paid only limited attention to the effect of interacting policies. This paper reviews and analyses interaction effects thus far identified with respect to factors that determine the interaction. Drawing on this review, we identify cases for interaction effects between energy efficiency policies to assess their potential existence systematically and to show future research needs.
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06 July 2018
In the original publication, 8 paragraphs under subsection Interaction cases were incorrectly set as footnotes of Table 2.
06 July 2018
In the original publication, 8 paragraphs under subsection Interaction cases were incorrectly set as footnotes of Table 2.
06 July 2018
In the original publication, 8 paragraphs under subsection Interaction cases were incorrectly set as footnotes of Table 2.
06 July 2018
In the original publication, 8 paragraphs under subsection Interaction cases were incorrectly set as footnotes of Table 2.
Notes
We use the classical definitions of energy efficiency and savings: Energy efficiency relates to the ratio between energy consumption and the amount of energy service or production obtainable, whereas energy savings concern the absolute reduction in final energy consumed, which the end-user can achieve through investment in technical energy efficiency improvement or behavioural change. In this paper, both concepts represent the same policy target of a reduction in final energy consumption.
Future research could make a similar assessment shifting the scope to further sectors, e.g. public, commercial and large-scale industries, where different policies and policy interactions would be relevant to investigate.
Market barriers include any disincentives to invest in energy efficiency or reduce energy consumption. Not all barriers can be defined as a market failure in a welfare economic perspective, e.g. uncertainty, irreversibility of energy efficiency investment and bounded rationality. For a detailed discussion on market failures and barriers to energy efficiency see for example Gillingham et al. (2009); Jaffe and Stavins (1994), Linares and Labandeira (2010).
See Bertoldi and Rezessy (2008) for a comprehensive overview of fundamental concepts behind tradable white certificate schemes.
Free-riders are agents who make use of an incentive program, although they would have invested in energy efficiency improvements without any financial support. The free-riding problem therefore challenges the additionality of energy savings achieved through financial incentives. The rebound effect causes an increase in final energy consumption and may occur due to an effective price reduction once energy efficiency improves (Greening et al. 2000). Alternatively, an increase in the total number and the size of certain energy consuming products in use may increase final energy consumption, when e.g. a subsidy reduces initial investment costs (Galarraga et al. 2013; Markandya et al. 2015).
Information problems include imperfect, asymmetric information and split incentives, and behavioural failures refer to any departure from perfect rationality.
http://www.bigee.net/media/filer_public/2013/11/28/bigee_txt_0006_pg_how_policies_need_to_interact_2.pdf (Accessed 18 January 2018)
Kern et al. (2017) analyse the development of policy mixes for energy efficiency over time. Yet, the assessment of sequencing interactions between energy efficiency policies is a field for future research.
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The research has been financed by the Innovation Fund Denmark under the research project SAVE-E, grant no. 4106-00009B.
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In the original publication, 8 paragraphs under subsection Interaction cases were incorrectly set as footnotes of table 2.
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Wiese, C., Larsen, A. & Pade, LL. Interaction effects of energy efficiency policies: a review. Energy Efficiency 11, 2137–2156 (2018). https://doi.org/10.1007/s12053-018-9659-z
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DOI: https://doi.org/10.1007/s12053-018-9659-z