Skip to main content
SpringerLink
Log in
Book cover

Green Energy and Efficiency pp 93–110Cite as

Policy Instruments to Foster Energy Efficiency

  • Chapter
  • First Online:

Part of the book series: Green Energy and Technology ((GREEN))

Abstract

In this chapter we start by enumerating the reasons why progress in realizing the energy efficiency potential has been so limited both for firms and households. Then we turn to the role of policy in moving agents closer to an optimal level of energy efficiency. Governments have a range of instruments at their disposal for doing so and while some of them have been successful others have not. Lessons can therefore be learnt from the experience in implementing these different measures. The paper ends with some thoughts on how policies can be made more effective.

This chapter was prepared with the economic support of the Spanish Ministry of Economy and Competitiveness through its research project ECO2009-14586-C2-01 (Xavier Labandeira and Ana Ramos) and Fundación Iberdrola (Ana Ramos). We thank the editors, Alberto Gago, and Pedro Linares for their useful comments and suggestions. The usual disclaimer applies.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   84.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD   109.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Notes

  1. 1.

    Surveys carried out by the OECD and others indicate that economic considerations such as the full price (i.e. levelised costs including capital plus operating costs) are not as important as capital costs and labelling of products when making energy appliance choices [68].

  2. 2.

    There is also a literature which notes that measures of the energy paradox are exaggerated because the methods used do not take account of the fact that consumers have different preferences. See for example, [7].

  3. 3.

    Energy Services Companies (ESCOs) are companies that guarantee the energy savings by energy performance contracting, that is, customers pay the services with the energy savings achieved.

  4. 4.

    The range of subsidies is very wide and the instrument takes many forms. It is very common for example to use renovation or ‘scrappage’ plans, which consists of subsidizing the substitution of inefficient products by new ones with a certain energy efficiency requirements, especially during economic recessions. However, the principal goal of these plans is frequently to activate the market and not really environmental protection [10]. Nevertheless, the use of such measures is also supported by some evidence through consumer surveys which show that the up-front investment cost is one of the main factors driving consumer decisions. This is the case with low-carbon technology vehicles in the UK [54].

  5. 5.

    Research on the rebound effect arising from these subsidies is problematic. The difficulty of estimating indirect rebound effects (see the discussion above) has constrained the development of research in this area (see [14]).

References

  1. Achtnicht M (2011) Do environmental benefits matter? Evidence from a choice experiment among house owners in Germany. Ecol Econ 70:2191–2200

    Article  Google Scholar 

  2. Alberini A, Banfi S, Ramseier C (2013) Energy efficiency investments in the home: Swiss homeowners and expectations about future energy prices. Energy J 34(1):49–86

    Article  Google Scholar 

  3. Allcott H (2011) Social norms and energy conservation. J Public Econ 95:1082–1095

    Article  Google Scholar 

  4. Aroonruengsawat A, Auffhammer M, Sanstad A (2012) The impacts of State Level Building Codes on Residential Electricity Consumption. Energy J 33:31–52

    Article  Google Scholar 

  5. Banfi S, Farsi M, Filippini M, Jakob M (2008) Willingness to pay for energy-saving measures in residential buildings. Energy Econ 30:503–516

    Article  Google Scholar 

  6. Bennear LS, Stavins RN (2007) Second-best theory and the use of multiple policy instruments. Environ Resource Econ 37:111–129

    Article  Google Scholar 

  7. Bento AM, Li S, Roth K (2010) Is there an energy paradox in fuel economy? A note on the role of consumer heterogeneity and sorting bias. RFF Discussion Paper 10-56, Washington DC

    Google Scholar 

  8. Bertoldi P, Rezessy S (2009) Energy saving obligations and tradable white certificates. Joint Research Center of the European Commission, Institute for Energy, Ispra

    Google Scholar 

  9. Bertoldi P, Rezessy S, Lees E, Baudry P, Jeandel A, Labanca N (2010) Energy supplier obligations and white certificate scheme: Comparative analysis of experiences in the European Union. Energy Policy 38:1455–1469

    Article  Google Scholar 

  10. Brand C, Anable J, Tran M (2013) Accelerating the transformation to a low carbon passenger transport system: The role of car purchase taxes, feebates, road taxes and scrappage incentives in the UK. Transp Res Part A 49:132–148

    Google Scholar 

  11. Brounen D, Kok N (2011) On the economics of energy labels in the housing market. J Environ Econ Manag 62:166–179

    Article  Google Scholar 

  12. Datta S, Gulati S (2011) Utility rebates for Energy Star appliances: are they effective? CEPE Working Paper Series 11–81

    Google Scholar 

  13. Davis L (2012) Evaluating the slow adoption of energy efficient investment: are renters less likely to have energy efficient appliances? In: Fullerton D, Wolfram C (eds) The design and implementation of U.S. climate policy. University of Chicago Press, Chicago

    Google Scholar 

  14. Davis LW, Fuchs A, Gertler PJ (2012) Cash for coolers. NBER Working paper series, WP 18044

    Google Scholar 

  15. De Castro L, Dutra J (2013) Paying for the smart grid. Energy Econ 40:S74–S84

    Article  Google Scholar 

  16. Del Rio P (2010) Analysing the interactions between renewable energy promotion and energy efficiency support schemes: The impact of different instruments and design elements. Energy Policy 38:4978–4989

    Article  Google Scholar 

  17. Deng Y, Li Z, Quigley JM (2012) Economic returns to energy-efficient investments in the housing market: evidence from Singapore. J Region Sci Urban Econ 42:506–515

    Article  Google Scholar 

  18. Directive 2010/31/EU of the European Parliament and of the Council of 19 May 2010 on the energy performance of buildings (recast). Brussels

    Google Scholar 

  19. Directive 1999/94/CE of the European Parliament and of the Council of 13 December 1999 relating to the availability of consumer information on fuel economy and CO2 emissions in respect of the marketing of new passenger cars. Brussels

    Google Scholar 

  20. Directive 92/75/CEE of the Council of 22 September 1992 on the indicating by labeling and standard product information of the consumption of energy and other resources by household appliances. Brussels

    Google Scholar 

  21. Directive 2010/30/EU of the European Parliament and of the Council of 19 May 2010 on the indication by labeling and standard product information of the consumption of energy and other resources by energy-related products (recast). Brussels

    Google Scholar 

  22. Doostizadeh M, Ghasemi H (2012) A day-ahead electricity pricing model based on smart metering and demand-side-management. Energy 46:221–230

    Article  Google Scholar 

  23. EC (2011) Energy efficiency plan 2011. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. COM(2011) 109 final, Brussels

    Google Scholar 

  24. EP (2014) Report from the European Parliament on a 2030 framework for climate and energy policies (2013/2135(INI)). Committee on the Environment, Public Health and Food Safety. Committee on Industry, Research and Energy. A7-0047/2014

    Google Scholar 

  25. Eichholtz P, Kok N, Quigley JM (2010) Doing well by doing good? Green office buildings. Am Econ Rev 100:2494–2511

    Article  Google Scholar 

  26. Espey M (1998) Gasoline demand revisited: An international meta-analysis of elasticities. Energy Econ 20:273–295

    Article  Google Scholar 

  27. Farinelli U, Johansson TB, McCormick K, Mundaca L, Oikonomou V, Örtenvik M, Patel M, Santi F (2005) ‘White and Green’: Comparison of market-based instruments to promote energy efficiency. J Clean Prod 13:1015–1026

    Article  Google Scholar 

  28. Frondel M, Peters J, Vance C (2008) Identifying the rebound: evidence from a German household panel. Energy J 29:145–164

    Article  Google Scholar 

  29. Fuerst F, McAllister P (2011) Green noise or green value? Measuring the effects of environmental certification on office values. Real Estate Econ 39:45–69

    Article  Google Scholar 

  30. Fuerst F, McAllister P (2011) The impact of Energy Performance Certificates on the rental and capital values of commercial property assets. Energy Policy 39:6608–6614

    Article  Google Scholar 

  31. Galvin R (2010) Thermal upgrades of existing homes in Germany: The building code, subsidies and economic efficiency. Energy Build 42:834–844

    Article  Google Scholar 

  32. Gago A, Hanemann M, Labandeira X, Ramos A (2013) Climate change, buildings and energy prices. In: Fouquet R (ed) Hand book on energy and climate change. Edward Elgar, Cheltenham

    Google Scholar 

  33. Gago A, Labandeira X, López-Otero X (2013). A panorama on energy taxes and green tax reforms. WP 08/2013, Economics for Energy

    Google Scholar 

  34. Galarraga I, González-Eguino M, Markandya A (2011) Willingness to pay and price elasticities of demand for energy-efficient appliances: combining the hedonic approach and demand systems. Energy Econ 33:S66–S74

    Article  Google Scholar 

  35. Galarraga I, Ramos A, Lucas J, Labandeira X (2013) The price of energy efficiency in the Spanish car market. Economics for Energy. WP 02/2013

    Google Scholar 

  36. Gans W, Alberini A, Longo A (2013) Smart meter devices and the effect of feedback on residential electricity consumption: evidence from a natural experiment in Northern Ireland. Energy Econ 36:729–743

    Article  Google Scholar 

  37. Geller H, Harrington P, Rosenfeld AH, Tanishima S, Unander F (2006) Policies for increasing energy efficiency: Thirty years of experience in OECD countries. Energy Policy 34:556-573

    Google Scholar 

  38. Gillingham K, Newel RG, Palmer K (2009) Energy efficiency economics and policy. RFF DP 09-13

    Google Scholar 

  39. Gillingham K, Palmer K (2013) Bridging the energy efficiency gap. Policy insights from economic theory and empirical evidence. RFF DP 13-02-REV

    Google Scholar 

  40. Grösche P, Vance C (2009) Willingness to pay for energy conservation and free-ridership on subsidization: evidence from Germany. Energy J 30:135–154

    Article  Google Scholar 

  41. Hassett KA, Metcalf GE (1995) Energy tax credits and residential conservation investment: evidence from panel data. J Public Econ 57:201–217

    Article  Google Scholar 

  42. Houde S, Todd A, Sudarshan A, Flora JA, Carrie Armel K (2013) Real-time feedback and electricity consumption: a field experiment assessing the potential for savings and persistence. Energy Policy 34:87-102

    Google Scholar 

  43. IEA (2007) Mind the gap. Quantifying principal-agent problems in energy efficiency. OECD/IEA, Paris

    Google Scholar 

  44. IEA (2008) Energy efficiency requirements in building codes, energy efficiency policies for new buildings. OECD/IEA, Paris

    Google Scholar 

  45. IEA (2011) Energy efficiency policy and carbon pricing. OECD/IEA, Paris

    Google Scholar 

  46. IPCC (2007) Fourth assessment report of the intergovernmental panel on climate change. Cambridge University Press, Cambridge

    Google Scholar 

  47. Iwaro J, Mwasha A (2010) A review of building energy regulation and policy for energy conservation in developing countries. Energy Policy 38:7744–7755

    Article  Google Scholar 

  48. Jaffe AB, Stavins RN (1994) The energy-efficiency gap. What does it mean? Energy Policy 22:804–810

    Article  Google Scholar 

  49. Jaffe AB, Newell RG, Stavins RN (2004) Economics of Energy Efficiency. Encyclopedia of Energy 2:79–90

    Article  Google Scholar 

  50. Jessoe K, Rapson D (2013) Knowledge is (Less) power: experimental evidence from residential energy use. UCE3, Center for Energy and Environmental Economics, University of California. Working paper 046

    Google Scholar 

  51. Kwak S, Yoo S, Kwak S (2010) Valuing energy-saving measures in residential buildings: A choice experiment study. Energy Policy 38:673–677

    Article  Google Scholar 

  52. Linares P, Labandeira X (2010) Energy efficiency. Economics and policy. J Econ Survey 24:573–592

    Google Scholar 

  53. Markandya A, Ortiz R, Mudgal S, Tinetti B (2009) Analysis of tax incentives for energy efficient durables in the EU. Energy Policy 37: 5662−5674

    Google Scholar 

  54. Mourato S, Saynor B, Hart D (2004) Greening London’s black cabs: a study of driver’s preferences for fuel cell taxis. Energy Policy 32:685–695

    Article  Google Scholar 

  55. Mundaca L, Neij L (2009) A multi-criteria evaluation framework for tradable white certificate schemes. Energy Policy 37:4557–4573

    Article  Google Scholar 

  56. Mundaca L (2008) Markets for energy efficiency: Exploring the implications of an EU-wide ‘Tradable White Certificate’ scheme. Energy Econ 30:3016–3043

    Article  Google Scholar 

  57. Nadel S (2012) Energy efficiency tax incentives in the context of tax reform. Working paper. American Council for an Energy-Economy, Washington

    Google Scholar 

  58. Noailly J (2012) Improving the energy efficiency of buildings: The impact of environmental policy on technological innovation. Energy Econ 34:795–806

    Article  Google Scholar 

  59. Nolan JM, Schultz PW, Cialdini RB, Goldstein NJ, Griskevicius V (2008) Normative social influence in underdetected. Society Personal Social Psychol 34:913–923

    Article  Google Scholar 

  60. OECD (2003) Environmentally sustainable buildings: challenges and policies. OECD, Paris

    Google Scholar 

  61. OECD (2007) Instrument mixed for environmental policy. OECD, Paris

    Google Scholar 

  62. Oikonomou V, Jepma C, Becchis F, Russolillo D (2008) White certificates for energy efficiency improvement with energy taxes: A theoretical economic model. Energy Econ 30:3044–3062

    Article  Google Scholar 

  63. Popp D (2006) R&D subsidies and climate policy: is there a “free lunch”? Clim Change 77:311–341

    Article  Google Scholar 

  64. Revelt D, Train K (1998) Mixed logit with repeated choices: households’ choices of appliance efficiency level. Rev Econ Stat 80:647–657

    Article  Google Scholar 

  65. Ryan L, Ferreira S, Convery F (2009) The impact of fiscal and other measures on new passenger car sales and CO2 emissions intensity: evidence from Europe. Energy Econ 31:365–374

    Article  Google Scholar 

  66. Ryan L, Moarif S, Levina E, Baron R (2011) Energy efficiency policy and carbon pricing. Energy efficiency series, information paper. IEA, International Energy Agency, Paris

    Google Scholar 

  67. Sammer K, Wüstenhagen R (2006) The influence of eco-labelling on consumer behavior—results of a discrete choice analysis for washing machines. Bus Strategy Environ 15:185–199

    Article  Google Scholar 

  68. Ščasný M, Urban J (2009) Residential energy efficiency: a cross-country empirical analysis. Paper prepared for the OECD Conference on Household Behaviour and Environmental Policy. OECD Environment Directorate, Paris

    Google Scholar 

  69. Schultz PW, Nolan JM, Cialdini RB, Goldstein NJ, Griskevicius V (2007) Association Psychol Sci 18:429–434

    Article  Google Scholar 

  70. Sorrell S (2003) Carbon trading in the policy mix. Oxford Rev Econ Policy 19:420–437

    Article  Google Scholar 

  71. Sorrell S (2007) The rebound effect: an assessment of the evidence for economy-wide energy savings from improved energy efficiency. UK Energy Research Center Report, London

    Google Scholar 

  72. Sterner T (2007) Fuel taxes: An important instrument for climate policy. Energy Policy 35:3194–3202

    Article  Google Scholar 

  73. Sterner T (2011) Fuel taxes and the poor, the distributional effects of gasoline taxation and their implications for climate policy. RFF Press with Environment for Development initiative, Routledge

    Google Scholar 

  74. Suerkemper F, Thomas S, Osso D, Baudry P (2012) Cost-effectiveness of energy efficiency programmes. Evaluating the impacts of a regional programme in France. Energ Effi 5:121–135

    Article  Google Scholar 

  75. Thorsnes P, Williams J, Lawson R (2012) Consumer responses to time varying prices for electricity. Energy Policy 49:552–561

    Article  Google Scholar 

  76. Tinbergen J (1952) On the theory of economic policy. North Holland Publishing, Amsterdam

    Google Scholar 

  77. Train KE, Atherton T (1995) Rebates, loans, and customers’ choice of appliance efficiency level: combining stated-and revealed-preference data. Energy J 16:55–70

    Article  Google Scholar 

  78. Wesselink B, Harmsen R, Eichhammer W (2010) Energy savings 2020. How to triple the impact of energy savings in Europe. Final version. A contributing study to Roadmap 2050: A practical guide to a prosperous Low-carbon Europe. ECOFYS and Fraunhofer

    Google Scholar 

  79. Yoshira J, Sugiura A (2011) Which ‘Greenness’ is valued? Evidence from Green Condominiums in Tokyo. Working Paper. Pennsylvania State University and Tokyo Association of Real Estate Appraisers

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Basque Centre for Climate Change (BC3), Bilbao, Spain

    Anil Markandya

  2. University of Vigo and Economics for Energy, Vigo, Spain

    Xavier Labandeira & Ana Ramos

Authors
  1. Anil Markandya
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Xavier Labandeira
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Ana Ramos
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Anil Markandya .

Editor information

Editors and Affiliations

  1. University of the Basque Country, Bilbao, Spain

    Alberto Ansuategi

  2. Basque Centre for Climate Change(BC3), Bilbao, Spain

    Juan Delgado

  3. Basque Centre for Climate Change (BC3), Bilbao, Spain

    Ibon Galarraga

Rights and permissions

Reprints and permissions

Copyright information

© 2015 Springer International Publishing Switzerland

About this chapter

Cite this chapter

Markandya, A., Labandeira, X., Ramos, A. (2015). Policy Instruments to Foster Energy Efficiency. In: Ansuategi, A., Delgado, J., Galarraga, I. (eds) Green Energy and Efficiency. Green Energy and Technology. Springer, Cham. https://doi.org/10.1007/978-3-319-03632-8_4

Download citation

  • DOI: https://doi.org/10.1007/978-3-319-03632-8_4

  • Published:

  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-319-03631-1

  • Online ISBN: 978-3-319-03632-8

  • eBook Packages: EnergyEnergy (R0)

Publish with us

Policies and ethics

Search

Navigation