Energy Efficiency Policy and Market Failures

Levine, Mark

doi:10.1146/annurev.energy.20.1.535

Cited by 10 publications

(13 citation statements)

References 10 publications

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“…This TCE reasoning adds an important explanatory (yet similar) aspect to the existing discussion on barriers to EE investments, which focuses on the prohibitive effect of high upfrontinvestments (Vine et al, 2003) and on the phenomenon of short payback periods stipulated by investors in energy efficiency measures (see DeCanio, 1993;Blumstein et al, 1980;Fisher and Rothkopf, 1989;Koomey, 1990, Levine et al, 1995, Stern and Aronson, 1984, Bhattacharjee, 1993). …”

Section: Specificity Of Energy Efficiency Investmentsmentioning

confidence: 93%

06/01465 How much market do market-based instruments create? An analysis for the case of `white' certificates

Langniß

Praetorius

2006

Fuel and Energy Abstracts

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu Terms of use: Documents in AbstractIn the context of economic instruments for more energy efficiency and climate protection, tradable certificates have been investigated for renewable energy and for a number of emissions. In contrast, tradable energy efficiency -or "white" -certificates have only lately been considered as a market-based tool to foster energy efficiency as compared to standards and labelling, for example. Theoretically, there is little doubt about the advantages. In practice, however, some fundamental problems arise. Critical issues are the design of an efficient artificial market for "white" certificates, its compatibility with the European emissions trading system, the identification of a suitable target group for an energy efficiency obligation and the measurement of energy savings as compared to a reference use of energy. We use the theoretical framework of Transaction Cost Economics to elaborate these issues. We conclude that transaction costs and investment specificity will restrict markets for "white" certificates in practise. Long-term contracts rather than spot trade will be the prevailing form of governance for energy efficiency investments.

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Section: Specificity Of Energy Efficiency Investmentsmentioning

confidence: 93%

06/01465 How much market do market-based instruments create? An analysis for the case of `white' certificates

Langniß

Praetorius

2006

Fuel and Energy Abstracts

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“…It is a well accepted truth that a range of market barriers adversely impact energy efficiency in the built environment [1][2][3][4][5][6]. Among these barriers, the low priority of energy issues, lack of information, upfront cost barriers, and split incentives are particularly relevant to attempts to retrofit existing dwellings [7][8][9].…”

Section: Barriers To Effective Retrofit Programsmentioning

confidence: 99%

Grants versus Financing for Domestic Retrofits: A Case Study from Efficiency Maine

Gillich

2013

Sustainability

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Any attempts to limit the impacts of climate change must maximize the potential for energy efficiency in existing dwellings. Retrofitting the existing stock of aging and inefficient dwellings is a challenge on many fronts. A number of programs have been put in place to encourage domestic retrofits by reducing barriers such as the upfront costs and access to capital. While many such programs are delivering positive results, there is much uncertainty regarding what constitutes success, as well as the long term cost effectiveness of various approaches. Geographic, demographic, and programmatic differences frequently cloud the ability to make comparisons across programs. This work examines a case study from Efficiency Maine in the United States, in which a grant program transitioned to a financing program. The grant program was highly popular and delivered significant energy savings, but used considerable public funds. The financing program reaches fewer homeowners, but delivers larger retrofit projects per homeowner, and leverages private investment with smaller public expenditures. Which of the two programs can be considered more successful? This work explores the methods of assessing this question and offers the author's perspectives.

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“…The literature suggests market failures are the main cause of the slow spread of energy efficiency. Examples of such barriers include adaptation, lack of public concern for energy issues and limited information (Jaffe and Stavins 1994;Levine et al 1995). In addition, behavioral anomalies, such as risk aversion, inertia or routines and habits, affect energy use (Rohdin et al 2007;Wilson and Dowlatabadi 2007).…”

Section: Pro-environmental Behavior Consumption and The Environmentmentioning

confidence: 99%

Environmental Policy Theory Given Bounded Rationality and Other-regarding Preferences

Gsottbauer

Bergh

2010

Environ Resource Econ

114

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Established environmental policy theory is based on the assumption of homo economicus. This means that people are seen as fully rational and acting in a self-regarding manner. In line with this, economics emphasizes efficient policy solutions and the associated advantages of price incentives. Behavioral economics offers alternative, more realistic views on individual behavior. In this paper we investigate opportunities to integrate bounded rationality and other-regarding preferences into environmental policy theory to arrive at recommendations for more effective policies. For this purpose, we will address decisions made under risk and uncertainty, intertemporal choice, decision heuristics, other-regarding preferences, heterogeneity, evolutionary selection of behaviors, and the role of happiness. Three aspects of environmental policy are considered in detail, namely sustainable consumption, environmental valuation and policy design. We pay special attention to the role of non-pecuniary, informative instruments and illustrate the implications for climate policy.

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Energy Efficiency Policy and Market Failures

Cited by 10 publications

References 10 publications

06/01465 How much market do market-based instruments create? An analysis for the case of `white' certificates

06/01465 How much market do market-based instruments create? An analysis for the case of `white' certificates

Grants versus Financing for Domestic Retrofits: A Case Study from Efficiency Maine

Environmental Policy Theory Given Bounded Rationality and Other-regarding Preferences

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