Free riding and rebates for residential energy efficiency upgrades: A multi-country contingent valuation experiment

Olsthoorn, Mark; Schleich, Joachim; Gassmann, Xavier; Faure, Corinne

doi:10.1016/j.eneco.2018.01.007

Cited by 30 publications

(17 citation statements)

References 34 publications

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“…It is quite possible that an incentive has high effectiveness from an end-user's point of view but has a low effectiveness from the society's or program administrator's perspective. Researchers have evaluated effectiveness from the end-users, society and government perspectives [ 10 , 11 , 144 , 145 , 148 , [165] , [166] , [167] , [168] , [169] ]; technical, program administrator and multiple stakeholders perspectives [ 8 , 45 , [170] , [171] , [172] , [173] , [174] , [175] ]; and micro-economic (end-users) and macro-economic (societal) perspectives [ 176 , 177 ].…”

Section: Effectiveness Of Financial Incentivesmentioning

confidence: 99%

“… Split incentives Particularly important in rental housings where interests of two parties conflict and neither the landlord (due to low ROI) nor the tenant (high initial costs) wants to invest in energy efficiency upgrade [ 119 , [196] , [197] , [198] ] Weak incentives Lack of attractive amount of incentive and connection between the government budget and the energy target needed to be achieved by FIs [ 9 , 11 , 197 , 199 ] Time of implementation Application of FIs at wrong time [ 200 ] Negative impacts of FIs interaction Mitigating impacts are negative interaction between two policy instruments that result in reduced savings [ [201] , [202] , [203] , [204] ] Behavioral impacts Low priority towards energy efficiency (Low resource consumption culture present in most developed countries makes it difficult for FIs to be successful) Free riders (Free-riders are consumers who would have performed energy upgrade regardless of introduction of FIs.) Non-takers (Non-takers are consumers who do not perform energy upgrade even with the introduction of FIs) Rebound effect (Rebound effect results in less energy savings compared to expected due to introduction of FIs and is a source of energy efficiency gap) [ 11 , 21 , 145 , 148 , 163 , 169 , 175 , 191 , 199 ] Other Barriers Tax exemptions High initial investment Long payback periods Transaction costs Limited...…”

Section: Effectiveness Of Financial Incentivesmentioning

confidence: 99%

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Evaluation of financial incentives for green buildings in Canadian landscape

Rana

Sadiq

Alam

et al. 2021

Renewable and Sustainable Energy Reviews

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Financial Incentives (FIs) for green buildings are a major component of energy policy planning and play a vital role in the promotion of sustainable development and carbon mitigation strategies. Despite the presence of numerous FIs in Canada, there is still a lack of understanding on their distribution and effectiveness. This review first investigates the FIs available for residential and commercial buildings in Canada, and then performs a comprehensive review of studies related to FIs’ effectiveness evaluation. It is found that FIs for buildings in Canada can be distributed into four categories: tax, loans, grants, and rebates. Among these, rebates from utility providers are the most common and are administered in all provinces. In addition to these, special incentives are available for three end-users (low-income, aboriginal people, landlords and tenants) and for three types of buildings (heritage, non-profit and energy rated). A clear contrast is observed on FIs offered in three regulatory regimes (Federal, provincial and municipal). Four provinces (Alberta, British Columbia, Ontario and Quebec) are leading in green building efforts. The in-depth literature review was also used to develop an understanding on the criteria used in effectiveness evaluation and the factors impacting effectiveness. Based on the findings of different studies on FIs effectiveness, a generic approach for evaluation of FIs is proposed that can help in deploying successful FIs programs. The results of this review are of importance to the policymakers, government authorities, and utilities engaged in designing and improving FIs for energy efficient buildings.

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Section: Effectiveness Of Financial Incentivesmentioning

confidence: 99%

Section: Effectiveness Of Financial Incentivesmentioning

confidence: 99%

Evaluation of financial incentives for green buildings in Canadian landscape

Rana

Sadiq

Alam

et al. 2021

Renewable and Sustainable Energy Reviews

View full text Add to dashboard Cite

show abstract

“…Given costs, decisions strongly depend on the assumed value of b. In choice experiments Olsthoorn et al (2017) find that the mean payback threshold for a premature replacement of space heating systems is as low as 3±1 years, while Newell and Siikamäki (2015) report a mean threshold of 3-5 years.…”

Section: Premature Replacementsmentioning

confidence: 99%

“…The right panel shows the marginal running costs of fossil fuel heating, compared to full payback costs for renewable technologies (assuming a payback period of three years). Choice experiments on the behavioural decision-making of households indicate that as long as the former do not exceed the latter, households would not consider a premature replacement, even if it would be highly profitable from an outside perspective (Newell and Siikamäki, 2015;Olsthoorn et al, 2017). The combined effect of the 50-200€/tCO 2 fuel and 50% subsidy on renewables is just large enough (despite translating into much larger differences in levelised costs): after 2020, the fuel savings from replacing an oil or gas system by renewables increasingly exceeds the necessary investment in less than three years, potentially incentivizing the scrapping of fossil fuel capacities before they reach the end of their rated technological lifetime.…”

Section: Dynamics In An Exemplary Decarbonisation Scenariomentioning

confidence: 99%

Simulating the deep decarbonisation of residential heating for limiting global warming to 1.5 °C

et al. 2018

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Whole-economy scenarios for limiting global warming to 1.5°C suggest that direct carbon emissions in the buildings sector should decrease to almost zero by 2050, but leave unanswered the question how this could be achieved by real-world policies. We simulate which policy measures could induce an almost complete decarbonisation of residential heating, the by far largest source of direct emissions in residential buildings. Under which assumptions is it possible, and how long would it take? We use the non-equilibrium bottom-up model FTT:Heat to simulate policies for a transition towards low-carbon heating in a context of inertia and bounded rationality, focusing on the uptake of heating systems. Our results indicate that the near-zero decarbonisation is achievable by 2050, but requires substantial policy efforts. We find that policy mixes are more effective for incentivising the uptake of fuelefficient low-carbon technologies, compared to a residential carbon tax as the only policy. In combination with subsidies and procurement policies for renewables, near-complete decarbonisation could be achieved with a tax of 50-200 €/tCO 2. Without being complimented by additional policies, carbon taxes show a decreasing marginal impact on total emission reductions, thus remaining insufficient for deep decarbonisation. In all scenarios, the decarbonisation of heating would increase projected heating costs faced by households initially, but could lead to cost reductions in most world regions in the medium term. We show that the potential impacts of policies highly depend on behavioural decisionmaking by households, especially in a context of deep decarbonisation and rapid transformation.

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“…Oechssler et al (2009), as well as Hoppe and Kusterer (2011), find that individuals with low CRT scores are more likely to be affected by behavioral biases, such as anchoring and overconfidence. In their analysis on the effects of free-riding on a rebate program for heating systems, Olsthoorn et al (2017) include cognitive reflection as a control variable, finding that respondents with a higher level of cognitive reflection demand higher rebates and are less prone to be free riders.…”

Section: Introductionmentioning

confidence: 99%

Cognitive reflection and the valuation of energy efficiency

2019

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Based on a stated-choice experiment among about 3,600 German household heads on the purchase of electricity-using durables, this paper explores the impact of cognitive reflection on consumers' valuation of energy efficiency, as well as its interaction with consumers' response to the EU energy label. Using a standard cognitive reflection test, our results indicate that consumers with low cognitive reflection scores value energy efficiency less than those with high scores. Furthermore, we find that consumers with a low level of cognitive reflection respond more strongly to grade-like energy efficiency classes than to detailed information on annual energy use.

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Free riding and rebates for residential energy efficiency upgrades: A multi-country contingent valuation experiment

Cited by 30 publications

References 34 publications

Evaluation of financial incentives for green buildings in Canadian landscape

Evaluation of financial incentives for green buildings in Canadian landscape

Simulating the deep decarbonisation of residential heating for limiting global warming to 1.5 °C

Cognitive reflection and the valuation of energy efficiency

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