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Social Benefits of Financial Investment Support in Energy Conservation Policy

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  • Torleif Haugland

Abstract

This paper examines the costs and benefits of a Norwegian energy conservation program that provided financial support for investments in energy efficiency. Participants in the program included industry, commerce, public services and households. Evaluation of the program shows that about 70% of the participants were "free riders' who would have invested in efficiency improvements even in the absence of the program. The economic efficiency was further reduced by economic distortions caused by taxes needed to finance the program. However, the energy savings did give environmental benefits through reduced atmospheric emissions, although this effect was somewhat diluted through a "conservation rebound," where the actual reduction in energy consumption was less than the theoretical savings. The energy conservation program is also highly sensitive to assumptions about the economic lifetime of the investments.

Suggested Citation

  • Torleif Haugland, 1996. "Social Benefits of Financial Investment Support in Energy Conservation Policy," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 79-102.
    • Handle: RePEc:aen:journl:1996v17-02-a05
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    Cited by:

    1. Dulleck, Uwe & Kaufmann, Sylvia, 2004. "Do customer information programs reduce household electricity demand?--the Irish program," Energy Policy, Elsevier, vol. 32(8), pages 1025-1032, June.
    2. Aalbers, R.F.T. & Vollebergh, H.R.J. & de Groot, H.L.F., 2011. "Reducing Rents from Energy Technology Adoption Programs by Exploiting Observable Information," Discussion Paper 2011-109, Tilburg University, Center for Economic Research.
    3. Wirl, Franz, 2015. "White certificates — Energy efficiency programs under private information of consumers," Energy Economics, Elsevier, vol. 49(C), pages 507-515.
    4. Sjodin, Jorgen & Gronkvist, Stefan, 2004. "Emissions accounting for use and supply of electricity in the Nordic market," Energy Policy, Elsevier, vol. 32(13), pages 1555-1564, September.
    5. Grepperud, Sverre & Rasmussen, Ingeborg, 2004. "A general equilibrium assessment of rebound effects," Energy Economics, Elsevier, vol. 26(2), pages 261-282, March.
    6. Vennemo, Haakon & Halseth, Arve, 2001. "Environmental regulation of a power investment in an international market," Resource and Energy Economics, Elsevier, vol. 23(2), pages 157-173, April.
    7. Kelly, Geoff, 2012. "Sustainability at home: Policy measures for energy-efficient appliances," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(9), pages 6851-6860.
    8. McGilligan, Charles & Sunikka-Blank, Minna & Natarajan, Sukumar, 2010. "Subsidy as an agent to enhance the effectiveness of the energy performance certificate," Energy Policy, Elsevier, vol. 38(3), pages 1272-1287, March.

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    JEL classification:

    • F0 - International Economics - - General

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