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The structure of energy efficiency investment in the UK households and its average monetary and environmental savings

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  • Tovar, Miguel A.

Abstract

Socioeconomic and behavioural variables that influence the household’s adoption of energy efficiency measures such as cavity and loft insulation and upgrades to the boiler are identified, contrary to previous literature. By extending Brechling and Smith’s (1994) and Hassett and Metcalf's (1995) models, it is shown that the application of the Energy Act 2011, which contains provisions on the Green Deal, the new Energy Company Obligation (ECO) and the private rented sector, needs to follow a tailored strategy to reach the low adoption households identified by my model. Moreover, for the current adopters of the analysed measures, average monetary and environmental adoption benefits are estimated based on Parti and Parti’s (1980) demand model. These estimates are smaller than their expected values showing an important energy efficiency gap in the sector. Particularly low cost measures can bring important savings that can help to meet the "pay as you save" rule (i.e., the Golden rule) of the new regulation. My model also shows that a poor state of dwelling repair can reduce the adoption benefits increasing the need of subsidies that will be financed through consumer’s energy bills. However, this can increase the number of households in fuel poverty.

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  • Tovar, Miguel A., 2012. "The structure of energy efficiency investment in the UK households and its average monetary and environmental savings," Energy Policy, Elsevier, vol. 50(C), pages 723-735.
    • Handle: RePEc:eee:enepol:v:50:y:2012:i:c:p:723-735
    DOI: 10.1016/j.enpol.2012.08.019
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    4. Webber, Phil & Gouldson, Andy & Kerr, Niall, 2015. "The impacts of household retrofit and domestic energy efficiency schemes: A large scale, ex post evaluation," Energy Policy, Elsevier, vol. 84(C), pages 35-43.
    5. Tovar Reaños, Miguel A. & Wölfing, Nikolas M., 2018. "Household energy prices and inequality: Evidence from German microdata based on the EASI demand system," Energy Economics, Elsevier, vol. 70(C), pages 84-97.
    6. Sylwia Słupik & Joanna Kos-Łabędowicz & Joanna Trzęsiok, 2021. "Energy-Related Behaviour of Consumers from the Silesia Province (Poland)—Towards a Low-Carbon Economy," Energies, MDPI, vol. 14(8), pages 1-23, April.
    7. Peñasco, Cristina & Anadón, Laura Díaz, 2023. "Assessing the effectiveness of energy efficiency measures in the residential sector gas consumption through dynamic treatment effects: Evidence from England and Wales," Energy Economics, Elsevier, vol. 117(C).
    8. Cellini, Stefano, 2021. "Split incentives and endogenous inattention in home retrofits uptake: a story of selection on unobservables?," Energy Economics, Elsevier, vol. 104(C).
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