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Utility Rebates for ENERGY STAR Appliances: Are They Effective?

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Author Info

  • Souvik Datta

    ()
    (Centre for Energy Policy and Economics (CEPE), Department of Management, Technology and Economics, ETH Zurich, Switzerland)

  • Sumeet Gulati

    ()
    (Faculty of Land and Food Systems, University of British Columbia, Canada)

Abstract

In this paper we estimate the increase in the market share of ENERGY STAR-qualified appliances that can be attributed to targetted cash rebates offered by utility companies. To estimate the impact of these incentives we use the variation in timing and size of the utility rebates across the US states. We then use these estimates along with information on the average energy saved by using an ENERGY STAR appliance relative to a non-ENERGY STAR appliance to provide an estimate on the cost per tonne of carbon saved by the rebate program. Our results show that a dollar increase in the rebate leads to a 0.3% increase in the share of ENERGY STAR-qualified clothes washers while the effect of rebates is not significant for dishwashers and refrigerators. Assuming a redemption rate of 40%, we calculate the cost of saving a tonne of carbon through the clothes washer rebate program to be around $158. The corresponding cost of a megawatt hour saved (about $32), is lower than the estimated cost of building and operating an additional power plant and the average on-peak spot price. We conclude that the ENERGY STAR clothes washers rebate programs are a cost-effective way for utilities to reduce energy demand.

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Bibliographic Info

Paper provided by CEPE Center for Energy Policy and Economics, ETH Zurich in its series CEPE Working paper series with number 11-81.

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Length: 24 pages
Date of creation: Dec 2011
Date of revision:
Handle: RePEc:cee:wpcepe:11-81

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Related research

Keywords: Eco-labelling; energy efficiency; appliances; utility rebates; carbon saving; energy saving;

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References

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  1. Toshi H. Arimura, Shanjun Li, Richard G. Newell, and Karen Palmer, 2012. "Cost-Effectiveness of Electricity Energy Efficiency Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2).
  2. Nadel, Steven & Geller, Howard, 1996. "Utility DSM : What have we learned? Where are we going?," Energy Policy, Elsevier, vol. 24(4), pages 289-302, April.
  3. B. Howarth, Richard & Haddad, Brent M. & Paton, Bruce, 2000. "The economics of energy efficiency: insights from voluntary participation programs," Energy Policy, Elsevier, vol. 28(6-7), pages 477-486, June.
  4. Webber, C. A. & Brown, R. E. & Koomey, J., 2000. "Savings estimates for the E S(R) voluntary labeling program," Energy Policy, Elsevier, vol. 28(15), pages 1137-1149, December.
  5. William D. Nordhaus, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 686-702, September.
  6. Mark E Schaffer & Steven Stillman, 2006. "XTOVERID: Stata module to calculate tests of overidentifying restrictions after xtreg, xtivreg, xtivreg2, xthtaylor," Statistical Software Components S456779, Boston College Department of Economics, revised 02 Nov 2011.
  7. Gallagher, Kelly Sims & Muehlegger, Erich, 2008. "Giving Green to Get Green: Incentives and Consumer Adoption of Hybrid Vehicle Technology," Working Paper Series rwp08-009, Harvard University, John F. Kennedy School of Government.
  8. Lucas W. Davis, 2008. "Durable goods and residential demand for energy and water: evidence from a field trial," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 530-546.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Utility Rebates for ENERGY STAR Appliances: Are They Effective?
    by Environmental Valuation and Cost-Benefit News in Environmental Valuation & Cost-Benefit News on 2012-06-07 02:07:00
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Cited by:
  1. Rocha, Luiz Eduardo Vasconcelos & Bastos, Patricia De Melo Abrita & Santos, Gilnei Costa, 2006. "Evolução Da Distribuição Da Renda E Da Pobreza Das Famílias Ocupadas E Residentes No Meio Rural Do Estado De Minas Gerais, De 1981 A 2003," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 148649, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
  2. ALVES, MARIA ODETE & VALENTE, AIRTON SABOYA Jr, 2006. "Comunicação Rural Entre Três Atores Nas Áreas De Concentração De Fruteiras No Nordeste Brasileiro:," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 148515, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
  3. Galarraga, Ibon & Abadie, Luis M. & Ansuategi, Alberto, 2013. "Efficiency, effectiveness and implementation feasibility of energy efficiency rebates: The “Renove” plan in Spain," Energy Economics, Elsevier, vol. 40(S1), pages S98-S107.
  4. Leite, Sheila Cristina Ferreira & De Figueiredo, Margarida Garcia, 2006. "Fluxos De Algodão Em Pluma Para Exportação No Estado Da Bahia: Uma Aplicação De Programação Linear," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 149116, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
  5. Santos, Jair Carvalho Dos, 2006. "Estimativa De Custo De Coleta E Rentabilidade Para Sistema Extrativo De Latex De Seringueira Na Amazonia," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 145689, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
  6. Li, Xiaogu & Clark, Christopher D & Jensen, Kimberly L & Yen, Steven T, 2013. "The Effect of Mail-in Utility Rebates on Willingness-to-Pay for ENERGY STAR® Certified Refrigerators," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 159795, Southern Agricultural Economics Association.
  7. Massuquetti, Angelica, 2006. "Algumas Reflexões Acerca Do Espaço De Investigação Sobre O," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 149051, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
  8. Souvik Datta & Massimo Filippini, 2012. "Analysing the Impact of ENERGY STAR Rebate Policies in the US," CEPE Working paper series 12-86, CEPE Center for Energy Policy and Economics, ETH Zurich.

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