IDEAS home Printed from https://ideas.repec.org/a/aen/journl/ej41-si1-giraudet.html
   My bibliography  Save this article

Selling and Saving Energy: Energy Efficiency Obligations in Liberalized Energy Markets

Author

Listed:
  • Louis-Gaëtan Giraudet, Matthieu Glachant, and Jean-Philippe Nicolaï

Abstract

In Europe, energy efficiency obligations are imposed on energy retailers competing in liberalized energy markets. They comply by subsidizing energy efficiency investments made by energy end-users from within or outside their customer base. We develop a model describing how competition in the energy market affects compliance strategies. We find that, instead of selecting the most cost-effective investments options, firms may either target their most elastic customers, which enables them to increase their retail price, or their competitor's customers, which protects their sales. Allowing firms to trade obligations can restore cost-effectiveness, but reduces consumer surplus. Overall, the degree of flexibility that should be incorporated into such programs crucially depends on the degree of heterogeneity across investment costs and the relative weights governments assign to cost-effectiveness and consumer surplus.

Suggested Citation

  • Louis-Gaëtan Giraudet, Matthieu Glachant, and Jean-Philippe Nicolaï, 2020. "Selling and Saving Energy: Energy Efficiency Obligations in Liberalized Energy Markets," The Energy Journal, International Association for Energy Economics, vol. 0(Special I).
  • Handle: RePEc:aen:journl:ej41-si1-giraudet
    as

    Download full text from publisher

    File URL: http://www.iaee.org/en/publications/ejarticle.aspx?id=3683
    Download Restriction: Access to full text is restricted to IAEE members and subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kenneth Gillingham & Karen Palmer, 2014. "Bridging the Energy Efficiency Gap: Policy Insights from Economic Theory and Empirical Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 8(1), pages 18-38, January.
    2. Wirl, Franz, 2015. "White certificates — Energy efficiency programs under private information of consumers," Energy Economics, Elsevier, vol. 49(C), pages 507-515.
    3. Meredith Fowlie & Michael Greenstone & Catherine Wolfram, 2018. "Do Energy Efficiency Investments Deliver? Evidence from the Weatherization Assistance Program," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(3), pages 1597-1644.
    4. Louis-Gaëtan Giraudet & Philippe Quirion, 2008. "Efficiency and distributional impacts of tradable white certificates compared to taxes, subsidies and regulations," Revue d'économie politique, Dalloz, vol. 118(6), pages 885-914.
    5. Paul Klemperer, 1995. "Competition when Consumers have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 62(4), pages 515-539.
    6. Gilbert E. Metcalf & Kevin A. Hassett, 1999. "Measuring The Energy Savings From Home Improvement Investments: Evidence From Monthly Billing Data," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 516-528, August.
    7. Paul L. Joskow & Donald B. Marron, 1992. "What Does a Negawatt Really Cost? Evidence from Utility Conservation Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 41-74.
    8. Louis-Gaetan Giraudet and Dominique Finon, 2015. "European experiences with white certifirecate obligations: A critical review of existing evaluations," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    9. repec:aen:journl:eeep4_1_giraudet is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Darmais, Amélie & Glachant, Matthieu & Kahn, Victor, 2024. "Social equity provisions in energy efficiency obligations: An ex-post analysis of the French program," Energy Policy, Elsevier, vol. 195(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Katrina Jessoe, Maya Papineau, and David Rapson, 2020. "Utilities Included: Split Incentives in Commercial Electricity Contracts," The Energy Journal, International Association for Energy Economics, vol. 0(Number 5), pages 271-303.
    2. Ben Gilbert & Jacob LaRiviere & Kevin Novan, 2019. "Additionality, Mistakes, and Energy Efficiency Investment," Working Papers 2019-01, Colorado School of Mines, Division of Economics and Business.
    3. Giraudet, Louis-Gaëtan, 2020. "Energy efficiency as a credence good: A review of informational barriers to energy savings in the building sector," Energy Economics, Elsevier, vol. 87(C).
    4. Louis-Gaëtan Giraudet & Antoine Missemer, 2023. "The History of Energy Efficiency in Economics: Breakpoints and Regularities," Post-Print halshs-02301636, HAL.
    5. Lauren Giandomenico & Maya Papineau & Nicholas Rivers, 2022. "A Systematic Review of Energy Efficiency Home Retrofit Evaluation Studies," Annual Review of Resource Economics, Annual Reviews, vol. 14(1), pages 689-708, October.
    6. Lang, Ghislaine & Lanz, Bruno, 2022. "Climate policy without a price signal: Evidence on the implicit carbon price of energy efficiency in buildings," Journal of Environmental Economics and Management, Elsevier, vol. 111(C).
    7. Fischbacher, Urs & Schudy, Simeon & Teyssier, Sabrina, 2021. "Heterogeneous preferences and investments in energy saving measures," Resource and Energy Economics, Elsevier, vol. 63(C).
    8. Meredith Fowlie & Michael Greenstone & Catherine Wolfram, 2018. "Do Energy Efficiency Investments Deliver? Evidence from the Weatherization Assistance Program," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 133(3), pages 1597-1644.
    9. Pedro Linares & Xavier Labandeira, 2010. "Energy Efficiency: Economics And Policy," Journal of Economic Surveys, Wiley Blackwell, vol. 24(3), pages 573-592, July.
    10. Louis-Gaëtan Giraudet & Antoine Missemer, 2019. "The Economics of Energy Efficiency, a Historical Perspective," CIRED Working Papers halshs-02301636, HAL.
    11. Bourgeois, Cyril & Giraudet, Louis-Gaëtan & Quirion, Philippe, 2021. "Lump-sum vs. energy-efficiency subsidy recycling of carbon tax revenue in the residential sector: A French assessment," Ecological Economics, Elsevier, vol. 184(C).
    12. Matthew J. Kotchen, 2015. "Do Building Energy Codes Have a Lasting Effect on Energy Consumption? New Evidence From Residential Billing Data in Florida," NBER Working Papers 21398, National Bureau of Economic Research, Inc.
    13. Louis-Gaëtan Giraudet & Sébastien Houde, 2015. "Double Moral Hazard and the Energy Efficiency Gap," Working Papers hal-01260907, HAL.
    14. Louis-Gaëtan Giraudet & Sébastien Houde, 2014. "Double moral hazard and the energy efficiency gap," Working Papers hal-01016109, HAL.
    15. Davis, Lucas & Martinez, Sebastian & Taboada, Bibiana, 2018. "How Effective is Energy-efficient Housing?: Evidence From a Field Experiment in Mexico," IDB Publications (Working Papers) 8767, Inter-American Development Bank.
    16. Judson Boomhower & Lucas Davis, 2020. "Do Energy Efficiency Investments Deliver at the Right Time?," American Economic Journal: Applied Economics, American Economic Association, vol. 12(1), pages 115-139, January.
    17. Louis-Gaëtan Giraudet & S. Houde, 2013. "Double moral hazard and the energy efficiency gap," Post-Print hal-00799725, HAL.
    18. Jens Ewald & Thomas Sterner & Eoin Ó Broin & Érika Mata, 2021. "Saving energy in residential buildings: the role of energy pricing," Climatic Change, Springer, vol. 167(1), pages 1-20, July.
    19. Louis-Gaëtan Giraudet & Sébastien Houde & Joseph Maher, 2018. "Moral Hazard and the Energy Efficiency Gap: Theory and Evidence," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(4), pages 755-790.
    20. Davis, Lucas W. & Martinez, Sebastian & Taboada, Bibiana, 2020. "How effective is energy-efficient housing? Evidence from a field trial in Mexico," Journal of Development Economics, Elsevier, vol. 143(C).

    More about this item

    JEL classification:

    • F0 - International Economics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aen:journl:ej41-si1-giraudet. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: David Williams (email available below). General contact details of provider: https://edirc.repec.org/data/iaeeeea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.