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Analysis of tax incentives for energy-efficient durables in the EU

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  • Markandya, Anil
  • Ortiz, Ramon Arigoni
  • Mudgal, Shailendra
  • Tinetti, Benoit

Abstract

Climate change is one of the most significant challenges faced by societies this century. Energy consumption is directly associated with CO2 emissions and climate change. The European Commission has set out emission reduction targets that require a great deal of energy consumption savings in the next 10 years in European countries. This paper presents the results of an analysis of the potential cost-effectiveness of different policy options aimed to foster the production and consumption of energy-efficient appliances in different European countries. Our results suggest that incentives to promote the use of energy-efficient appliances can be cost-effective, but whether or not they are depends on the particular country and the options under consideration. From the cases considered, tax credits on boilers appear to be a cost-effective option in Denmark and Italy, while subsidies on CFLi bulbs in France and Poland are cost-effective in terms of [euro]/ton of CO2 abated. Comparing the subsidies against the energy tax options, we find that the subsidies are in most cases less cost-effective than the energy tax.

Suggested Citation

  • Markandya, Anil & Ortiz, Ramon Arigoni & Mudgal, Shailendra & Tinetti, Benoit, 2009. "Analysis of tax incentives for energy-efficient durables in the EU," Energy Policy, Elsevier, vol. 37(12), pages 5662-5674, December.
    • Handle: RePEc:eee:enepol:v:37:y:2009:i:12:p:5662-5674
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    2. Ibon Galarraga & David Heres Del Valle & Mikel González-Eguino, 2011. "Price Premium for High-Efficiency Refrigerators and Calculation of Price-Elasticities for Close-Substitutes: Combining Hedonic Pricing and Demand Systems," Working Papers 2011-07, BC3.
    3. Mahlia, T.M.I. & Tohno, S. & Tezuka, T., 2013. "International experience on incentive program in support of fuel economy standards and labelling for motor vehicle: A comprehensive review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 18-33.
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    5. Woojae Kim & Sungmin Ko & Myoungjin Oh & Ie-jung Choi & Jungwoo Shin, 2019. "Is an Incentive Policy for Energy Efficient Products Effective for Air Purifiers? The Case of South Korea," Energies, MDPI, vol. 12(9), pages 1-14, May.
    6. Sun, Chuanwang & Zhan, Yanhong & Du, Gang, 2020. "Can value-added tax incentives of new energy industry increase firm's profitability? Evidence from financial data of China's listed companies," Energy Economics, Elsevier, vol. 86(C).
    7. Villca-Pozo, Milenka & Gonzales-Bustos, Juan Pablo, 2019. "Tax incentives to modernize the energy efficiency of the housing in Spain," Energy Policy, Elsevier, vol. 128(C), pages 530-538.
    8. Handing Guo & Wanzhen Qiao & Jiren Liu, 2019. "Dynamic Feedback Analysis of Influencing Factors of Existing Building Energy-Saving Renovation Market Based on System Dynamics in China," Sustainability, MDPI, vol. 11(1), pages 1-16, January.
    9. Galarraga, Ibon & Abadie, Luis M. & Kallbekken, Steffen, 2016. "Designing incentive schemes for promoting energy-efficient appliances: A new methodology and a case study for Spain," Energy Policy, Elsevier, vol. 90(C), pages 24-36.
    10. Abadie, Luis M. & Ortiz, Ramon A. & Galarraga, I., 2012. "Determinants of energy efficiency investments in the US," Energy Policy, Elsevier, vol. 45(C), pages 551-566.
    11. Francesco, Tinti & Annamaria, Pangallo & Martina, Berneschi & Dario, Tosoni & Dušan, Rajver & Simona, Pestotnik & Dalibor, Jovanović & Tomislav, Rudinica & Slavisa, Jelisić & Branko, Zlokapa & Attilio, 2016. "How to boost shallow geothermal energy exploitation in the adriatic area: the LEGEND project experience," Energy Policy, Elsevier, vol. 92(C), pages 190-204.
    12. Curtin, Joseph & McInerney, Celine & Ó Gallachóir, Brian, 2017. "Financial incentives to mobilise local citizens as investors in low-carbon technologies: A systematic literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 534-547.
    13. Muhammad Mushafiq & Muzammil Muhammad Khan Arisar & Hanan Tariq & Stanislaw Czapp, 2023. "Energy Efficiency and Economic Policy: Comprehensive Theoretical, Empirical, and Policy Review," Energies, MDPI, vol. 16(5), pages 1-22, March.
    14. Yu, Min & Cruz, Jose M. & Li, Dong & Masoumi, Amir H., 2022. "A multiperiod competitive supply chain framework with environmental policies and investments in sustainable operations," European Journal of Operational Research, Elsevier, vol. 300(1), pages 112-123.
    15. Anil Markandya & Xavier Labandeira & Ana Ramos, 2013. "Policy Instruments to Foster Energy Efficiency," Working Papers 01-2014, Economics for Energy.
    16. Satoshi Nakano & Ayu Washizu, 2017. "Changes in consumer behavior as a result of the Home Appliance Eco-Point System: an analysis based on micro data from the Family Income and Expenditure Survey," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(3), pages 459-482, July.
    17. Rana, Anber & Sadiq, Rehan & Alam, M. Shahria & Karunathilake, Hirushie & Hewage, Kasun, 2021. "Evaluation of financial incentives for green buildings in Canadian landscape," Renewable and Sustainable Energy Reviews, Elsevier, vol. 135(C).
    18. Panzone, Luca A., 2013. "Saving money vs investing money: Do energy ratings influence consumer demand for energy efficient goods?," Energy Economics, Elsevier, vol. 38(C), pages 51-63.
    19. Genovaitė Liobikienė & Mindaugas Butkus & Kristina Matuzevičiūtė, 2019. "The Contribution of Energy Taxes to Climate Change Policy in the European Union (EU)," Resources, MDPI, vol. 8(2), pages 1-23, April.
    20. Galarraga, Ibon & González-Eguino, Mikel & Markandya, Anil, 2011. "Willingness to pay and price elasticities of demand for energy-efficient appliances: Combining the hedonic approach and demand systems," Energy Economics, Elsevier, vol. 33(S1), pages 66-74.
    21. Ibon Galarraga & Luis M. Abadie, 2014. "The use of “Bonus-Malus†schemes for promoting energy-efficient household appliances: a case study for Spain," Working Papers 2014-06, BC3.

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