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The social return on investment in the energy efficiency of buildings in Germany

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  • Kuckshinrichs, Wilhelm
  • Kronenberg, Tobias
  • Hansen, Patrick

Abstract

The German government has developed a variety of policy instruments intended to reduce national CO2 emissions. These instruments include a programme administered by KfW bank, which aims at improving the energy efficiency of buildings. It provides attractive credit conditions or subsidies to finance refurbishment measures which improve the energy efficiency of buildings significantly. The refurbishment programme leads to a reduction in energy use, which benefits private investors by reducing their energy bills. In order to estimate whether the programme benefits society as a whole, additional effects must be taken into account, such as the amount of employment generated and the impact on the public budget. The aim of this paper is to evaluate the social benefits of the German CO2 refurbishment programme for the years 2005-2007. An extended input-output model is used to estimate the effect of the refurbishment works on public revenue via taxes and social security contributions. The value of avoided CO2 emissions is approximated using a range of marginal damage estimates from the literature. From these social benefits, the programme cost is deducted. The net social benefit thus computed turns out to be positive. This finding suggests that the refurbishment programme is a reasonable investment of public funds.

Suggested Citation

  • Kuckshinrichs, Wilhelm & Kronenberg, Tobias & Hansen, Patrick, 2010. "The social return on investment in the energy efficiency of buildings in Germany," Energy Policy, Elsevier, vol. 38(8), pages 4317-4329, August.
    • Handle: RePEc:eee:enepol:v:38:y:2010:i:8:p:4317-4329
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    1. Mikulić, Davor & Bakarić, Ivana Rašić & Slijepčević, Sunčana, 2016. "The economic impact of energy saving retrofits of residential and public buildings in Croatia," Energy Policy, Elsevier, vol. 96(C), pages 630-644.
    2. Markaki, M. & Belegri-Roboli, A. & Michaelides, P. & Mirasgedis, S. & Lalas, D.P., 2013. "The impact of clean energy investments on the Greek economy: An input–output analysis (2010–2020)," Energy Policy, Elsevier, vol. 57(C), pages 263-275.
    3. Zafrilla, Jorge Enrique & López, Luis Antonio & Cadarso, María Ángeles & Dejuán, Óscar, 2012. "Fulfilling the Kyoto protocol in Spain: A matter of economic crisis or environmental policies?," Energy Policy, Elsevier, vol. 51(C), pages 708-719.
    4. Kristina Mjörnell & Anna Boss & Markus Lindahl & Stefan Molnar, 2014. "A Tool to Evaluate Different Renovation Alternatives with Regard to Sustainability," Sustainability, MDPI, Open Access Journal, vol. 6(7), pages 1-19, July.
    5. Vögele, Stefan & Hansen, Patrick & Poganietz, Witold-Roger & Prehofer, Sigrid & Weimer-Jehle, Wolfgang, 2017. "Building scenarios for energy consumption of private households in Germany using a multi-level cross-impact balance approach," Energy, Elsevier, vol. 120(C), pages 937-946.
    6. Yushchenko, Alisa & Patel, Martin Kumar, 2016. "Contributing to a green energy economy? A macroeconomic analysis of an energy efficiency program operated by a Swiss utility," Applied Energy, Elsevier, vol. 179(C), pages 1304-1320.
    7. Salari, Mahmoud & Javid, Roxana J., 2017. "Modeling household energy expenditure in the United States," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 822-832.
    8. repec:eee:enepol:v:109:y:2017:i:c:p:154-180 is not listed on IDEAS
    9. Spyros Arvanitis & Michael Peneder & Christian Rammer & Tobias Stucki & Martin Wörter, 2016. "The adoption of green energy technologies: The role of policies in an international comparison," KOF Working papers 16-411, KOF Swiss Economic Institute, ETH Zurich.
    10. repec:eee:enepol:v:106:y:2017:i:c:p:212-221 is not listed on IDEAS
    11. Dimitra Papadopoulou & Christos Tourkolias & Sevastianos Mirasgedis, 2015. "Assessing the macroeconomic effect of gas pipeline projects: the case of Trans-Adriatic Pipeline on Greece," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 65(3-4), pages 100-118, july-Dece.
    12. Rammer, Christian & Gottschalk, Sandra & Peneder, Michael & Wörter, Martin & Stucki, Tobias & Arvanitis, Spyros, 2017. "Does energy policy hurt international competitiveness of firms? A comparative study for Germany, Switzerland and Austria," Energy Policy, Elsevier, vol. 109(C), pages 154-180.
    13. repec:eee:enepol:v:110:y:2017:i:c:p:246-256 is not listed on IDEAS
    14. Salari, Mahmoud & Javid, Roxana J., 2016. "Residential energy demand in the United States: Analysis using static and dynamic approaches," Energy Policy, Elsevier, vol. 98(C), pages 637-649.
    15. Weiss, Julika & Dunkelberg, Elisa & Vogelpohl, Thomas, 2012. "Improving policy instruments to better tap into homeowner refurbishment potential: Lessons learned from a case study in Germany," Energy Policy, Elsevier, vol. 44(C), pages 406-415.
    16. Rosenow, Jan & Platt, Reg & Demurtas, Andrea, 2014. "Fiscal impacts of energy efficiency programmes—The example of solid wall insulation investment in the UK," Energy Policy, Elsevier, vol. 74(C), pages 610-620.
    17. Spyros Arvanitis & Michael Peneder & Christian Rammer & Tobias Stucki & Martin Wörter, 2016. "How Different Policy Instruments Affect the Creation of Green Energy Innovation: A Differentiated Perspective," KOF Working papers 16-417, KOF Swiss Economic Institute, ETH Zurich.
    18. Kronenberg, Tobias & Kuckshinrichs, Wilhelm & Hansen, Patrick, 2012. "Macroeconomic Effects of the German Government’s Building Rehabilitation Program," MPRA Paper 38815, University Library of Munich, Germany.
    19. Valeria Costantini & Francesco Crespi & Elena Paglialunga, 2017. "The Employment Impact Of Private And Public Actions For Energy Efficiency: Evidence From European Industries," Departmental Working Papers of Economics - University 'Roma Tre' 0227, Department of Economics - University Roma Tre.
    20. Rosenow, Jan & Platt, Reg & Flanagan, Brooke, 2013. "Fuel poverty and energy efficiency obligations – A critical assessment of the supplier obligation in the UK," Energy Policy, Elsevier, vol. 62(C), pages 1194-1203.
    21. Kronenberg, Tobias & Többen, Johannes, 2011. "Regional input-output modelling in Germany: The case of North Rhine-Westphalia," MPRA Paper 35494, University Library of Munich, Germany.

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    Keywords

    CO2 emissions Energy efficiency Technology diffusion;

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