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

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

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.

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Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 38 (2010)
Issue (Month): 8 (August)
Pages: 4317-4329

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Handle: RePEc:eee:enepol:v:38:y:2010:i:8:p:4317-4329
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  1. Siller, Thomas & Kost, Michael & Imboden, Dieter, 2007. "Long-term energy savings and greenhouse gas emission reductions in the Swiss residential sector," Energy Policy, Elsevier, vol. 35(1), pages 529-539, January.
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  6. Ravetz, Joe, 2008. "State of the stock--What do we know about existing buildings and their future prospects?," Energy Policy, Elsevier, vol. 36(12), pages 4462-4470, December.
  7. Erdmenger, Christoph & Lehmann, Harry & Müschen, Klaus & Tambke, Jens & Mayr, Sebastian & Kuhnhenn, Kai, 2009. "A climate protection strategy for Germany--40% reduction of CO2 emissions by 2020 compared to 1990," Energy Policy, Elsevier, vol. 37(1), pages 158-165, January.
  8. Claudia Kemfert, 2007. "Klimawandel kostet die deutsche Volkswirtschaft Milliarden," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 74(11), pages 165-169.
  9. Power, Anne, 2008. "Does demolition or refurbishment of old and inefficient homes help to increase our environmental, social and economic viability?," Energy Policy, Elsevier, vol. 36(12), pages 4487-4501, December.
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