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Designing incentive schemes for promoting energy-efficient appliances: A new methodology and a case study for Spain

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  • Galarraga, Ibon
  • Abadie, Luis M.
  • Kallbekken, Steffen

Abstract

The energy-efficiency gap has been high on research and policy agendas for several decades. Incentive schemes such as subsidies, taxes and bonus-malus schemes are widely used to promote energy-efficient appliances. Most research, however, considers instruments in isolation, and only rarely in the context of political constraints on instrument use, or for alternative policy goals. This paper presents a methodology for the optimal design of incentive schemes based on the minimisation of Dead Weight Loss for different policy goals and policy restrictions. The use of the methodology is illustrated by designing optimal combinations of taxes and subsidies in Spain for three types of appliance: dishwashers, refrigerators and washing machines. The optimal policies are designed subject to different policy goals such as achieving a fixed reduction in emissions or a certain increased market share for efficient appliances, and for policy constraints such as budget neutrality. The methodology developed here can also be used to evaluate past and current incentive schemes.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:enepol:v:90:y:2016:i:c:p:24-36
    DOI: 10.1016/j.enpol.2015.12.010
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:enepol:v:107:y:2017:i:c:p:459-471 is not listed on IDEAS
    2. Olsthoorn, Mark & Schleich, Joachim & Gassmann, Xavier & Faure, Corinne, 2017. "Free riding and rebates for residential energy efficiency upgrades: A multi-country contingent valuation experiment," Energy Economics, Elsevier, vol. 68(S1), pages 33-44.
    3. repec:eee:enepol:v:116:y:2018:i:c:p:68-77 is not listed on IDEAS
    4. Schleich, Joachim & Gassmann, Xavier & Faure, Corinne & Meissner, Thomas, 2016. "Making the implicit explicit: A look inside the implicit discount rate," Energy Policy, Elsevier, vol. 97(C), pages 321-331.
    5. repec:eee:energy:v:141:y:2017:i:c:p:1998-2012 is not listed on IDEAS
    6. Collado, Rocío Román & Díaz, María Teresa Sanz, 2017. "Analysis of energy end-use efficiency policy in Spain," Energy Policy, Elsevier, vol. 101(C), pages 436-446.
    7. Cristina Cattaneo, 2018. "Internal and External Barriers to Energy Efficiency: Made-to-Measure Policy Interventions," Working Papers 2018.08, Fondazione Eni Enrico Mattei.
    8. Wang, Zhaohua & Wang, Xiaomeng & Guo, Dongxue, 2017. "Policy implications of the purchasing intentions towards energy-efficient appliances among China’s urban residents: Do subsidies work?," Energy Policy, Elsevier, vol. 102(C), pages 430-439.

    More about this item

    Keywords

    Energy efficiency; Taxes; Subsidies; Bonus-malus; Spain; Appliances;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General

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