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Uncertainty and additionality in energy efficiency programs

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  • Gilbert, Ben
  • LaRiviere, Jacob
  • Novan, Kevin

Abstract

Residential energy efficiency subsidy programs often suffer from poor additionality. Using a large household-level dataset of energy efficiency subsidy program participation, we find that households are significantly more likely to participate when first moving into an existing home — when uncertainty about energy consumption and savings is greatest. We also find that the influence of bills and dwelling characteristics on participation declines the longer a household has lived in a dwelling. These findings suggest that there is uncertainty about the household-specific benefits of an upgrade that resolves over time. We show that when this is the case, not only are a share of participating households inframarginal (i.e. “non-additional”), many of the “additional” participants may not be economically efficient.

Suggested Citation

  • Gilbert, Ben & LaRiviere, Jacob & Novan, Kevin, 2022. "Uncertainty and additionality in energy efficiency programs," Journal of Environmental Economics and Management, Elsevier, vol. 115(C).
    • Handle: RePEc:eee:jeeman:v:115:y:2022:i:c:s0095069622000638
    DOI: 10.1016/j.jeem.2022.102700
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    Keywords

    Durable goods; Learning; Electricity; Second best;
    All these keywords.

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • D - Microeconomics

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