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Utility rebates for ENERGY STAR appliances: Are they effective?

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  • Datta, Souvik
  • Gulati, Sumeet

Abstract

We estimate the impact of utility cash rebates on the market share of ENERGY STAR appliances by exploiting the variation in timing and size of rebates across US states. We find that a dollar increase in the population-weighted utility rebate raises the share of ENERGY STAR qualified clothes washers by 0.4%, but does not affect dishwasher and refrigerator shares. Using information on energy saved by an ENERGY STAR appliance and assuming a redemption rate of 40%, the cost per tonne of carbon saved is about $140 for the clothes washers rebate program. The corresponding cost of a megawatt hour saved, about $28, is lower than the estimated cost of building and operating an additional power plant and the average on-peak spot price. We conclude that the ENERGY STAR clothes washers rebate program is, on average, a cost-effective way for utilities to reduce electricity demand.

Suggested Citation

  • Datta, Souvik & Gulati, Sumeet, 2014. "Utility rebates for ENERGY STAR appliances: Are they effective?," Journal of Environmental Economics and Management, Elsevier, vol. 68(3), pages 480-506.
    • Handle: RePEc:eee:jeeman:v:68:y:2014:i:3:p:480-506
    DOI: 10.1016/j.jeem.2014.09.003
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    More about this item

    Keywords

    Eco-labelling; Energy efficiency; Appliances; Utility rebates; Carbon saving; Energy saving;
    All these keywords.

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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