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Social Benefits of Financial Investment Support in Energy Conservation Policy

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  • Torleif Haugland

Abstract

This paper examines the costs and benefits of a Norwegian energy conservation program that provided financial support for investments in energy efficiency. Participants in the program included industry, commerce, public services and households. Evaluation of the program shows that about 70% of the participants were "free riders' who would have invested in efficiency improvements even in the absence of the program. The economic efficiency was further reduced by economic distortions caused by taxes needed to finance the program. However, the energy savings did give environmental benefits through reduced atmospheric emissions, although this effect was somewhat diluted through a "conservation rebound," where the actual reduction in energy consumption was less than the theoretical savings. The energy conservation program is also highly sensitive to assumptions about the economic lifetime of the investments.

Suggested Citation

  • Torleif Haugland, 1996. "Social Benefits of Financial Investment Support in Energy Conservation Policy," The Energy Journal, , vol. 17(2), pages 79-102, April.
    • Handle: RePEc:sae:enejou:v:17:y:1996:i:2:p:79-102
    DOI: 10.5547/ISSN0195-6574-EJ-Vol17-No2-5
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    References listed on IDEAS

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    1. Samuel Fankhauser, 1994. "The Social Costs of Greenhouse Gas Emissions: An Expected Value Approach," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 157-184.
    2. Paul L. Joskow & Donald B. Marron, 1992. "What Does a Negawatt Really Cost? Evidence from Utility Conservation Programs," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 41-74.
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