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Utility Rebates for ENERGY STAR Appliances: Are They Effective?

Author

Listed:
  • Souvik Datta

    () (Centre for Energy Policy and Economics (CEPE), Department of Management, Technology and Economics, ETH Zurich, Switzerland)

  • Sumeet Gulati

    () (Faculty of Land and Food Systems, University of British Columbia, Canada)

Abstract

In this paper we estimate the increase in the market share of ENERGY STAR-qualified appliances that can be attributed to targetted cash rebates offered by utility companies. To estimate the impact of these incentives we use the variation in timing and size of the utility rebates across the US states. We then use these estimates along with information on the average energy saved by using an ENERGY STAR appliance relative to a non-ENERGY STAR appliance to provide an estimate on the cost per tonne of carbon saved by the rebate program. Our results show that a dollar increase in the rebate leads to a 0.3% increase in the share of ENERGY STAR-qualified clothes washers while the effect of rebates is not significant for dishwashers and refrigerators. Assuming a redemption rate of 40%, we calculate the cost of saving a tonne of carbon through the clothes washer rebate program to be around $158. The corresponding cost of a megawatt hour saved (about $32), 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 programs are a cost-effective way for utilities to reduce energy demand.

Suggested Citation

  • Souvik Datta & Sumeet Gulati, 2011. "Utility Rebates for ENERGY STAR Appliances: Are They Effective?," CEPE Working paper series 11-81, CEPE Center for Energy Policy and Economics, ETH Zurich.
  • Handle: RePEc:cee:wpcepe:11-81
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    References listed on IDEAS

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    1. Utility Rebates for ENERGY STAR Appliances: Are They Effective?
      by Environmental Valuation and Cost-Benefit News in Environmental Valuation & Cost-Benefit News on 2012-06-07 07:07:00

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    Cited by:

    1. Houde, Sebastien & Aldy, Joseph E., 2014. "Belt and Suspenders and More: The Incremental Impact of Energy Efficiency Subsidies in the Presence of Existing Policy Instruments," Discussion Papers dp-14-34, Resources For the Future.
    2. Giovanni Marin & Alessandro Palma, 2015. "Technology invention and diffusion in residential energy consumption. A stochastic frontier approach," IEFE Working Papers 81, IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy.
    3. repec:eee:pubeco:v:155:y:2017:i:c:p:93-107 is not listed on IDEAS
    4. 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.
    5. Galarraga, Ibon & Abadie, Luis M. & Ansuategi, Alberto, 2013. "Efficiency, effectiveness and implementation feasibility of energy efficiency rebates: The “Renove” plan in Spain," Energy Economics, Elsevier, vol. 40(S1), pages 98-107.
    6. 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.
    7. Walls, Margaret & Gerarden, Todd & Palmer, Karen & Bak, Xian Fang, 2017. "Is energy efficiency capitalized into home prices? Evidence from three U.S. cities," Journal of Environmental Economics and Management, Elsevier, vol. 82(C), pages 104-124.
    8. Souvik Datta & Massimo Filippini, 2012. "Analysing the Impact of ENERGY STAR Rebate Policies in the US," CEPE Working paper series 12-86, CEPE Center for Energy Policy and Economics, ETH Zurich.
    9. Li, Xiaogu & Clark, Christopher D. & Jensen, Kimberly L. & Yen, Steven T., 2013. "The Effect of Mail-in Utility Rebates on Willingness-to-Pay for ENERGY STAR® Certified Refrigerators," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 159795, Southern Agricultural Economics Association.
    10. Cristina Cattaneo, 2018. "Internal and External Barriers to Energy Efficiency: Made-to-Measure Policy Interventions," Working Papers 2018.08, Fondazione Eni Enrico Mattei.
    11. Santos, Jair Carvalho Dos, 2006. "Estimativa De Custo De Coleta E Rentabilidade Para Sistema Extrativo De Latex De Seringueira Na Amazonia," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 145689, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
    12. Anil Markandya & Xavier Labandeira & Ana Ramos, 2013. "Policy Instruments to Foster Energy Efficiency," Working Papers 01-2014, Economics for Energy.
    13. Xiaogu Li & Christopher D. Clark & Kimberly L. Jensen & Steven T. Yen, 2016. "The Effect of Mail-in Utility Rebates on Willingness-to-Pay for ENERGY STAR $$^{\textregistered }$$ ® Certified Refrigerators," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(1), pages 1-23, January.
    14. repec:spr:envpol:v:19:y:2017:i:3:d:10.1007_s10018-016-0145-6 is not listed on IDEAS
    15. repec:eee:eneeco:v:66:y:2017:i:c:p:85-98 is not listed on IDEAS
    16. Massuquetti, Angelica, 2006. "Algumas Reflexões Acerca Do Espaço De Investigação Sobre O," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 149051, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
    17. Alves, Maria Odete & Valente, Airton Saboya Jr, 2006. "Comunicação Rural Entre Três Atores Nas Áreas De Concentração De Fruteiras No Nordeste Brasileiro:," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 148515, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
    18. Rocha, Luiz Eduardo Vasconcelos & Santos, Gilnei Costa & Bastos, Patricia de Melo Abrita, 2006. "Evolução Da Distribuição Da Renda E Da Pobreza Das Famílias Ocupadas E Residentes No Meio Rural Do Estado De Minas Gerais, De 1981 A 2003," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 148649, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
    19. Leite, Sheila Cristina Ferreira & De Figueiredo, Margarida Garcia, 2006. "Fluxos De Algodão Em Pluma Para Exportação No Estado Da Bahia: Uma Aplicação De Programação Linear," 44th Congress, July 23-27, 2006, Fortaleza, Ceará, Brazil 149116, Sociedade Brasileira de Economia, Administracao e Sociologia Rural (SOBER).
    20. Jacobsen, Grant D., 2015. "Do energy prices influence investment in energy efficiency? Evidence from energy star appliances," Journal of Environmental Economics and Management, Elsevier, vol. 74(C), pages 94-106.
    21. Ibon Galarraga & Luis M. Abadie, 2014. "The use of “Bonus-Malus†schemes for promoting energy-efficient household appliances: a case study for Spain," Working Papers 2014-06, BC3.

    More about this item

    Keywords

    Eco-labelling; energy efficiency; appliances; utility rebates; carbon saving; energy saving;

    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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