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Do Energy Efficiency Investments Deliver? Evidence from the Weatherization Assistance Program

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  • Meredith Fowlie
  • Michael Greenstone
  • Catherine Wolfram

Abstract

Conventional wisdom suggests that energy efficiency (EE) policies are beneficial because they induce investments that pay for themselves and lead to emissions reductions. However, this belief is primarily based on projections from engineering models. This paper reports on the results of an experimental evaluation of the nation’s largest residential EE program conducted on a sample of more than 30,000 households. The findings suggest that the upfront investment costs are about twice the actual energy savings. Further, the model-projected savings are roughly 2.5 times the actual savings. While this might be attributed to the “rebound” effect – when demand for energy end uses increases as a result of greater efficiency – the paper fails to find evidence of significantly higher indoor temperatures at weatherized homes. Even when accounting for the broader societal benefits of energy efficiency investments, the costs still substantially outweigh the benefits; the average rate of return is approximately -9.5% annually.

Suggested Citation

  • Meredith Fowlie & Michael Greenstone & Catherine Wolfram, 2015. "Do Energy Efficiency Investments Deliver? Evidence from the Weatherization Assistance Program," NBER Working Papers 21331, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:21331
    Note: EEE
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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