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Heat savings and heat generation technologies: Modelling of residential investment behaviour with local externalities

Author

Listed:
  • zvingilaite, Erika
  • Klinge Jacobsen, Henrik

Abstract

The trade off between investing in energy savings in single family houses and investing in more expensive heating technologies with low variable costs has been modelled for a number of building and consumer categories in Denmark. The households have an option to combine their primary heating source with secondary heating e.g. woodstove. We address increased indoor air pollution with fine particles, which are potentially harmful to human health, when using a woodstove, in order to represent a close proximity to and tangibility of the environmental and health problems of air pollution for private consumers. We integrate health cost into household optimisation of woodstove use as secondary heating source. We investigate whether the monetary value of the possible health damage has an effect on the optimal consumers’ choice of a heating technology and heat savings. The results show that due to combination of low costs of primary fuel and low environmental performance of woodstoves today, included health costs lead to decreased secondary heating. Overall the interdependence of heat generation technology and heat savings is significant. The optimal level of heat savings for private consumers decrease by 66% when all have the option to shift to the technology with lowest variable costs.

Suggested Citation

  • zvingilaite, Erika & Klinge Jacobsen, Henrik, 2012. "Heat savings and heat generation technologies: Modelling of residential investment behaviour with local externalities," MPRA Paper 41545, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:41545
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    File URL: https://mpra.ub.uni-muenchen.de/41545/1/MPRA_paper_41545.pdf
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    References listed on IDEAS

    as
    1. Jacobsen, Henrik Klinge, 2001. "Technological progress and long-term energy demand -- a survey of recent approaches and a Danish case," Energy Policy, Elsevier, vol. 29(2), pages 147-157, January.
    2. Clinch, J. Peter & Healy, John D., 2001. "Cost-benefit analysis of domestic energy efficiency," Energy Policy, Elsevier, vol. 29(2), pages 113-124, January.
    3. Giraudet, Louis-Gaëtan & Guivarch, Céline & Quirion, Philippe, 2012. "Exploring the potential for energy conservation in French households through hybrid modeling," Energy Economics, Elsevier, vol. 34(2), pages 426-445.
    4. Banfi, Silvia & Farsi, Mehdi & Filippini, Massimo & Jakob, Martin, 2008. "Willingness to pay for energy-saving measures in residential buildings," Energy Economics, Elsevier, vol. 30(2), pages 503-516, March.
    5. Siller, Thomas & Kost, Michael & Imboden, Dieter, 2007. "Long-term energy savings and greenhouse gas emission reductions in the Swiss residential sector," Energy Policy, Elsevier, vol. 35(1), pages 529-539, January.
    6. Lund, H. & Möller, B. & Mathiesen, B.V. & Dyrelund, A., 2010. "The role of district heating in future renewable energy systems," Energy, Elsevier, vol. 35(3), pages 1381-1390.
    7. Jakob, Martin, 2006. "Marginal costs and co-benefits of energy efficiency investments: The case of the Swiss residential sector," Energy Policy, Elsevier, vol. 34(2), pages 172-187, January.
    8. Amstalden, Roger W. & Kost, Michael & Nathani, Carsten & Imboden, Dieter M., 2007. "Economic potential of energy-efficient retrofitting in the Swiss residential building sector: The effects of policy instruments and energy price expectations," Energy Policy, Elsevier, vol. 35(3), pages 1819-1829, March.
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    More about this item

    Keywords

    Energy savings; externalities; modelling; residential heating; rebound;

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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