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Buildings are crucial to control present and future energy demand and, therefore, greenhouse gas concentrations in the atmosphere. In this chapter we suggest that, due to a number of general and specific barriers to the implementation of energy efficiency in buildings, energy prices and conventional energy and environmental policy instruments may n...
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Context 1
... and reducing social damages. Reducing energy use in buildings may also contribute to reducing dependence on foreign supplies of energy, having a positive effect on the so-called energy security of countries. Moreover, energy conservation may result in net savings for households and firms, thus increasing their disposable income and profits. Energy efficiency measures in buildings may not only reduce energy expenditures but also may improve living conditions and indoor air quality (for instance through substitution of inefficient wood or coal usage) can also be achieved through energy-efficiency measures in homes and buildings. In the commercial sector there is evidence of the positive influence of more energy efficient buildings on indoor air quality and eventually on worker productivity (Leaman and Bordass, 1999). There is abundant evidence that firms can achieve positive reputational effects through eco-friendly behavior. Furthermore, energy efficiency in buildings offers large possibilities for new businesses such as ESCOs 2 and for owners and real estate investors due to its positive effect on property prices (Eichholtz et al., 2010a; Fuerst and McAllister, 2011). Lastly, the economy as a whole may benefit from the creation of jobs that are related to the implementation of energy-efficiency measures in buildings 3 . Last but not least, a widespread introduction of energy efficiency improvements in buildings can generate significant distributional benefits. They may be related to those households with a limited access to basic energy sources and services, quite common in emerging or developing countries. But they may be also linked to overcoming energy poverty in developed countries by allowing households to live in comfortable temperature conditions at affordable costs (UKDECC, 2011a). Despite the socio-economic and environmental importance of these matters, in practice energy efficiency measures and techniques have been barely introduced in commercial or residential buildings. A number of factors explain the real-world barriers to energy efficiency improvements, in buildings and elsewhere, which are actually the reason for persistent public intervention in this area. However, buildings and dwellings have particular characteristics that differentiate them from other products and sectors: they are long-lived and costly assets and many agents are usually involved in this market. These particularities must be taken into account for a proper understanding of this sector, a necessary condition for the design of effective energy-efficiency policies. This is the setting for the chapter, which will first provide a general description and discussion on the barriers to energy efficiency in buildings (Section 2.1) and then present the main policy tools available to tackle this problem (Section 2.2). With that information, in Section 3 we will propose a policy package that can simultaneously overcome most of the preceding barriers and provide incentives for a cost-effective implementation of energy efficiency measures in this important sector. Section 4 concludes with a summary of the main implications of our findings and policy proposal. But before further discussing strategies and policies, it is necessary to emphasize the significant heterogeneity within this sector. First, as indicated before, there is a crucial distinction between new buildings and existing buildings: this difference is very relevant for the design and implementation of energy efficiency measures. For instance, measures are likely to be cheaper and with a higher savings potential if introduced in new buildings. Moreover, some measures are only applicable to new buildings, such as construction or planning codes. Finally, the agents involved in decisions vary in new and existing facilities: in new buildings decisions on energy efficiency are largely in the hands of builders and investors, whereas in existing buildings energy efficiency measures may involve owners and tenants. A second characteristic of buildings is the heterogeneity of users, including both residential and commercial (which may also involve public and governmental, and sometimes industrial); this heterogeneity has important implications for the design and application of energy efficiency policies. Lastly, even residential or commercial buildings (whether new or old) may have plenty of internal heterogeneity: single-unit residences, multi-property houses with common areas or services, different uses in the so-called commercial sector, etc. But complexity does not end there because the heterogeneity also interacts with geographic and climatic variation. Essential factors for energy efficiency such as the ownership turnover period, occupancy rates or the stock of existing buildings are clearly dependent on climate and country/region. If there is a limited implementation of energy-efficiency measures in buildings, as suggested in the previous section, the negative cost figures in Figure 2 would clearly reflect the so-called 'energy efficiency paradox' (Jaffe and Stavins, 1994). Why are agents reluctant to invest in energy efficiency measures in buildings despite their negative costs? One possibility is that the net costs are not negative: either the outlays are understated or the energy-savings benefits are overstated, or perhaps some of the benefits do not accrue to those who must make the outlays (Figure 2 fails to consider the distribution of benefits and costs). But it is also possible that the net costs are negative but that barriers exist in the real estate sector that strongly affect investment decisions on energy efficiency. These barriers have been generally identified as absence of information, the conflict of interest between principal and agent, the difficulty to financing a high up-front cost, and uncertainty about the reliability of the energy efficiency device. We now elaborate on these explanations for the sub-optimal allocation of resources to energy efficiency before proceeding to identify some possible corrective measures. Generally, agents have substantial lack of information on future energy consumption at the moment of purchasing or renting a commercial or residential building. This is not something that is easily measured. Future energy use depends partly on the behavior of future occupants and on investments they might make in energy efficiency; it also depends on the aging of the building and the energy-using equipment within it. Another fact is that building owners and occupants may not have the same economic interests and thus problems of asymmetric information and lack of trust could arise. As a consequence, agents may give less consideration to expenditures for energy efficiency, and be less inclined to value the implementation of such measures. The conflict in interests among the agents that operate in the building sector pertains not only to information. In addition, there is the well-known principal/agent problem where the party that takes the investment decisions on energy efficiency would not benefit from their returns. In new buildings, for example, the builder may be interested in achieving the highest revenues at the lowest costs without paying attention to the effects on the stream of future energy expenditures and associated pollution emissions. In existing buildings the principal/agent problem is also present in the owner/tenant relationship: tenants may have incentives to promote energy efficiency to reduce their bills but they are unlikely to invest in items that become permanent fixtures in buildings they do not own and may occupy for only a limited period of time, leaving these fixtures for the owners once they quit the building. If the owners do not pay their tenants’ energy bills they themselves have little incentive to invest in energy-savings fixtures, except to the extent this would enable them to charge sufficiently higher rents to recoup their investment. This problem also arises in commercial buildings and it becomes even more important in multi-unit residences because the number of actors increases. There are several other barriers that, while not necessarily market failures, could be mitigated by public actions. First, the large up-front capital cost often required for energy-efficiency investments in existing residential and commercial buildings to pay for things like replacing heating systems, installing new windows, better insulation or renewable energy, discourages these investments, since it may be difficult to find a way of financing the capital outlay. Second, the so-called bounded rationality that potentially affects all agents participating in this sector, in new and existing buildings or in commercial and residential units. Bounded rationality is partially due to the above-mentioned lack of information but it is also affected by cultural or idiosyncratic habits that make consumers unaware of their energy use and associated emissions (Brounen et al., 2012; Palmer et al., 2011). Moreover, uncertainty also prevents agents from investing either because of changing legislation or because first movers cannot benefit from lower prices resulting from learning-by-doing effects or economies of scale (NRTE, 2009). On top of this, there might be significant hidden costs that affect the adoption of energy efficiency measures in existing buildings: transaction costs and the inconvenience and nuisance associated with retrofitting (and the possible need for another temporary dwelling). Finally, the literature has also mentioned long payback periods and high discount rates as other barriers to the adoption of energy efficiency in buildings. It should be emphasized that whether or not these factors are considered market failures is immaterial. What is important is that they are potentially amenable to policy action. Market failure signifies a violation of economic efficiency (typically based on the Kaldor-Hicks criterion of a ...
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... also may improve living conditions and indoor air quality (for instance through substitution of inefficient wood or coal usage) can also be achieved through energy-efficiency measures in homes and buildings. In the commercial sector there is evidence of the positive influence of more energy efficient buildings on indoor air quality and eventually on worker productivity (Leaman and Bordass, 1999). There is abundant evidence that firms can achieve positive reputational effects through eco-friendly behavior. Furthermore, energy efficiency in buildings offers large possibilities for new businesses such as ESCOs 2 and for owners and real estate investors due to its positive effect on property prices (Eichholtz et al., 2010a; Fuerst and McAllister, 2011). Lastly, the economy as a whole may benefit from the creation of jobs that are related to the implementation of energy-efficiency measures in buildings 3 . Last but not least, a widespread introduction of energy efficiency improvements in buildings can generate significant distributional benefits. They may be related to those households with a limited access to basic energy sources and services, quite common in emerging or developing countries. But they may be also linked to overcoming energy poverty in developed countries by allowing households to live in comfortable temperature conditions at affordable costs (UKDECC, 2011a). Despite the socio-economic and environmental importance of these matters, in practice energy efficiency measures and techniques have been barely introduced in commercial or residential buildings. A number of factors explain the real-world barriers to energy efficiency improvements, in buildings and elsewhere, which are actually the reason for persistent public intervention in this area. However, buildings and dwellings have particular characteristics that differentiate them from other products and sectors: they are long-lived and costly assets and many agents are usually involved in this market. These particularities must be taken into account for a proper understanding of this sector, a necessary condition for the design of effective energy-efficiency policies. This is the setting for the chapter, which will first provide a general description and discussion on the barriers to energy efficiency in buildings (Section 2.1) and then present the main policy tools available to tackle this problem (Section 2.2). With that information, in Section 3 we will propose a policy package that can simultaneously overcome most of the preceding barriers and provide incentives for a cost-effective implementation of energy efficiency measures in this important sector. Section 4 concludes with a summary of the main implications of our findings and policy proposal. But before further discussing strategies and policies, it is necessary to emphasize the significant heterogeneity within this sector. First, as indicated before, there is a crucial distinction between new buildings and existing buildings: this difference is very relevant for the design and implementation of energy efficiency measures. For instance, measures are likely to be cheaper and with a higher savings potential if introduced in new buildings. Moreover, some measures are only applicable to new buildings, such as construction or planning codes. Finally, the agents involved in decisions vary in new and existing facilities: in new buildings decisions on energy efficiency are largely in the hands of builders and investors, whereas in existing buildings energy efficiency measures may involve owners and tenants. A second characteristic of buildings is the heterogeneity of users, including both residential and commercial (which may also involve public and governmental, and sometimes industrial); this heterogeneity has important implications for the design and application of energy efficiency policies. Lastly, even residential or commercial buildings (whether new or old) may have plenty of internal heterogeneity: single-unit residences, multi-property houses with common areas or services, different uses in the so-called commercial sector, etc. But complexity does not end there because the heterogeneity also interacts with geographic and climatic variation. Essential factors for energy efficiency such as the ownership turnover period, occupancy rates or the stock of existing buildings are clearly dependent on climate and country/region. If there is a limited implementation of energy-efficiency measures in buildings, as suggested in the previous section, the negative cost figures in Figure 2 would clearly reflect the so-called 'energy efficiency paradox' (Jaffe and Stavins, 1994). Why are agents reluctant to invest in energy efficiency measures in buildings despite their negative costs? One possibility is that the net costs are not negative: either the outlays are understated or the energy-savings benefits are overstated, or perhaps some of the benefits do not accrue to those who must make the outlays (Figure 2 fails to consider the distribution of benefits and costs). But it is also possible that the net costs are negative but that barriers exist in the real estate sector that strongly affect investment decisions on energy efficiency. These barriers have been generally identified as absence of information, the conflict of interest between principal and agent, the difficulty to financing a high up-front cost, and uncertainty about the reliability of the energy efficiency device. We now elaborate on these explanations for the sub-optimal allocation of resources to energy efficiency before proceeding to identify some possible corrective measures. Generally, agents have substantial lack of information on future energy consumption at the moment of purchasing or renting a commercial or residential building. This is not something that is easily measured. Future energy use depends partly on the behavior of future occupants and on investments they might make in energy efficiency; it also depends on the aging of the building and the energy-using equipment within it. Another fact is that building owners and occupants may not have the same economic interests and thus problems of asymmetric information and lack of trust could arise. As a consequence, agents may give less consideration to expenditures for energy efficiency, and be less inclined to value the implementation of such measures. The conflict in interests among the agents that operate in the building sector pertains not only to information. In addition, there is the well-known principal/agent problem where the party that takes the investment decisions on energy efficiency would not benefit from their returns. In new buildings, for example, the builder may be interested in achieving the highest revenues at the lowest costs without paying attention to the effects on the stream of future energy expenditures and associated pollution emissions. In existing buildings the principal/agent problem is also present in the owner/tenant relationship: tenants may have incentives to promote energy efficiency to reduce their bills but they are unlikely to invest in items that become permanent fixtures in buildings they do not own and may occupy for only a limited period of time, leaving these fixtures for the owners once they quit the building. If the owners do not pay their tenants’ energy bills they themselves have little incentive to invest in energy-savings fixtures, except to the extent this would enable them to charge sufficiently higher rents to recoup their investment. This problem also arises in commercial buildings and it becomes even more important in multi-unit residences because the number of actors increases. There are several other barriers that, while not necessarily market failures, could be mitigated by public actions. First, the large up-front capital cost often required for energy-efficiency investments in existing residential and commercial buildings to pay for things like replacing heating systems, installing new windows, better insulation or renewable energy, discourages these investments, since it may be difficult to find a way of financing the capital outlay. Second, the so-called bounded rationality that potentially affects all agents participating in this sector, in new and existing buildings or in commercial and residential units. Bounded rationality is partially due to the above-mentioned lack of information but it is also affected by cultural or idiosyncratic habits that make consumers unaware of their energy use and associated emissions (Brounen et al., 2012; Palmer et al., 2011). Moreover, uncertainty also prevents agents from investing either because of changing legislation or because first movers cannot benefit from lower prices resulting from learning-by-doing effects or economies of scale (NRTE, 2009). On top of this, there might be significant hidden costs that affect the adoption of energy efficiency measures in existing buildings: transaction costs and the inconvenience and nuisance associated with retrofitting (and the possible need for another temporary dwelling). Finally, the literature has also mentioned long payback periods and high discount rates as other barriers to the adoption of energy efficiency in buildings. It should be emphasized that whether or not these factors are considered market failures is immaterial. What is important is that they are potentially amenable to policy action. Market failure signifies a violation of economic efficiency (typically based on the Kaldor-Hicks criterion of a potential Pareto improvement). But economic efficiency is defined by reference an existing set of actors, with existing choice sets, existing preferences, existing production technologies, existing constraints, existing information sets, and existing behavioral rules for the economic actors. If one can change some of these components of the existing economic system, there will be a different outcome that may be judged superior ex ...
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... are a crucial sector for controlling energy demand and, therefore, greenhouse gas (GHG) emissions. Buildings currently account for around 40% of the final energy use in the world (IEA, 2008; IPCC, 2007) and, as indicated by Figure 1, in developed countries such as the US they are responsible for 30% of total energy consumption and for around 20% of carbon dioxide (CO 2 ) emissions. The importance of buildings for energy and environmental policies also arises from the fact that they constitute a ‘stock’ of future energy consumption and emissions. For example, around 60% of the existing buildings in the UK, US, or Spain were built before 1980 (Sweatman and Managan, 2010) and therefore are likely to have lower energy efficiency and higher GHG emissions than modern buildings. Thus, failing to retrofit old buildings to improve their energy and environmental performances, or an inadequate construction of new buildings, may endanger GHG mitigation. In this sense, there is a particular concern with emerging economies where increasing population and economic growth may lead to a renewed activity in building construction that could considerably expand future energy consumption and its associated GHG emissions. Higher consumption and emissions would be brought about by a combination of more energy-inefficient buildings (stock) and the increasing flow demanded by households with rising incomes 1 . If this is the case, future energy systems may be clearly unable to comply with the current objectives to reduce greenhouse gas emissions because they actually rest on significant energy savings from this sector: up to 30% of the baseline emissions by 2030 (IPCC, 2007). In fact, the last World Energy Outlook of the IEA (2011a) emphasizes the critical importance of energy efficiency to overcome the rising GHG emissions trend and indicates that the stock component of such emissions, together with a lack of significant action, is already closing the window of opportunity to avoid large increases in GHG atmospheric concentrations. The building sector presents not only a challenge but also an opportunity, because of the apparent cost- effectiveness of energy efficiency measures in buildings. Expert engineers indicate the existence of a large potential to reduce energy consumption in new facilities, through proper design and construction, and in existing buildings through retrofitting. Some studies suggest energy abatement possibilities of up to 75% in new buildings and of 20-50% through retrofitting old facilities (IPCC, 2007; European Commission, 2011). Not only there is large potential for energy savings in the building domain: these measures, especially those applied on new buildings, are usually ranked among the most cost-effective alternatives to reduce energy consumption. This is depicted in Figure 2, where some energy-saving measures in the building sector show even negative costs ('win-win' options) in the global abatement cost curve for greenhouse gases in 2030. While this information should be treated with care, given the several methodological and empirical shortcomings of GHG abatement cost curves such as this (Linares et al., 2012), it identifies promising possibilities in this area. Indeed, from a technical point of view, most of the energy-efficiency measures in buildings are already mature as they have been widely studied and applied since the energy crisis of the 1970s. For instance, Laquatra (1986) and Gilmer (1988) analyze the market effects of energy efficiency investments for units constructed through the Energy Efficiency Housing Demonstration Program carried out by a Minnesota Agency in the 1970s. Nowadays, many possibilities are already available in the market, mostly related to the general lighting and heating/cooling facilities, insulation techniques (envelope and windows) and de- centralized renewables. For instance, improvements in space heating, which are very important because this end use is responsible for around 30% of energy use in residential buildings (IEA, 2008), may be achieved through a combination of insulation, improved heating/cooling methods and the use of different types of renewables. This chapter is interested in this type of combination of alternatives because, although we recognize the importance of energy consumption and emissions from other household appliances, their characteristics and regulation raise different issues from those associated with buildings and discussed in this paper. Given the focus of this book, we have emphasized the close relationship between energy consumption by buildings and GHG emissions. However, energy efficiency in buildings would bring about a richer array of benefits. It would definitely reduce other types of pollutants in urban areas, an increasing problem in many emerging economies (those, as indicated before, that may see a larger expansion of their building stock), thus improving health conditions for the population and reducing social damages. Reducing energy use in buildings may also contribute to reducing dependence on foreign supplies of energy, having a positive effect on the so-called energy security of countries. Moreover, energy conservation may result in net savings for households and firms, thus increasing their disposable income and profits. Energy efficiency measures in buildings may not only reduce energy expenditures but also may improve living conditions and indoor air quality (for instance through substitution of inefficient wood or coal usage) can also be achieved through energy-efficiency measures in homes and buildings. In the commercial sector there is evidence of the positive influence of more energy efficient buildings on indoor air quality and eventually on worker productivity (Leaman and Bordass, 1999). There is abundant evidence that firms can achieve positive reputational effects through eco-friendly behavior. Furthermore, energy efficiency in buildings offers large possibilities for new businesses such as ESCOs 2 and for owners and real estate investors due to its positive effect on property prices (Eichholtz et al., 2010a; Fuerst and McAllister, 2011). Lastly, the economy as a whole may benefit from the creation of jobs that are related to the implementation of energy-efficiency measures in buildings 3 . Last but not least, a widespread introduction of energy efficiency improvements in buildings can generate significant distributional benefits. They may be related to those households with a limited access to basic energy sources and services, quite common in emerging or developing countries. But they may be also linked to overcoming energy poverty in developed countries by allowing households to live in comfortable temperature conditions at affordable costs (UKDECC, 2011a). Despite the socio-economic and environmental importance of these matters, in practice energy efficiency measures and techniques have been barely introduced in commercial or residential buildings. A number of factors explain the real-world barriers to energy efficiency improvements, in buildings and elsewhere, which are actually the reason for persistent public intervention in this area. However, buildings and dwellings have particular characteristics that differentiate them from other products and sectors: they are long-lived and costly assets and many agents are usually involved in this market. These particularities must be taken into account for a proper understanding of this sector, a necessary condition for the design of effective energy-efficiency policies. This is the setting for the chapter, which will first provide a general description and discussion on the barriers to energy efficiency in buildings (Section 2.1) and then present the main policy tools available to tackle this problem (Section 2.2). With ...
Citations
... 1,4,5 Insulation in buildings, which are important energy consumers, to improve their energy and environmental performance will reduce greenhouse gasses in order to apply saving methods. [6][7][8] Besides, the insulation of buildings will significantly reduce heat losses and costs, increasing energy efficiency as well as increasing the market value. 9 The selection of insulation materials for buildings is an important step in effectively reducing the energy demand of buildings, as well as having an impact on the quality of life and the environment. ...
The issue related to energy efficiency is being addressed worldwide as a subject that is becoming more and more important every day. The implementation of insulation measures for buildings, which is one of the most crucial measures of energy consumption, is a critical issue that can be applied to both increase efficiency and reduce the greenhouse gas effect. While trying to create buildings that are efficient in terms of energy consumption, the sustainability factor should always be paid regard primarily. Since different insulation materials are used in the building insulation process, it is necessary to consider many factors in the evaluation of these materials. The complex nature of the selection of insulation materials problem requires a multi-criteria decision approach to apply a detailed and systematic evaluation. Considering all of these, it is aimed to evaluate the building insulation materials under the sustainability perspective by using the Bayesian best worst method in this paper. As a result, the weights are calculated and ranking of the criteria is obtained and finally, the most and least important factors are revealed for the building insulation selection problem. The “economic” and “performance” criteria are determined as the most important to determine the best insulation material.
... • Economic benefits: a consequent permanent structural saving in expenses ("energy bill") earmarked and assigned for building energy management. • Ecological benefits: a cut in CO 2 emissions [19][20][21][22][23][24][25][26][27][28][29][30][31][32][33][34][35] proportional to the cut in kWh consumption. • Environmental benefits: a consequent permanent structural saving in collective social costs of carbon or CO 2 [36][37][38][39][40][41][42][43] and the reduction of damage caused by pollution and CO 2 emission and its monetary equivalent. ...
The world’s existing buildings are aged, in a state of deterioration and in need of interventions. When selecting the type of possible intervention to be applied, the choice falls between two alternatives: simple unsustainable ordinary maintenance versus ecological retrofitting i.e., an increase in the quality of the indoor environment and building energy saving using local bio-natural materials and products. The present research seeks to respond to the requests of recent comprehensive reviews which ask for the retrofitting of the world’s huge existing building stocks and portfolios by proposing an approach and testing it in a specific case study (at the unit, building and urban block level) which can then be carried out and repeated in the future on a larger urban scale. The real-world experimentation in the provided case study achieved the important outcome and goal of a Green Building strategy and post-carbon city framework i.e., the significant enhancement of the thermal performance of the buildings as a result of a few targeted key external works and the consequent saving of energy in those already existing (but not preserved and not included in the state national register or record of monuments) Liberty-style constructions. All the above show that these important existing buildings can be ecologically retrofitted at an affordable cost, although initially slightly more expensive than the cost of ordinary unsustainable maintenance. However, this difference is offset by the favorable pay-back period, which is fast, acceptable and of short duration. The tried and tested approach, the positive proposed case study and the experimental database-GIS joint platform (the details of which can be found in an additional supplementary research which is currently being carried out) are the bases on which a future decision support system will be proposed. This support system can be carried out as a tailor- made solution for the ecological retrofitting of the enormous existing building stocks and portfolios which must be considered on a larger scale i.e., at ward, quartier, city, regional and country level.
... Constraints and barriers to a successful adoption of EE in residential buildings explain the proliferation of public policies encouraging EE over the last years, particularly intensive in the EU, with the introduction of several EE instruments and packages such as codes and standards, labeling systems, information programs, subsidies or taxes, etc. (see e.g. Gillingham et al. 2006Gillingham et al. , 2009Levine et al. 2007;Linares and Labandeira 2010;Ryan et al. 2011;Gago et al. 2013). However, these policies are unlikely to be successful unless they are designed with good knowledge of the residential market. ...
The residential building sector is a major driver of current and future energy consumption and associated emissions, which can be potentially mitigated through significant energy-efficiency (EE) improvements in both emerging and developed countries. Yet, there are several persistent barriers that hinder the attainment of EE improvements in this area. Using data from a 2008 national representative survey of Spanish households, this paper is interested in the determinants of EE-related decisions. In particular, a discrete-choice model empirically analyzes whether pro-environmental households are more likely to invest in EE and to adopt daily energy-saving habits. We show that households with eco-friendly behaviors are more likely to investment in well-differentiated EE measures as well as to steer daily habits towards energy savings. However, no effects are found for households with environmental attitudes based on stated willingness to pay to protect the environment. In addition to this, households belonging to higher income groups and education levels are more likely to invest in EE but not to adopt energy-saving habits; while households with older members are less likely to invest in EE and show fewer eco-friendly habits.
... This should be the area for future academic work, and the corresponding findings should be used to design and implement policy packages (see e.g. [32]). ...
In this chapter we start by enumerating the reasons why progress in realizing the energy efficiency potential has been so limited both for firms and households. Then we turn to the role of policy in moving agents closer to an optimal level of energy efficiency. Governments have a range of instruments at their disposal for doing so and while some of them have been successful others have not. Lessons can therefore be learnt from the experience in implementing these different measures. The paper ends with some thoughts on how policies can be made more effective.
... The Carbon Reduction Commitment (CRC) of the UK, a complement to the EU Emissions Trading System for the commercial sector that addresses low-energyintensive activities in high demand is a good example. Another interesting instrument is the one recently proposed by Rodríguez et al. (2012) and Gago et al. (2013): a new tax on energy inefficiency. This tax would be based on the energy certificate system, and would employ a fixed charge per area unit, depending on the type of certificate. ...
In spite of the large potential and existing efforts to foster energy efficiency in the residential sector, much remains to be achieved. This may be partially due to the many barriers and market failures faced by energy efficiency, which are even greater in this sector. In particular, informational failures seem to be pervasive and relevant in this area. Addressing these issues requires specific policy instruments and strategies. This paper reviews the empirical evidence on the effectiveness of such instruments, focusing on energy certificates, feedback programs, and energy audits. Results show that energy certificates and feedback programs can be effective, but only if they are carefully designed, whereas the evidence about the effectiveness of energy audits is mixed. In addition, the paper points out the large potential for new instruments as well as combinations of existing ones.
... However, given that there are several significant policy instruments available to promote energy efficiency, it is very important to introduce such approaches with proper consideration for the synergies and negative interactions that they might bring about in such a context. Energy labels or certificates, on the other hand, could be used as the basis for designing other policy initiatives in this area, such as taxes levied on the energy inefficiency of stocks (Gago et al., 2013) or emission based car taxation (Rogan et al., 2011). The results of this article, and their possible derivations, may be particularly useful for an informed discussion of these and other policy issues in this important area. ...
Due to climate change, energy dependence and other energy-related issues, most developed countries are attempting to reduce fossil-fuel use in the transport sector. Accordingly, there are several instruments that have been in place for many years, such as mandatory design standards, taxes on fuels, car purchase and ownership, and energy efficiency labels. Yet it is still not clear whether consumers value energy efficiency as a characteristic of vehicles. In this paper we use the European labelling system for light vehicles, which classifies automobiles according to their relative fuel consumption levels, as a novel, alternative indicator for energy efficiency. Moreover, we use a unique database that incorporates official commercial prices along with prices obtained through ‘mystery shopping’ at a selection of Spanish car retailers. We apply the hedonic price method to this database to estimate the price functions for vehicles and thereby obtain the marginal price of vehicles rated highly in terms of energy efficiency. Our results show that vehicles labelled A and B are sold at prices 3 to 5.9 percent higher than those with similar characteristics but lower energy-efficiency labels.
... The buildings as energy consummators are important also because they will consume future energy. Thus, failing to retrofit old buildings to improve their energy and environmental performances may endanger GHG mitigation [6]. Fig. 1 shows the part of energy consumed in buildings with low energy efficiency. ...
... This is the particular case of buildings, mostly due to the irreversibility of emissions once the building is operative. In a recent paper Gago et al. (2013) suggest that, due to a number of general and specific barriers to the implementation of energy efficiency in buildings, energy prices and conventional energy and environmental policy instruments may not achieve the desired outcomes. They thus propose a package of complementary measures that would simultaneously tackle the problems of imperfect information, split incentives among agents, uncertainty about cost and limited access to capital. ...
This article provides an overview of specific and systemic applications of energy taxes and environmental(or green) tax reforms. To do so it combines a theoretical and empirical assessment of the literature, with anon-exhaustive description of the practice of these instruments and packages in the real world. Besidesyielding a comprehensive approximation to the specific and systemic use of energy taxes, the paper con-tributes to the research in this area by reflecting on the present and future of these instruments in a particu-larly shifting world.
... The buildings as energy consummators are important also because they will consume future energy. Thus, failing to retrofit old buildings to improve their energy and environmental performances may endanger Greenhouse Gas (GHG) mitigation [4]. Figure 1 shows the part of energy consumed in buildings with low energy efficiency. ...
... Energy efficiency improvements in the built environment not only imply energy savings and, as a consequence, lower energy bills. According to different authors (Gago et al., 2012;UNEP: SBCI, 2009;Levine et al., 2007), energy efficiency improvements in buildings can reduce GHG and other pollutant emissions, improve energy security, stimulate the growth of new businesses and jobs, as well as, improved quality of life, health and comfort. These additional benefits might increase the economic attractiveness of energy efficiency investments. ...
... Buildings constitute a 'stock' of future energy consumption and emissions, which makes this sector an important target for energy and environmental policies (Gago et al., 2012). Spain has 2689 million square meters built, of which 86% is residential buildings and 14% intended for other uses, mainly administrative and commercial (MITyC & IDAE, 2010). ...
... The EPC, on the other hand, provides information to consumers on energy efficiency, it creates incentives for agents to invest in energy efficiency, and it is a linking mechanism to other instruments such as subsidies (Gago et al., 2012). Spain is still behind in the implementation of the EPBD regarding the EPC for existing buildings. ...
Energy efficiency is considered one of the most cost effective ways to enhance security of energy supply and reduce greenhouse gas emissions. According to Europe's Energy Efficiency Plan, the biggest energy savings potential in the EU lies in the built environment. However, the many barriers to energy efficiency have prevented the implementation of the existing potential so far. This paper evaluates the existing policy instruments aimed at energy efficiency in buildings in Spain as laid down in the 2nd National Energy Efficiency Action Plan (NEEAP). The results show that the current policy package is insufficient to yield the existing energy savings potential in this sector. As much of the savings potential can be found in existing buildings and realization of this potential very much relies on voluntary action, the renovation sector is in need of an appropriate financial framework that mobilizes sufficient public and private financial resources, and transparent and efficient mechanisms to ensure the return on investment and payments from those who benefit from the renovation. Such financial framework needs to be supported by a regulatory framework that is tuned to existing buildings and an organizational framework that effectively connects the different policy layers in Spain.