Are environmental fiscal incentives effective in inducing energy-saving renovations? An econometric evaluation of the French energy tax credit

Anna Risch

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Abstract: Fiscal incentives have been introduced to encourage households in many countries to undertake energy-saving renovations. This paper assesses the impact of an energy tax credit on (i) renovation rate and (ii) renovation expenditures using French data. We exploit a sharp discontinuity corresponding to the introduction of the French tax credit in 2005 to identify the policy's effects. Results indicate that the tax credit has little effect on the decision to renovate, increasing renovations by 1.09%, ceteris paribus. We find that the presence of free riding reduces the actual effect of fiscal measures. However, this fiscal policy does lead to an increase in renovation expenditures by 21.76%, all things being equal. This suggests that the energy tax credit induces households who are already determined to renovate to perform more substantial energy-saving renovations. We conduct a robustness check using the matching method, which confirms our results.

Keywords: Policy evaluation; Regression discountinuity design; Energy tax credit; Energy-efficient renovation (search for similar items in EconPapers)
Date: 2020-08
New Economics Papers: this item is included in nep-ene, nep-env and nep-pbe
Note: View the original document on HAL open archive server: https://hal.science/hal-03133083v1
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Citations: View citations in EconPapers (20)

Published in Energy Economics, 2020, 90 (August), ⟨10.1016/j.eneco.2020.104831⟩

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Journal Article: Are environmental fiscal incentives effective in inducing energy-saving renovations? An econometric evaluation of the French energy tax credit (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03133083

DOI: 10.1016/j.eneco.2020.104831

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