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Assessing the Energy-Efficiency Gap

Todd D. Gerarden, Richard Newell () and Robert Stavins

Journal of Economic Literature, 2017, vol. 55, issue 4, 1486-1525

Abstract: Energy-efficient technologies offer considerable promise for reducing the financial costs and environmental damages associated with energy use, but it has long been observed that these technologies may not be adopted by individuals and firms to the degree that might be justified, even on a purely financial basis. We survey the relevant literature on this "energy-efficiency gap" by presenting two complementary frameworks. First, we divide potential explanations for the energy-efficiency gap into three categories: market failures, behavioral explanations, and model and measurement errors. Second, we organize previous research in terms of the fundamental elements of cost-minimizing energy-efficiency decisions. This provides a decomposition that organizes thinking around four questions. First, are product offerings and pricing economically efficient? Second, are energy operating costs inefficiently priced and/or understood? Third, are product choices cost minimizing in present value terms? Fourth, do other costs inhibit more energy-efficient decisions? We synthesize academic research on these questions, with an emphasis on recent empirical findings, and offer suggestions for future research.

JEL-codes: D24 D82 L94 L98 O33 Q41 Q48 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/jel.20161360
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Related works:
Working Paper: Assessing the Energy-Efficiency Gap (2015) Downloads
Working Paper: Assessing the Energy-Efficiency Gap (2015) Downloads
Working Paper: Assessing the Energy-Efficiency Gap (2015) Downloads
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