Economics at your fingertips  

Rethinking European energy taxation to incentivise consumer demand response participation

Nina Voulis, Max J.J. van Etten, Émile J.L. Chappin, Martijn Warnier and Frances M.T. Brazier

Energy Policy, 2019, vol. 124, issue C, 156-168

Abstract: The European Union considers demand response to be an integral part of its future energy vision, in particular as a supporting mechanism for renewable resource integration. To achieve high demand response participation, the European Union recognises the need for adequate financial incentives for all consumers, especially for residential and service sector consumers. However, the European Energy Tax Directive, which regulates energy taxation in the European Union, is currently not in alignment with this vision, as it does not provide any financial incentives for demand response participation. This paper explores the potential of energy taxes to provide such incentives. First, through an analysis of the current energy taxation and demand response literature. Second, by quantifying the difference in financial incentives between two tax designs (per-unit and ad valorem taxes) in a simulation case study of consumers heat pumps in the Netherlands. Results show that financial incentives are 3.5 times higher for the ad valorem tax than for the per-unit tax. The paper concludes with recommendations for policy makers for the design of energy taxes that provide residential and service sector consumers with adequate financial incentives for demand response participation.

Keywords: Energy taxes; Demand response; Financial incentives; Residential; Service sector; EU energy policy (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-01-19
Handle: RePEc:eee:enepol:v:124:y:2019:i:c:p:156-168