Uncertainty and additionality in energy efficiency programs

Ben Gilbert, Jacob LaRiviere and Kevin Novan

Journal of Environmental Economics and Management, 2022, vol. 115, issue C

Abstract: Residential energy efficiency subsidy programs often suffer from poor additionality. Using a large household-level dataset of energy efficiency subsidy program participation, we find that households are significantly more likely to participate when first moving into an existing home — when uncertainty about energy consumption and savings is greatest. We also find that the influence of bills and dwelling characteristics on participation declines the longer a household has lived in a dwelling. These findings suggest that there is uncertainty about the household-specific benefits of an upgrade that resolves over time. We show that when this is the case, not only are a share of participating households inframarginal (i.e. “non-additional”), many of the “additional” participants may not be economically efficient.

Keywords: Durable goods; Learning; Electricity; Second best (search for similar items in EconPapers)
JEL-codes: D Q (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:115:y:2022:i:c:s0095069622000638

DOI: 10.1016/j.jeem.2022.102700

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