Social Benefits of Financial Investment Support in Energy Conservation Policy

Torleif Haugland

The Energy Journal, 1996, vol. 17, issue 2, 79-102

Abstract: This paper examines the costs and benefits of a Norwegian energy conservation program that provided financial support for investments in energy efficiency. Participants in the program included industry, commerce, public services and households. Evaluation of the program shows that about 70% of the participants were "free riders' who would have invested in efficiency improvements even in the absence of the program. The economic efficiency was further reduced by economic distortions caused by taxes needed to finance the program. However, the energy savings did give environmental benefits through reduced atmospheric emissions, although this effect was somewhat diluted through a "conservation rebound," where the actual reduction in energy consumption was less than the theoretical savings. The energy conservation program is also highly sensitive to assumptions about the economic lifetime of the investments.

Keywords: Energy conservation; energy policy; Investment; Norway; Free riders (search for similar items in EconPapers)
Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:sae:enejou:v:17:y:1996:i:2:p:79-102

DOI: 10.5547/ISSN0195-6574-EJ-Vol17-No2-5

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