Investment in Energy Efficiency, Adoption of Renewable Energy and Household Behaviour: Evidence from OECD countries

Prudence Dato

No 2017.05, Working Papers from FAERE - French Association of Environmental and Resource Economists

Abstract: There are possible synergies between the decision to invest in energy efficiency measures and to adopt renewable energy, in the sense that the former reduces energy demand so that the latter can further cut future greenhouse gas (GHG) emissions, and which has great potential in the residential sector. Much work has been done in the residential sector on demand for clean energy and on investment in energy efficiency, but to our knowledge there is no specific study that investigates the interaction between the two. This paper fills a gap in the literature, and first shows theoretically that there are interactions between the two decisions depending on the threshold of the cross effect related to the environmental motivation of the consumer. Second, the paper empirically shows that the two decisions are positively interrelated and cannot be estimated independently. As a result, univariate methods that estimate the decision to adopt renewable energy and investment in energy efficiency separately may produce biased results, because there may be unobserved characteristics that determine both decisions. Third, the paper investigates household characteristics that significantly affect the interaction between the two decisions using a generalised ordered logit model. Specifically, the paper provides evidence of factors that affect the joint probability of adopting renewable energy and investing in energy efficiency, and the probability of doing nothing. This contribution can serve to define incentive policies to advance the energy transition.

Keywords: Energy efficiency; Renewable energy; Bivariate probit; Generalised ordered logit (search for similar items in EconPapers)
JEL-codes: C35 D11 Q21 Q42 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2017-02
New Economics Papers: this item is included in nep-ene and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://faere.fr/pub/WorkingPapers/Dato_FAERE_WP2017.05R.pdf First version, 2017 (application/pdf)

Related works:
Journal Article: Investment in Energy Efficiency, Adoption of Renewable Energy and Household Behavior: Evidence from OECD Countries (2018)
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: https://EconPapers.repec.org/RePEc:fae:wpaper:2017.05

Access Statistics for this paper

More papers in Working Papers from FAERE - French Association of Environmental and Resource Economists Contact information at EDIRC.
Bibliographic data for series maintained by Dorothée Charlier ().