On the added value of utility-sponsored energy efficiency subsidies: Insights from the French White Certificates program, Phase III

Sur la valeur ajoutée du financement des programmes d'efficacité énergétique par les fournisseurs d'énergie: Le cas de la troisième période des Certificats d'économies d'énergie

Pille-Riin Aja () and Louis-Gaëtan Giraudet ()
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Louis-Gaëtan Giraudet: ENPC - École nationale des ponts et chaussées

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Abstract: Since 2006, French energy suppliers provide subsidies for home energy retrofits to comply with an energy efficiency, or "White Certificate," obligation. The alleged advantage of utility-sponsored programs, compared to the public counterparts with which they often overlap, is in leveraging the private information energy suppliers may possess about energy efficiency potentials, allowing them to save energy more cost-effectively. We challenge this hypothesis and assess the value private funding adds to public funding. In a regression discontinuity design, we exploit two geographical discontinuities in subsidy amounts that prevailed during the third phase of the program (2015-2017). Comparing outcomes across the high-versus middle-subsidy border, we find that a 1% increase in subsidy amounts induced a 1.16% higher take-up. The effect only holds in three out of eight specifications, however. We moreover fail to identify a significant elasticity across the middle-versus low-subsidy border. In subsample regressions, we find that take-up was strong for insulation measures, which rank first in the cost-effectiveness merit order. These results together imply that the program's third phase was effective qualitatively, but not quantitatively. This suggests that energy suppliers could fulfill their obligation by merely free riding on overlapping programs -- a mechanism we confirm in complementary microsimulations.

Keywords: Energy efficiency; Subsidies; Regression discontinuity; White certificate (search for similar items in EconPapers)
Date: 2025-04-08
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