Local Money for Global Climate? Impact of a local energy efficiency subsidy program on energy use and job creation

Financement local pour le climat global? Impact d'un programme d'efficacité énergétique local sur la consommation d'énergie et la création d'emplois

Ilya Eryzhenskiy and Louis-Gaëtan Giraudet ()
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Louis-Gaëtan Giraudet: ENPC - École nationale des ponts et chaussées

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Abstract: Subsidy programs for home energy retrofits are a popular tool to reduce CO2 emissions. Should they be implemented at the national level to leverage economies of scale or at the local level to more finely identify the best opportunities? To examine this question, we evaluate a program introduced in the French department of Essonne and compare its performance to that of its national counterparts. In a difference-in-differences framework, we identify a 8% reduction in residential natural gas use induced by the program, implying a carbon abatement cost of €44/tCO2eq. In a triple-difference framework, we further identify a 27% increase in employment in the renovation sector in Essonne, as opposed to non-renovation sectors and neighboring departments, implying about 20 jobs created per million euro spent. Looking more carefully at contractors' origin, we find that households were more likely to hire an Essonian firm than an equally distant one based outside Essonne. Altogether, our results suggest that local programs perform better than their national counterparts, and that a fair share of their benefits are retained locally. This calls for a stronger involvement of local authorities in managing home renovation policies.

Keywords: Energy efficiency; Subsidies; Job creation (search for similar items in EconPapers)
Date: 2025-04-04
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