CO2 emissions reduction from residential buildings: cost estimate and policy design

Riccardo Camboni (), Alberto Corsini, Raffaele Miniaci () and Paola Valbonesi
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Riccardo Camboni: University of Padova and OIPE
Raffaele Miniaci: University of Brescia and OIPE

No 304, "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno"

Abstract: Relying on microdata from Energy Performance Certificates (EPCs) for the Treviso province (Italy), which include information on the energy use of buildings and detailed rec- ommendations on renovations to increase energy performance and the corresponding achiev- able energy efficiency, we first assess the cost of improving building energy efficiency for a given CO2 abatement. To our EPC dataset we add information on household characteristics (from the Census) and expenditure (from the Households Budget Survey) using a probabilistic matching technique. We then investigate the optimality of a subsidy financed by the policy maker covering a percentage of the renovation cost. Our results show that the cost of reducing carbon emissions increases exponentially with CO2 abatement. Moreover, without any subsidy, only 15% of the recommended energy efficiency enhancing investments result in a positive private net present value (NPV) and are likely to be implemented: these investments represent an average upfront cost of about 22% of annual household spending. The adoption of a subsidy covering 50% of the upfront costs brings the percentage of recommended investments with private positive NPV to 30% and reduces the incidence on the annual household budget to 11%. Finally, in determining the likelihood of a recommendation being implemented, our empirical findings further show that household characteristics play a far less important role than dwelling characteristics.

Keywords: CO2 emission reduction; residential building energy efficiency; energy performance certificates (EPCs); housing renovation; Energy: government housing policy; distributional impact. (search for similar items in EconPapers)
Pages: 40 pages
Date: 2024-06
New Economics Papers: this item is included in nep-ene, nep-env and nep-mfd
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Citations: View citations in EconPapers (1)

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