The energy efficiency gap and barriers to investments

Leon Bremer, Sacha J. den Nijs and Henri de Groot
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Leon Bremer: Vrije Universiteit Amsterdam
Sacha J. den Nijs: Vrije Universiteit Amsterdam

No 23-043/VII, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: This study investigates the energy efficiency (EE) gap, referring to private agents who are not making seemingly profitable investments to reduce energy use. We deploy a questionnaire among firms in the Netherlands in which we ask them about investment behavior and barriers to investing in EE. A set of 16 barriers is constructed based on the literature. We find that most firms (70%) have made EE investments in the past five years, and that the median firm has saved 10% of its energy use. The remaining profitable EE investment opportunities still leave room for another 15% of energy savings at the median firm. We find that uncertainty about future policies ranks as the leading barrier to EE investments, followed by lock-ins in current equipment, and energy price uncertainty. Especially energy-intensive firms indicate the importance of policy uncertainty. Past policies have not been successful in addressing these barriers. Additionally, we find that a firm’s network can be an important channel for obtaining EE investment knowledge. Classification-JEL: C83, D22, O33, Q40.

Keywords: energy efficiency gap; barriers; investment behavior; technology adoption; policy uncertainty (search for similar items in EconPapers)
Date: 2023-07-24
New Economics Papers: this item is included in nep-ene
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