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An Assessment of the Energy-Efficiency Gap and Its Implications for Climate Change Policy

Author

Listed:
  • Todd D. Gerarden

    (Harvard University)

  • Richard G. Newell

    (Duke University)

  • Robert N. Stavins

    (Harvard University)

  • Robert C. Stowe

    (Harvard University)

Abstract
Improving end-use energy efficiency—that is, the energy-efficiency of individuals, households, and firms as they consume energy—is often cited as an important element in efforts to reduce greenhouse-gas (GHG) emissions. Arguments for improving energy efficiency usually rely on the idea that energy-efficient technologies will save end users money over time and thereby provide low-cost or no-cost options for reducing GHG emissions. However, some research suggests that energy-efficient technologies appear not to be adopted by consumers and businesses to the degree that would seem justified, even on a purely financial basis. We review in this paper the evidence for a range of explanations for this apparent “energy-efficiency gap.” We find most explanations are grounded in sound economic theory, but the strength of empirical support for these explanations varies widely. Retrospective program evaluations suggest the cost of GHG abatement varies considerably across different energy-efficiency investments and can diverge substantially from the predictions of prospective models. Findings from research on the energy-efficiency gap could help policy makers generate social and private benefits from accelerating the diffusion of energy-efficient technologies—including reduction of GHG emissions.

Suggested Citation

  • Todd D. Gerarden & Richard G. Newell & Robert N. Stavins & Robert C. Stowe, 2015. "An Assessment of the Energy-Efficiency Gap and Its Implications for Climate Change Policy," Working Papers 2015.28, Fondazione Eni Enrico Mattei.
    • Handle: RePEc:fem:femwpa:2015.28
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    Cited by:

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    5. Jihyo Kim & Suhyeon Nam, 2021. "Do Household Time, Risk, and Social Preferences Affect Home Energy Retrofit Decisions in Korea?," Sustainability, MDPI, vol. 13(8), pages 1-18, April.
    6. Schleich, Joachim & Gassmann, Xavier & Faure, Corinne & Meissner, Thomas, 2016. "Making the implicit explicit: A look inside the implicit discount rate," Energy Policy, Elsevier, vol. 97(C), pages 321-331.
    7. Mehdi Bensouda & Mimoun Benali & Ghada Moufdi & Taoufik El Bouzekri El Idrissi & Abdelhamid El Bouhadi, 2023. "Energy Audit as an Instrument to Tackle Internal Barriers to Energy Efficiency: Lessons from Moroccan Industrial Firms," Sustainability, MDPI, vol. 15(15), pages 1-19, July.
    8. Foster, John & Wagner, Liam & Liebman, Ariel, 2015. "Modelling the Electricity and Natural Gas Sectors for the Future Grid: Developing Co-Optimisation Platforms for Market Redesign," MPRA Paper 70114, University Library of Munich, Germany.
    9. Tetyana Vasylieva & Vladyslav Pavlyk & Yuriy Bilan & Grzegorz Mentel & Marcin Rabe, 2021. "Assessment of Energy Efficiency Gaps: The Case for Ukraine," Energies, MDPI, vol. 14(5), pages 1-14, March.

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    More about this item

    Keywords

    Energy Efficiency; Climate Change Policy;

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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