Is There an Energy Efficiency Gap?
Many analysts of the energy industry have long believed that energy efficiency offers an enormous "win-win" opportunity: through aggressive energy conservation policies, we can both save money and reduce negative externalities associated with energy use. In 1979, Daniel Yergin and the Harv...
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| Format: | Article |
| Language: | en_US |
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American Economic Association
2012
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| Online Access: | http://hdl.handle.net/1721.1/73024 |
| _version_ | 1826204370831671296 |
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| author | Allcott, Hunt Volney Greenstone, Michael |
| author2 | Massachusetts Institute of Technology. Department of Economics |
| author_facet | Massachusetts Institute of Technology. Department of Economics Allcott, Hunt Volney Greenstone, Michael |
| author_sort | Allcott, Hunt Volney |
| collection | MIT |
| description | Many analysts of the energy industry have long believed that energy efficiency offers an enormous "win-win" opportunity: through aggressive energy conservation policies, we can both save money and reduce negative externalities associated with energy use. In 1979, Daniel Yergin and the Harvard Business School Energy Project estimated that the United States could consume 30 or 40 percent less energy without reducing welfare. The central economic question around energy efficiency is whether there are investment inefficiencies that a policy could correct. First, we examine choices made by consumers and firms, testing whether they fail to make investments in energy efficiency that would increase utility or profits. Second, we focus on specific types of investment inefficiencies, testing for evidence consistent with each. Three key conclusions arise: First, the evidence presented in the long literature on the subject frequently does not meet modern standards for credibility. Second, when one tallies up the available empirical evidence from different contexts, it is difficult to substantiate claims of a pervasive Energy Efficiency Gap. Third, it is crucial that policies be targeted. Welfare gains will be larger from a policy that preferentially affects the decisions of those consumers subject to investment inefficiencies. |
| first_indexed | 2024-09-23T12:53:35Z |
| format | Article |
| id | mit-1721.1/73024 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T12:53:35Z |
| publishDate | 2012 |
| publisher | American Economic Association |
| record_format | dspace |
| spelling | mit-1721.1/730242022-10-01T11:44:13Z Is There an Energy Efficiency Gap? Allcott, Hunt Volney Greenstone, Michael Massachusetts Institute of Technology. Department of Economics Greenstone, Michael Allcott, Hunt Volney Greenstone, Michael Many analysts of the energy industry have long believed that energy efficiency offers an enormous "win-win" opportunity: through aggressive energy conservation policies, we can both save money and reduce negative externalities associated with energy use. In 1979, Daniel Yergin and the Harvard Business School Energy Project estimated that the United States could consume 30 or 40 percent less energy without reducing welfare. The central economic question around energy efficiency is whether there are investment inefficiencies that a policy could correct. First, we examine choices made by consumers and firms, testing whether they fail to make investments in energy efficiency that would increase utility or profits. Second, we focus on specific types of investment inefficiencies, testing for evidence consistent with each. Three key conclusions arise: First, the evidence presented in the long literature on the subject frequently does not meet modern standards for credibility. Second, when one tallies up the available empirical evidence from different contexts, it is difficult to substantiate claims of a pervasive Energy Efficiency Gap. Third, it is crucial that policies be targeted. Welfare gains will be larger from a policy that preferentially affects the decisions of those consumers subject to investment inefficiencies. Alfred P. Sloan Foundation John D. and Catherine T. MacArthur Foundation California Energy Commission 2012-09-17T19:36:07Z 2012-09-17T19:36:07Z 2012-01 Article http://purl.org/eprint/type/JournalArticle 0895-3309 1944-7965 http://hdl.handle.net/1721.1/73024 Allcott, Hunt, and Michael Greenstone. “Is There an Energy Efficiency Gap?” Journal of Economic Perspectives 26.1 (2012): 3–28. Web.© 2012 The American Economic Association. en_US http://dx.doi.org/10.1257/jep.26.1.3 Journal of Economic Perspectives Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use. application/pdf American Economic Association American Economic Association |
| spellingShingle | Allcott, Hunt Volney Greenstone, Michael Is There an Energy Efficiency Gap? |
| title | Is There an Energy Efficiency Gap? |
| title_full | Is There an Energy Efficiency Gap? |
| title_fullStr | Is There an Energy Efficiency Gap? |
| title_full_unstemmed | Is There an Energy Efficiency Gap? |
| title_short | Is There an Energy Efficiency Gap? |
| title_sort | is there an energy efficiency gap |
| url | http://hdl.handle.net/1721.1/73024 |
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