Energy-saving Technology Adoption under Uncertainty in the Residential Sector

Charlier, Dorothée; Mosiño, Alejandro; Pommeret, Aude

doi:10.2307/41615493

Annals of Economics and Statistics

2011

DOI: 10.2307/41615493

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Energy-saving Technology Adoption under Uncertainty in the Residential Sector

Dorothée Charlier¹,

Alejandro Mosiño²,

Aude Pommeret³

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Cited by 3 publications

(1 citation statement)

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“…Following [18] the mathematical models for energy in buildings can be classified in a) top-down approaches, b) bottom-up (accounting) approaches, c) approaches based on building physics, d) statistical models, and e) hybrid models. The top-down models investigate the inter-relationships of energy demand in buildings and the economy at large and are aggregate approaches [19]. The categorisation of energy models into bottom-up, top-down and hybrid is established in the literature reviewing modelling, [20].…”

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Economic-Engineering Modelling of the Buildings Sector to Study the Transition towards Deep Decarbonisation in the EU

2019

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The paper presents a newly developed economic-engineering model of the buildings sector and its implementation for all the European Union (EU) Member States (MS), designed to study in detail ambitious energy efficiency strategies and policies, in the context of deep decarbonisation in the long term. The model has been used to support the impact assessment study that accompanied the European Commission's communication "A Clear Planet for All", in November 2018. The model covers all EU countries with a fine resolution of building types, and represents agent decision-making in a complex and dynamic economic-engineering mathematical framework. Emphasis is given to behaviours driving the energy renovation of buildings and the ensuing choice of equipment for heating and cooling. The model represents several market and non-market policies that can influence energy decisions in buildings and promote deep energy renovation. Moreover, the paper presents key applications for supporting policies targeting ambitious reduction of energy consumption and carbon emissions in buildings across Europe. The results illustrate that the achievement of ambitious energy-efficiency targets in the long-term heavily depends on pursuing a fast and extensive renovation of existing buildings, at annual rates between 1.21% and 1.77% for the residential sector and between 0.92% to 1.35% for the services sector. In both cases, the renovation rates are far higher past trends. Strong policies aimed at removing non-market barriers are deemed necessary. Electrification constitutes a reasonable choice for deeply renovated buildings and, as a result, almost 50% of households chooses electric heating over gas heating in the long term. However, heat pumps need to exploit further their learning potential to be economical and implementable for the various climatic conditions in Europe. The results also show that the cost impacts are modest even if renovation and decarbonisation in buildings develop ambitiously in the EU. The reduced energy bills due to energy savings can almost offset the increasing capital expenditures. Fundraising difficulties and the cost of capital are, however, of concern.

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Economic-Engineering Modelling of the Buildings Sector to Study the Transition towards Deep Decarbonisation in the EU

2019

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Energy Transition Under Irreversibility: A Two-Sector Approach

Dato¹

2016

Environ Resource Econ

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In this paper, we analyze the optimal energy transition of a two-sector economy (energy and final goods) with exhaustible oil reserves, a renewable source of energy and a pollution threat. The latter corresponds to a pollution threshold above which a part of the capital is lost (following flooding for instance). We show that the optimal energy transition path may correspond to a corner regime in which the economy starts using both resources, then crosses the pollution threshold and therefore loses a part of its capital. At the end, the sole adoption of the renewable energy is optimal only in the long run. This result is in line with the asymptotic energy transition arguments stating that the transition to "clean" energy may happen only in the long run. We also show that economy reduces the use of energy resource as long as the productivity of capital and energy services is high. Therefore, public policies should promote investments in energy innovation that targets productive sector, home appliances and buildings and helps to save both money and energy. We extend the present model to allow for additional investment in energy saving technologies. Our main results show that this additional investment favours the energy transition in the sense that it increases the time within which the economy may experience the catastrophe and the welfare of the society. For policy implications, economic instruments such as taxes on "dirty" energy, subsidies on "clean" energy or incentives for energy saving technologies need to be implemented in order to promote the energy transition. This is particularly important for developing countries that mostly rely on polluting energy resources and are the most vulnerable to climate change. But those economic instruments should be carefully designed in line with the asymptotic energy transition result.

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Investment in Energy Efficiency, Adoption of Renewable Energy and Household Behavior: Evidence from OECD Countries

Dato¹

2018

The Energy Journal

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There exist some possible synergies between energy efficiency measures and renewable energy adoption in the sense that the former reduces the energy demand so that the latter can begin to cut future GHG emissions with a high potential in residential sector. In this residential sector, many works have been done either on demand for clean energy or on investment in energy efficiency, but to our knowledge there is no specific study that investigates the interaction between the two decisions. This paper fills this gap in literature and first theoretically shows that there exist interactions between the two decisions depending on a threshold on the pro-environmental index of the consumer. Second, the paper empirically shows that the two decisions are positively interrelated and cannot be estimated independently. As a result, univariate methods that estimate separately the two decisions of renewable energy adoption and investment in energy efficiency potentially produce biased results because it may exist unobserved characteristics that determine both decisions. Third, the paper investigates characteristics of the household that significantly affect the interaction between the two decisions by using generalized ordered logit model. More precisely, the paper provides evidence on factors that affect the joint probability of adopting renewable energy and investing in energy efficiency and the probability of doing nothing. This contribution can serve to define incentive policies to boost the energy transition.

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Energy-saving Technology Adoption under Uncertainty in the Residential Sector

Cited by 3 publications

References 18 publications

Economic-Engineering Modelling of the Buildings Sector to Study the Transition towards Deep Decarbonisation in the EU

Economic-Engineering Modelling of the Buildings Sector to Study the Transition towards Deep Decarbonisation in the EU

Energy Transition Under Irreversibility: A Two-Sector Approach

Investment in Energy Efficiency, Adoption of Renewable Energy and Household Behavior: Evidence from OECD Countries

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