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An Examination of How Energy Efficiency Incentives Are Distributed Across Income Groups

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  • Grant D. Jacobsen

Abstract

Many policies lead to the provision of incentives, such as rebates or tax credits, to consumers for the purchase of products that have high energy efficiency. This paper investigates how these incentives are distributed across income groups for three types of subsidies (manufacturer or retailer rebates, utility rebates, and tax credits) and eight types of equipment. While incentives are always concentrated in higher-income households, there is substantial heterogeneity in the magnitude of the concentration depending on how incentives are structured. Tax credits are the type of subsidy that is most concentrated in higher-income households and utility rebates are the least. Incentives for appliances that are not universally-owned, including dishwashers and clotheswashers, are more concentrated than are incentives for other types of equipment. Differences across income groups in the rates of equipment presence and turnover, willingness to purchase Energy Star models, and rates of homeownership contribute to the concentration. After controlling for these factors, utility rebates are no longer concentrated in higher-income households, but manufacturer / retailer rebates and tax credits remain so.

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  • Grant D. Jacobsen, 2019. "An Examination of How Energy Efficiency Incentives Are Distributed Across Income Groups," The Energy Journal, , vol. 40(6), pages 171-198, November.
    • Handle: RePEc:sae:enejou:v:40:y:2019:i:6:p:171-198
    DOI: 10.5547/01956574.40.6.gjac
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    Cited by:

    1. Jacobsen, Grant D. & Stewart, James I., 2022. "How do consumers respond to price complexity? Experimental evidence from the power sector," Journal of Environmental Economics and Management, Elsevier, vol. 116(C).
    2. Vona, Francesco, 2023. "Managing the distributional effects of climate policies: A narrow path to a just transition," Ecological Economics, Elsevier, vol. 205(C).
    3. Puja Singhal & Andrew Hobbs, 2023. "The Distribution of Energy Efficiency and Regional Inequality," The Energy Journal, , vol. 44(4), pages 83-122, July.
    4. Luiz de Mello, 2023. "Real Estate in a Post-Pandemic World: How Can Policies Make Housing More Enviromentally Sustainable and Affordable?," Hacienda Pública Española / Review of Public Economics, IEF, vol. 244(1), pages 111-139, March.
    5. Miriam Berretta & Joshua Furgeson & Collins Zamawe & Ian Hamilton & Yue Wu & Paul J. Ferraro & Neal Haddaway & John Eyers, 2021. "PROTOCOL: Residential energy efficiency interventions: An effectiveness systematic review," Campbell Systematic Reviews, John Wiley & Sons, vol. 17(4), December.
    6. Singhal, Puja & Pahle, Michael & Kalkuhl, Matthias & Levesque, Antoine & Sommer, Stephan & Berneiser, Jessica, 2022. "Beyond good faith: Why evidence-based policy is necessary to decarbonize buildings cost-effectively in Germany," Energy Policy, Elsevier, vol. 169(C).
    7. Jacobsen, Grant D., 2024. "Race, ethnicity, and the distribution of energy efficiency incentives," Energy Economics, Elsevier, vol. 130(C).
    8. Beiser-McGrath, Liam & Busemeyer, Marius R., 2023. "Carbon inequality and support for carbon taxation," LSE Research Online Documents on Economics 120925, London School of Economics and Political Science, LSE Library.
    9. Singhal, Puja & Hobbs, Andrew, 2021. "The Distribution of Energy Efficiency and Regional Inequality," VfS Annual Conference 2021 (Virtual Conference): Climate Economics 242343, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    Energy efficiency; Energy rebates; Energy tax credits; Energy subsidies; Distributional effects; Energy policy;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

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