Determinants to the adoption of energy-efficient retrofits and the role of policy measures

Buildings are responsible for around 45% of total energy consumption and one-third of CO2 emissions annually in Switzerland. Policymakers have argued that an increased rate of energy-saving retrofits in existing buildings will play a critical role in meeting the energy and climate policy goals. This article examines the determinants for the households’ investment decisions to undertake energy-efficient retrofits and investigates the role of policy measures. We estimate random effects probit models using a rich data for 1663 owned single-family Swiss households for retrofits undertaken during 2010 to 2014. Results suggest that while the building vintage appears to be a relevant determinant; energy-related attitudes of decision makers and policy instruments are also likely to play an important role. In particular, we find a suggestive evidence of tax deduction policy in supporting households’ decisions to undertake energy-saving retrofits as well as the intensity of renovation. Direct monetary policies such as tax deductions should be focused particularly upon poorly insulated old buildings and those that rely on non-renewable energy sources for heating purposes.