IDEAS home Printed from https://ideas.repec.org/p/bcc/wpaper/2013-05.html
   My bibliography  Save this paper

Economic Efficiency, Environmental Effectiveness and Political Feasibility of Energy Efficiency Rebates: The Case of the Spanish Energy Efficiency Renove Plan

Author

Listed:
  • Ibon Galarraga
  • Luis M. Abadie
  • Alberto Ansuategi

Abstract

Energy labels are used to promote the purchase of efficient appliances. Many countries in Europe use subsidies (namely energy efficiency rebates) to support these purchases as it is the case of Spain. A figure ranging from 50 to 105€ subsidy has been granted in the past for the acquisition of the most efficient appliances. This paper first analyses the impact of a 80€ subsidy on the dishwasher market and compares the results with a 40 € tax for non-labelled ones. The results take into account the effects that the policies generate in the market segment that is a close substitute, that is, cross effects. The paper shows that the subsidy is expensive for the Government, generates some welfare losses and it also generates a rebound effect as a consequence of the increase in the total number of appliances sold. The 40 € tax does not cost money to the Government, it generates a lower welfare loss and reduces the energy bill. However, the analysis is extended to go beyond the two extreme scenarios: subsidies without taxes and taxes without subsidies. Different combinations of both instruments are suggested and they are assessed based on their performance regarding economic efficiency, environmental effectiveness and political feasibility.

Suggested Citation

  • Ibon Galarraga & Luis M. Abadie & Alberto Ansuategi, 2013. "Economic Efficiency, Environmental Effectiveness and Political Feasibility of Energy Efficiency Rebates: The Case of the Spanish Energy Efficiency Renove Plan," Working Papers 2013-05, BC3.
    • Handle: RePEc:bcc:wpaper:2013-05
    as

    Download full text from publisher

    File URL: http://www.bc3research.org/index.php?option=com_wpapers&task=downpubli&iddoc=63&repec=1&Itemid=279
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Stavins, Robert N., 2003. "Experience with market-based environmental policy instruments," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 9, pages 355-435, Elsevier.
    2. Bovenberg, A. Lans & Goulder, Lawrence H., 2002. "Environmental taxation and regulation," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 23, pages 1471-1545, Elsevier.
    3. Ibon Galarraga & Anil Markandya, 2003. "The analysis of welfare effects of an environmental product tax: an application to the taxation of car tyres in Hungary," Fiscal Studies, Institute for Fiscal Studies, vol. 24(1), pages 97-114, March.
    4. Geller, Howard & Harrington, Philip & Rosenfeld, Arthur H. & Tanishima, Satoshi & Unander, Fridtjof, 2006. "Polices for increasing energy efficiency: Thirty years of experience in OECD countries," Energy Policy, Elsevier, vol. 34(5), pages 556-573, March.
    5. Newell, Richard G. & Pizer, William A., 2003. "Regulating stock externalities under uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 45(2, Supple), pages 416-432, March.
    6. Hunt Allcott & Michael Greenstone, 2012. "Is There an Energy Efficiency Gap?," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 3-28, Winter.
    7. Sorrell, Steve & Dimitropoulos, John & Sommerville, Matt, 2009. "Empirical estimates of the direct rebound effect: A review," Energy Policy, Elsevier, vol. 37(4), pages 1356-1371, April.
    8. A. Greening, Lorna & Greene, David L. & Difiglio, Carmen, 2000. "Energy efficiency and consumption -- the rebound effect -- a survey," Energy Policy, Elsevier, vol. 28(6-7), pages 389-401, June.
    9. William D. Nordhaus, 2006. "After Kyoto: Alternative Mechanisms to Control Global Warming," American Economic Review, American Economic Association, vol. 96(2), pages 31-34, May.
    10. Alberto Ansuategi & Ibon Galarraga, 2009. "Carbon Pricing as an Effective Instrument of Climate Policy: Searching for an Optimal Policy Instrument," Rivista di Politica Economica, SIPI Spa, vol. 99(3), pages 147-169, JULY-SEPT.
    11. Diamond, P. A. & McFadden, D. L., 1974. "Some uses of the expenditure function in public finance," Journal of Public Economics, Elsevier, vol. 3(1), pages 3-21, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Galarraga, Ibon & Abadie, Luis M. & Ansuategi, Alberto, 2013. "Efficiency, effectiveness and implementation feasibility of energy efficiency rebates: The “Renove” plan in Spain," Energy Economics, Elsevier, vol. 40(S1), pages 98-107.
    2. Todd D. Gerarden & Richard G. Newell & Robert N. Stavins, 2017. "Assessing the Energy-Efficiency Gap," Journal of Economic Literature, American Economic Association, vol. 55(4), pages 1486-1525, December.
    3. Karen Turner, 2013. ""Rebound" Effects from Increased Energy Efficiency: A Time to Pause and Reflect," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4).
    4. Anna Alberini, Will Gans, and Charles Towe, 2016. "Free Riding, Upsizing, and Energy Efficiency Incentives in Maryland Homes," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1).
    5. Rishan Adha & Cheng-Yih Hong, 2021. "How Large the Direct Rebound Effect for Residential Electricity Consumption When the Artificial Neural Network Takes on the Role? A Taiwan Case Study of Household Electricity Consumption," International Journal of Energy Economics and Policy, Econjournals, vol. 11(3), pages 354-364.
    6. Rocco, Matteo V. & Forcada Ferrer, Rafael J. & Colombo, Emanuela, 2018. "Understanding the energy metabolism of World economies through the joint use of Production- and Consumption-based energy accountings," Applied Energy, Elsevier, vol. 211(C), pages 590-603.
    7. Llorca, Manuel & Jamasb, Tooraj, 2017. "Energy efficiency and rebound effect in European road freight transport," Transportation Research Part A: Policy and Practice, Elsevier, vol. 101(C), pages 98-110.
    8. Andersen, Kristoffer Steen & Wiese, Catharina & Petrovic, Stefan & McKenna, Russell, 2020. "Exploring the role of households’ hurdle rates and demand elasticities in meeting Danish energy-savings target," Energy Policy, Elsevier, vol. 146(C).
    9. Copiello, Sergio, 2017. "Building energy efficiency: A research branch made of paradoxes," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 1064-1076.
    10. Meier, Helena & Tode, Christian, 2015. "How Technological Potentials are Undermined by Economic and Behavioural Responses - The Treatment Effect of Endogenous Energy Efficiency Measures," EWI Working Papers 2015-4, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    11. Berry, Stephen & Davidson, Kathryn, 2016. "Improving the economics of building energy code change: A review of the inputs and assumptions of economic models," Renewable and Sustainable Energy Reviews, Elsevier, vol. 58(C), pages 157-166.
    12. Schmidt, Stephan & Weigt, Hannes, 2013. "A Review on Energy Consumption from a Socio-Economic Perspective: Reduction through Energy Efficiency and Beyond," Working papers 2013/15, Faculty of Business and Economics - University of Basel.
    13. Zhang, Yue-Jun & Peng, Hua-Rong, 2017. "Exploring the direct rebound effect of residential electricity consumption: An empirical study in China," Applied Energy, Elsevier, vol. 196(C), pages 132-141.
    14. Carlo Drago & Andrea Gatto, 2022. "An interval‐valued composite indicator for energy efficiency and green entrepreneurship," Business Strategy and the Environment, Wiley Blackwell, vol. 31(5), pages 2107-2126, July.
    15. Hancevic, Pedro I. & Sandoval, Hector H., 2022. "Low-income energy efficiency programs and energy consumption," Journal of Environmental Economics and Management, Elsevier, vol. 113(C).
    16. Aydin, Erdal, 2016. "Energy conservation in the residential sector : The role of policy and market forces," Other publications TiSEM b9cedba8-1310-4097-90fb-b, Tilburg University, School of Economics and Management.
    17. Jonathan M. Lee, 2015. "The Impact of Heterogeneous NOx Regulations on Distributed Electricity Generation in U.S. Manufacturing," Working Papers 15-12, Center for Economic Studies, U.S. Census Bureau.
    18. De Borger, Bruno & Mulalic, Ismir & Rouwendal, Jan, 2016. "Measuring the rebound effect with micro data: A first difference approach," Journal of Environmental Economics and Management, Elsevier, vol. 79(C), pages 1-17.
    19. Stavins, Robert, 2001. "Lessons From the American Experiment With Market-Based Environmental Policies," RFF Working Paper Series dp-01-53, Resources for the Future.
    20. Kurt Kratena & Ina Meyer & Mark Sommer, 2013. "Energy Scenarios 2030. Model Projections of Energy Demand as a Basis to Quantify Austria's Greenhouse Gas Emissions," WIFO Studies, WIFO, number 46702.

    More about this item

    Keywords

    Energy efficiency rebates; deadweight losses; rebound effect;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcc:wpaper:2013-05. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sergio Henrique Faria (email available below). General contact details of provider: https://www.bc3research.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.