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Is it sensible to invest in home energy renovation?

Author

Listed:
  • Corinne Chaton

    (FiME Lab - Laboratoire de Finance des Marchés d'Energie - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CREST - EDF R&D - EDF R&D - EDF - EDF)

  • Samy Zitouni

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

To accelerate the energy renovation of buildings (housing and tertiary) necessary to achieve carbon neutrality by 2050, the French government has launched an energy renovation plan for buildings. This plan allocates funds across different subsidy and aid mechanisms for housing renovation. What is the impact of these investment subsidies for energy renovation on such investment and on the consumption and savings of a home-owning household that is not in fuel poverty? To answer this question, we develop a two-period, two-goods model that integrates "essential baskets", i.e., baskets of goods (with a "minimum energy" level and an "essential composite good"). We confirm that the investment subsidy for energy renovation is effective if it is targeted. However, this targeting should not be based solely on income. Indeed, we highlight non-monetary side effects as one of the key parameters of policy effectiveness. To illustrate our remarks, we estimate and calibrate the parameters of the model with data from French households that only use electricity as an energy source for their homes.

Suggested Citation

  • Corinne Chaton & Samy Zitouni, 2023. "Is it sensible to invest in home energy renovation?," Working Papers hal-04758670, HAL.
    • Handle: RePEc:hal:wpaper:hal-04758670
    as

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