Costs and benefits of energy efficiency obligations: a review of European programmes
The economics of energy efficiency programmes, including their costs and benefits, have been subject to considerable academic debate lasting well over three decades. However, robust data on the cost-effectiveness of different types of energy efficiency policy instruments is still scarce. A recent investigation into economic instruments supporting energy efficiency by the International Energy Agency concluded that ‘very few thorough evaluations of economic instruments in energy efficiency policy are available that would facilitate benefit-cost ratio comparisons.’
In this paper, we contribute to filling this gap by reviewing the costs and benefits of a specific type of policy instrument that recently gained significant traction in Europe–energy efficiency obligations (EEOs, also known as white certificates). Following the introduction of the Energy Efficiency Directive in 2012, the number of EEOs in Europe has grown from five schemes to 16 EEOs in operation or planned across the EU. There is now an emerging body of evidence on the costs and benefits of energy efficiency obligations covering a wider range of EU countries, which offers an opportunity to improve our understanding of the economics of EEOs.
We draw on this new data and provide:
- A comparative analysis of the costs and benefits of Energy Efficiency Obligations in a number of European countries,
- Discuss the uncertainties and challenges around calculating the costs of Energy Efficiency Obligations, and
- Provide a categorisation of the multiple benefits often overlooked in cost benefit-analyses with selected quantified examples.