Encouraging Residential Energy

Abstract

This cumulative PhD thesis explores the potential of a more contextual approach for energy policies targeted at private households. The five chapters of the thesis consist of an introduction, which motivates the thesis and gives a brief summary of the chapters with a joint conclusion, three paper-based chapters intended for publication, and a methodological chapter for an extension of the existing sampleSelection package in the statistics programme R. The thesis mainly contributes to the energy policy and economics literature, but it is also relevant to related disciplines, such as other social sciences, engineering, and psychology. Energy savings in private households play an important role in achieving reduction targets for the European Union and its member states, as the residential sector constitutes about 25 percent of total final energy consumption. As only 1 percent is added to the building stock in new housing per year in the EU, the majority of savings must be realized through retrofitting and changes in consumption habits. Evidence from policy programs in the last couple of decades has been mixed and it appears that households are harder to reach than previously thought. This has led to the perception that there is an Energy Efficiency Gap, describing a situation in which households are not aware of the financial savings they could achieve by investing in more energy efficient technologies. However, more recent evidence indicates that the financial potentials at the household level may have been overstated. While there is still no consensus on whether there is an Energy Efficiency Gap, a pragmatic way forward suggests a more contextual approach that pays closer attention to barriers and promoters of energy efficiency in private homes. Against this background, the thesis applies different methodologies to investigate the role of context in energy policies targeted at private households: a meta-analysis drawing on existing evidence in the literature, an ex-post policy analysis based on data from an energy audit programme in Southern Denmark, and a novel experimental economic framework. The first analysis provides indicative evidence that income, age, and education positively influence a household’s propensity to invest, while household size has a negative effect. However, these findings are only partly significant due to a limited base of comparable evidence, highlighting a need for compatibility in empirical studies, and more repetition studies. The second analysis shows that changes in certain life situations increase the propensity for households to have an audit and make energy investments; specifically we find that moving and retiring make households more likely to join a free energy audit programme, while getting married and moving correlates with higher investments. This indicates opportunities to develop more efficient policy programmes that depend on a household response, by reaching out to households at a time when they are more likely to be encouraged. The final analysis investigates potential spillover effects induced by behavioural policy interventions, i.e. when an intervention aimed at one behaviour may also affect another behaviour positively or negatively. In an economic experiment we find evidence for a positive spillover induced by a social norms based intervention, but the primary contribution of this part of the thesis is the novel experimental framework developed for the purpose of a systematic analysis of spillovers. Overall, the results of this thesis indicate that a more contextual policy approach holds promise to encourage energy efficiency improvements and savings by incorporating the context in which decisions are made, be it the socio-economic circumstances, changes in life situation, or the decision environment. Although the insights generated by the thesis are also relevant for policy design, its main contributions are to future policy research, as it highlights the need for energy policy research to be put on a more robust and evidence-based foundation, mainly through increased application of experimental methods.