Energy performance certification and time on the market

This paper analyzes whether energy performance certificates (EPCs) serve as means to reduce the information asymmetry among market participants during the sale of homes. Using a sample of 876,000 single-family homes in the Netherlands, we examine the impact of EPC adoption on the speed of sale. Our results indicate that energy-rated homes sell faster than non-energy-rated homes, an effect that varies by 7–12 percent depending on model specifications and increases when positive (green) ratings are granted. The information conveyed by these certificates reduces the information asymmetry between buyers and sellers, which helps to reduce the uncertainty of quality.     

The price of innovation: An analysis of the marginal cost of green buildings

Energy efficiency plays an important role in reducing the carbon externality from buildings, but economic analyses of more efficient, green building have thus far ignored input costs. This paper finds that the average marginal cost of green-labeled construction projects is smaller than the value premiums documented in the literature. However, design fees, representing just a fraction of development costs but paid largely up-front, are significantly higher for green construction projects. These projects also take longer to complete. The results provide some insight into the market barriers and market failures that may explain the relatively slow adoption of otherwise economically rational green construction practices.     

Is energy efficiency capitalized into home prices? Evidence from three U.S. cities

We test for evidence that energy efficiency features are capitalized into home prices in three U.S. metropolitan areas. Using hedonic regressions and multiple matching procedures, we find that Energy Star certification is associated with higher sales prices in two of the markets: the Research Triangle region of North Carolina and Portland, Oregon. We find that local “green” certifications in Portland and in Austin, Texas, are also associated with higher prices and that the estimated price impacts are larger than those from Energy Star. Matching on observables proves to be important in some cases, reducing the estimated impacts compared with models without matching. We calculate the implied energy savings from the estimated premiums and find that, in the Research Triangle market, the Energy Star premiums approximately equal the savings that program is designed to achieve, but in Portland, the premiums are slightly greater than the program's savings due to low energy costs in the region.     

Quantifying the rebound effects of residential solar panel adoption

Customers who adopt solar panels can reduce their energy bills and lower the effective average electricity prices they pay. When the price falls, a solar consumer might consume more electricity than before – a solar rebound effect. We provide the first empirical evidence of residential solar rebound effects in the U.S. We use household level hourly and daily electricity meter data as well as hourly solar panel electricity generation data from 277 solar homes and about 4000 non-solar homes from 2013 to 2017 in Phoenix Arizona. Using matching methods and a fixed effects panel regression approach, we find that when solar electricity generation increases by 1 kWh, solar homes increase their total electricity consumption by 0.18 kWh. This indicates that solar rebound effects are estimated at 18%. Building upon our theoretical framework, the increase in consumer surplus from solar panel adoption is estimated at $972/yr.     

Do energy prices influence investment in energy efficiency? Evidence from energy star appliances

I examine whether electricity prices influence the likelihood that consumers purchase high efficiency appliances by using state-year panel data on electricity prices and the proportion of sales of new appliances that involve high efficiency “Energy Star” models. I find no evidence that electricity prices affect the propensity for consumers to choose high efficiency appliances. Point estimates are extremely small and precisely estimated. The findings suggest that price-based energy policies may be limited in the extent to which they increase investment in residential energy efficiency, which has been considered one of the lowest cost opportunities for reducing carbon emissions.     

Methods to empirically estimate direct and indirect rebound effect of energy-saving technological changes in households

Energy efficiency policies have a special importance within carbon emission reduction policies to mitigate the climate change effects. However, potential reductions of energy consumption and, consequently, its resulting emissions, can be offset through the so called “rebound effect”. The concept of “rebound effect” refers to a set of mechanisms whereby the improvement of efficiency reduces the cost of the energy service and this results in the household energy consumption rising and totally or partially negating the reduction achieved by the energy efficiency improvement. This paper provides a methodology to estimate the static direct plus indirect rebound effect of energy efficiency improvements in the use of energy in households. It is based on the combination of econometric estimations of energy demand functions, re-spending modelling and generalised intput-output of energy modelling. It also provides estimations for Catalonia.     

Energy neutrality potential of wastewater treatment plants: A novel evaluation framework integrating energy efficiency and recovery

• Framework of indicators was established based on energy efficiency and recovery. • Energy neutrality potential of 970 wastewater treatment plants was evaluated. • Analysis of characteristics and explanatory factors was carried out. • Pathways for improving the energy neutrality potential were proposed. Wastewater treatment plants (WWTPs) consume large amounts of energy and emit greenhouse gases to remove pollutants. This study proposes a framework for evaluating the energy neutrality potential (ENP) of WWTPs from an integrated perspective. Operational data of 970 WWTPs in the Yangtze River Economic Belt (YREB) were extracted from the China Urban Drainage Yearbook 2018. The potential chemical and thermal energies were estimated using combined heat and power (CHP) and water source heat pump, respectively. Two key performance indicators (KPIs) were then established: the energy self-sufficiency (ESS) indicator, which reflects the offset degree of energy recovery, and the comprehensive water–energy efficiency (CWEE) indicator, which characterizes the efficiency of water–energy conversion. For the qualitative results, 98 WWTPs became the benchmark (i.e., CWEE= 1.000), while 112 WWTPs were fully self-sufficient (i.e., ESS≥100%). Subsequently, four types of ENP were classified by setting the median values of the two KPIs as the critical value. The WWTPs with high ENP had high net thermal energy values and relatively loose discharge limits. The explanatory factor analysis of water quantity and quality verified the existence of scale economies. Sufficient carbon source and biodegradability condition were also significant factors. As the CWEE indicator was mostly sensitive to the input of CHP, future optimization shall focus on the moisture and organic content of sludge. This study proposes a novel framework for evaluating the ENP of WWTPs. The results can provide guidance for optimizing the energy efficiency and recovery of WWTPs.     

Are energy efficiency standards justified?

This paper develops an analytical framework for comparing the welfare effects of energy efficiency standards and pricing policies for reducing gasoline, electricity, and nationwide carbon emissions. The model is parameterized with US data and includes key externalities in the energy/transportation sectors and possible underinvestment in energy efficiency due to “misperceptions” over energy savings. Even with large misperceptions, the extra welfare gains from complementing efficient pricing policies with energy efficiency standards are zero for reducing gasoline and 5 percent for reducing electricity. And when viewed as substitutes, these standards forgo 60 percent or more of the potential welfare gains from corresponding pricing policies. A combination of energy efficiency and emissions standards is more than three times as costly as carbon pricing when there is no misperception over energy savings, and even with large misperceptions, combining carbon pricing with gasoline/electricity taxes is better than combining it with energy efficiency standards.     

Modelling radiative balance in a row-crop canopy: Row-soil surface net radiation partition

Row crops like vineyards undergo various and significant manipulations of training system and cultural practices, which strongly influence the quality of products. Variations of water vapour fluxes from the soil surface and the leaves in the row volume are closely linked to the ratio of energy available to each compartment. A physically realistic model of available energy partition between the rows and the soil surface is therefore a key factor towards optimization of such systems, and must be included in canopy models. A number of available models were not directly validated. The purpose of the study was therefore to design a model of net radiation partition and check it directly.The model of net radiation partition between rows (Rnv), considered as a whole, and intervening soil surface (Rns) of a row-crop canopy was developed from physically realistic yet simple assumptions:

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global solar (short wave) radiation partition was calculated by a previously validated geometric model;

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long-wave radiative fluxes between the soil surface, the rows and the atmosphere were calculated from the corresponding view factors, which only depended on canopy geometry;

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atmospheric radiation was estimated by a simple empirical relation based on air temperature as the only input variable;

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air temperature in the vicinity of leaves replaced leaf surface temperatures as a more convenient input variable, with little loss of information.

The input variables were incoming direct and diffuse solar radiation, soil surface mean temperature and air temperature near the leaves. The main parameters were soil and leaf albedos, row porosity and dimensions.A direct validation of the model was attempted by measuring net radiation above the canopy and at five positions above the soil surface in a vineyard of the Bordeaux area. The reliability of soil surface net radiation measurements was estimated by thorough error propagation analysis. When found significant, errors were corrected and finally soil surface net radiation data were corrected only for delay in direct downward solar radiation striking net radiometers, because canopy was discontinuous and height of net radiometers was not negligible compared to canopy height.In these conditions, model calculations were in agreement with measurements, although the model slightly underestimated Rns and therefore overestimated Rnv. As the mean error was about 20 W m⁻², and therefore compatible with instrument accuracy, the results were considered satisfactory.This available energy partition model is able to estimate radiative balance in various canopy systems and in various thermal environment conditions, leading to easier simulations of energy balance and water fluxes. It could therefore be a useful tool for optimizing row-crop canopies, taking fully into account any kind of present or future thermal environment.     

Energy taxes and endogenous technological change

This paper studies the effects of a tax on energy use in a growth model where market structure is endogenous and jointly determined with the rate of technological change. Because this economy does not exhibit the scale effect (a positive relation between TFP growth and aggregate R&D), the tax has no effect on the steady-state growth rate. It has, however, important transitional effects that give rise to surprising results. Specifically, under the plausible assumption that energy demand is inelastic, there may exist a hump-shaped relation between the energy tax and welfare. This shape stems from the fact that the reallocation of resources from energy production to manufacturing triggers a temporary acceleration of TFP growth that generates a √-shaped time profile of consumption. If endogenous technological change raises consumption sufficiently fast and by a sufficient amount in the long run, and households are sufficiently patient, the tax raises welfare despite the fact that—in line with standard intuition—it lowers consumption in the short run.     

Competing land uses and fossil fuel,and optimal energy conversion rates during the transition toward a green economy under a pollution stock constraint

We study the transition to a carbon-free economy in a model with a polluting non-renewable resource and a clean renewable resource. Transforming primary energy into ready-to-use energy services is costly and more efficient energy transformation rates are more costly to achieve. Renewable energy competes with food production for land and the food productivity of land can be improved at some cost. To avoid catastrophic climate damages, the pollution stock is mandated to stay below a given cap. When the economy is not constrained by the cap, the efficiency of energy transformation increases steadily until the transition toward the ultimate green economy; when renewable energy is exploited, its land use rises at the expense of food production; food productivity increases together with the land rent but food production drops; the food and energy prices increase and renewables substitute for non-renewable energy. During the constrained phase, the economy follows a constant path of prices, quantities, efficiency rates, food productivity and land rent, a phenomenon we call the ‘ceiling efficiency paradox’.     

Prospect theory and energy efficiency

Investments in energy efficiency entail uncertainty, and when faced with uncertainty consumers have been shown to behave according to prospect theory: preferences are reference-dependent and exhibit loss aversion, and probabilities are subjectively weighted. Using data from a choice experiment eliciting prospect theory parameters, I provide evidence that loss-averse people are less likely to invest in energy efficiency. Then, I consider policy design under prospect theory when there are also externalities from energy use. A higher degree of loss aversion implies a higher subsidy to energy efficiency. Numerical simulations suggest that the impact of prospect theory on policy may be substantial.     

Predicting national sustainability: The convergence of energetic,economic and environmental realities

The “constraint space” dictated by energetic, economic and environmental realities on scenarios for future organization of humanity and nature is explored from the perspective of the energy and resources driving economies. Net energy of energy sources is presented as an index (Emergy Yield Ratio; EYR) that must be evaluated for energy sources to better understand their potential contributions to society, but more important, as an indicator of the changes needed in the future if lower net yielding sources are to be relied upon. An aggregate EYR was calculated for the USA economy and shown to have decreased by 38% since 1950, from 11/1 to 6.8/1. Several measures of efficiency at the scale of national economies are explored and the data suggest that the most efficient economies are also the most energetically intense (as measured by empower intensity). An index of environmental loading is suggested as a measure to evaluate environmental efficacy. An obvious outcome is that the smallest most energetically intense countries have the highest environmental loads, and those with large land area and/or continental shelves have the lowest ratios. An Emergy Sustainability Index (EmSI) is defined, computed for countries, and proposed as a multi-dimensional measure of long-term sustainability. The most sustainable economies are those with the highest EYR and lowest environmental loads.     

Tradable fuel economy credits: Competition and oligopoly

Corporate average fuel economy (CAFE) regulations specify minimum standards for fuel efficiency that vehicle manufacturers must meet independently. We design a system of tradeable fuel economy credits that allows trading across vehicle classes and manufacturers with and without considering market power in the credit market. We perform numerical simulations to measure the potential cost savings from moving from the current CAFE system to one with stricter standards, but that allows vehicle manufacturers various levels of increased flexibility. We find that the ability for each manufacturer to average credits between its cars and trucks provides a large percentage of the potential savings. As expected, the greatest savings come from the greatest flexibility in the credit system. Market power lowers the potential cost savings to the industry as a whole, but only modestly. Loss in efficiency from market power does not eliminate the gains from credit trading.     

Re-evaluating the role of energy efficiency standards: A behavioral economics approach

The economic models that prescribe Pigovian taxation as the first-best means of reducing energy-related externalities are typically based on the neoclassical model of rational consumer choice. Yet, consumer behavior in markets for energy-using durables is generally thought to be far from efficient, giving rise to the concept of the “energy-efficiency gap.” This paper presents a welfare analysis of energy policies that is based on a behavioral model of temptation and self-control, introduced by Gul and Pesendorfer 23 and 24. We find that, in the presence of temptation, (i) Pigovian taxes alone do not yield a first-best outcome, (ii) when viewed as substitutes, energy efficiency standards can dominate Pigovian taxes, and (iii) a policy combining standards with a Pigovian tax can yield higher social welfare than a Pigovian tax alone, implying that the two instruments should be viewed as complements rather than substitutes.     

Foraging in the seed-harvester ant genus Pogonomyrmex: are energy costs important?

Energy intake and expenditure on natural foraging trips were estimated for the seed-harvester ants, Pogonomyrmex maricopa and P. rugosus. During seed collection, P. maricopa foraged individually, whereas P. rugosus employed a trunk-trail foraging system. Energy gain per trip and per minute were not significantly different between species. There was also no interspecific difference in energy cost per trip, but energy cost per minute was lower for P. maricopa foragers because they spent on average 7 min longer searching for a load on each trip. Including both unsuccessful and successful foraging trips, average energy gain per trip was more than 100 times the energy cost per trip for both species. Based on this result, we suggest that time cost incurred during individual foraging trips is much more important than energy cost in terms of maximizing net resource intake over time. In addition, because energy costs are so small relative to gains, we propose that energy costs associated with foraging may be safely ignored in future tests of foraging theory with seed-harvesting ant species.     

Generating better energy indicators: Addressing the existence of multiple scales and multiple dimensions

High energy prices and the growing concern for “Peak Oil” have put energy analysis, once again, on the front burner. However, before speculating about possible roadmaps regarding our energy future, it would be wise to develop better quantitative analyses. This paper flags the existence of systemic epistemological flaws in the current use of aggregate energy indicators and presents an alternative approach capable of dealing with the issue of multiple dimensions and multiple scales. Starting from a critical appraisal of the aggregate indicator “Economic Energy Intensity” it shows that economic and biophysical variables are often correlated and that their value is determined by characteristics which can only observed across different levels and scales. Complex metabolic systems (systems that use energy to maintain and reproduce themselves) are operating simultaneously at different scales. This implies that changes in the characteristics of parts, defined at the local scale, and changes in the characteristics of the whole, defined at the large scale can only be obtained after establishing a scaling mechanism in the analysis. In order to deal with the issue of scale in energy accounting, we propose to make a distinction between three different categories: (i) primary energy sources (PES) - establishing a link between energy quantities and the associated requirement of biophysical gradients, at the large scale, on the interface black-box/context; (ii) energy carriers (EC) - defining the set of energy inputs required by technical devices for expressing useful functions, at the local scale, within the parts operating inside the black-box; (iii) end uses (EU) the set of functions to be expressed by society across hierarchical levels for reproducing itself. Finally, the paper presents examples of quantitative results obtained using an innovative method of analysis - Multi-Scale Integrated Analysis of Societal and Ecosystem Metabolism (MuSIASEM). We conclude that by using this new accounting method it is possible to generate a better understanding of external and internal constraints determining the desirability and viability of the metabolic pattern of societies.     

CEO education and corporate environmental footprint

We analyze the effect of CEO education on environmental decision-making. Using a unique sample of Danish firms from 1996 to 2012, we find that CEO education significantly improves firms' energy efficiency. We seek to derive causality using health shocks: the hospitalization of highly educated CEOs induces a drop in energy efficiency, whereas the hospitalization of less educated CEOs does not have any significant effect. Exploring the mechanisms at play, we show that our results are largely driven by advanced education in business degrees. Moreover, we show that CEO education is associated with greater environmental awareness: highly educated CEOs exhibit greater concerns for climate change, as measured by a survey of social preferences, and drive more environmentally efficient cars. Taken together, our findings suggest that education shapes managerial styles giving rise to greater sustainability in corporate actions.     

Self-organization of tropical seasonal rain forest in southwest China

How to measure development of ecosystems is both a theoretical and practical question in ecology. Species richness and biomass accumulation are familiar figures of merit, but they cannot be instant watched. Self-organization is a tacit character. However, methods to measure the degree of self-organization of ecosystem are problematic. To this end Lin et al. (2009) have devised indicators of energy capture and dissipation so that self-organization defined via maximum energy dissipation can be quantified easily. Here the method is used to analyze long-term data (2004-2006) of a tropical seasonal rain forest included in the ChinaFLUX program. Three years of average self-organization values were clearly separated by seasonal variation. Reflection and long wave radiation are the main two pathways of energy loss. For tropical seasonal rain forest studied, long wave radiation contributed most to energy loss, and was negatively correlated with energy capture ability (Rn/DR). The nocturnal difference between canopy and air temperatures had a strong negative correlation with the long wave radiation loss ratio. However, the long wave radiation loss ratio was slightly lower than the reflection loss ratio in rainy season, when values were very low. Precipitation and wind had significant impact on energy dissipation ability in the hot dry season, but the correlation coefficients between precipitation and wind with thermal response numbers (TRNs) were very low. The results indicated that the self-organization estimation system based on “maximum energy dissipation theory” is applicable for tropical forest.     

Providing the Spark: Impact of financial incentives on battery electric vehicle adoption

To overcome adoption barriers and promote battery electric vehicles (BEVs) as an energy efficient consumer transportation option, a number of states offer subsidies to consumers for BEVs. We use a national data set of vehicle registrations and state-level financial incentives to assess the impact of vehicle purchase subsidies on adoption using both difference-in-differences and synthetic controls methods. We find that incentives offered as direct purchase rebates generate increased levels of new BEV registrations at a rate of approximately 8 percent per thousand dollars of incentive offered. Between 2011 and 2015, vehicle rebate incentives are associated with an increase in overall BEV registrations of approximately 11 percent. Our findings indicate incentives offered as state income tax credits do not have a statistically significant effect on BEV adoptions, though we caution this may be a result of limited temporal variation in BEV incentives across our sample. Responses to rebate incentives do not differ significantly by the make of the vehicle purchased (i.e., Tesla and non-Tesla vehicles). We combine our results with recent assessments of marginal environmental costs of electric vehicle charging and measure net welfare effects of BEV subsidy programs. Our analysis indicates these programs are not welfare-improving if only considering benefits associated with avoided emissions. Additional benefits associated with long-term market growth, production cost savings, network externalities, or accelerated innovation could substantially impact the net welfare outcomes.