Bridge over troubled water – spanning the energy-efficiency gap

Panel: Panel 1. The foundations of future energy policies: Initiating change and breaking walls

Authors:
Agneta Persson, WSP Environmental, Sweden
Anders Göransson, PROFU, Sweden
Erik Gudbjerg, LokalEnergi A/S, Denmark

Abstract

The existence or non-existence of cost-efficient energy efficiency measures seems to be a constant argue between engineers and economists. Engineers on the one hand point at major potentials for cost-efficient energy efficiency measures. A recently carried out study shows that merely 15 per cent of all cost efficient measures in the Swedish building sector are likely to be carried out, even when taking currently implemented policy measures into account. Economists on the other hand claim the cost-efficient potential to be low. The engineers simply have forgotten to include transaction costs and other important factors in their calculations is a common comment.

Is the main explanation of the energy-efficiency gap the transaction costs? Several studies are available on the existence of transaction costs and various types of such costs. However, only few of these studies manage to quantify them. In an attempt to bridge the energy-efficiency gap, a Swedish study has recently been carried out in joint effort between engineers and economists. The study seeks to quantify to what extent transaction costs, split incentives and other factors can explain the gap. The results of the study indicate that transaction costs only to a surprisingly small part explain the gap. The output from the study provides important knowledge for policy makers.

This paper is presenting the results from the Swedish study on quantifying different parts of the energy-efficiency gap. The presentation is focussed on the buildings sector. The paper also discusses calculation inputs used and sensitivity analyses carried out in the Swedish study.