Do Energy Efficiency Investments Deliver? Evidence from the Weatherization Assistance Program

73 Pages Posted: 26 Jun 2015 Last revised: 25 Jan 2018

See all articles by Meredith Fowlie

Meredith Fowlie

University of California, Berkeley

Michael Greenstone

University of Chicago - Department of Economics; Becker Friedman Institute for Economics; National Bureau of Economic Research (NBER)

Catherine D. Wolfram

University of California, Berkeley - Economic Analysis & Policy Group; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: January 22, 2018

Abstract

A growing number of policies and programs aim to increase investment in energy efficiency, because conventional wisdom suggests that people fail to take-up these investments even though they have positive private returns and generate environmental benefits. Many explanations for this energy efficiency gap have been put forward but there has been surprisingly little field testing of whether the conventional wisdom is correct. This paper reports on the results of an experimental evaluation of the nation’s largest residential energy efficiency program – the Weatherization Assistance Program – conducted on a sample of approximately 30,000 households in Michigan. The findings suggest that the upfront investment costs are about twice the actual energy savings. Further, the model-projected savings are more than three times the actual savings. While this might be attributed to the “rebound” effect – when demand for energy end uses increases as a result of greater efficiency – the paper fails to find evidence of significantly higher indoor temperatures at weatherized homes. Even when accounting for the broader societal benefits derived from emissions reductions, the costs still substantially outweigh the benefits; the average rate of return is approximately -7.8% annually.

Keywords: energy, efficiency investments

Suggested Citation

Fowlie, Meredith and Greenstone, Michael and Wolfram, Catherine D., Do Energy Efficiency Investments Deliver? Evidence from the Weatherization Assistance Program (January 22, 2018). Becker Friedman Institute for Research in Economics Working Paper No. 2621817. Available at SSRN: https://ssrn.com/abstract=2621817 or http://dx.doi.org/10.2139/ssrn.2621817

Meredith Fowlie

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Michael Greenstone (Contact Author)

University of Chicago - Department of Economics

1126 East 59th Street
Chicago, IL 60637
United States

Becker Friedman Institute for Economics ( email )

Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Catherine D. Wolfram

University of California, Berkeley - Economic Analysis & Policy Group ( email )

Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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