Public budgets are affected by energy efficiency in multiple ways. For this indicator we consider changes in public budgets due to additional tax revenue triggered by new jobs generated by energy efficiency policies in the building sector. Thus, this indicator directly builds on data from the indicator “employment effects”.
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Næss-Schmidt, Helge Sigurd; Bo Hansen, Martin; von Utfall Danielsson, Carl, 2012
Energy savings through the renovation of the existing building stock is one of the most attractive and low cost options to reduce the emissions of CO2 and potentially improve energy security by reducing imports of fossil fuels. Indeed, there is wide evidence that undertaking energy efficient renovations at current energy prices often pay for themselves. In addition to the energy savings that renovation of the existing buildings stock will bring, there are a range of co-benefits, which can also be harvested. By reducing energy consumption and focusing on indoor climate issues when renovating, co-benefits can be achieved such as reduced outlay on government subsidies, and improved health due to less air pollution and a better indoor climate, both of which also lead to fewer hospitalisations and improved worker productivity. Harvesting renovation opportunities could bring huge benefits to the EU economy over the coming decades. Based on available estimates of the potential for energy savings from renovation of buildings, this study suggests a monetised permanent annual benefit to society of €104-175 billion in 2020 depending on the level of investments made from 2012 to 2020, €52-75 billion from lower energy bills, and at least €9-12 billion from the co-benefits of reduced outlay on subsidies and reduced air pollution from energy production. If the health benefits from improved indoor climate are included, the benefits are increased by an additional €42-88 billion per year. These health benefits are evident, but very uncertain to estimate, and should be interpreted accordingly. If investments are continued after 2020, these annual benefits can be doubled by 2030.
Malone, Leslie; Howland, Jamie, 2014
This modelling study helps to better understand the economy-wide benefits and costs from investing in energy efficiency as a resource in Canada. It examines the macroeconomic impacts – dollars of GDP and jobs created – from investments in cost-effective energy efficiency that reduce demand for electricity, natural gas, and liquid fossil fuel. The results show that reducing demand for energy has a significant, positive impact on economic growth and job creation beyond those commonly acknowledged or measured. Regarding Canada, a total net increase in national GDP of $230 billion to $580 billion over the study period (2012 - 2040) can be achieved. Every $1 spent on energy efficiency programs results in an increase in GDP of $5 to $8. Moreover, the total net increase in national employment ranges from 1.5 to 4.0 million job-years. Every $1 million invested in efficiency programs generates 30 to 52 job-years. Across Canada, the peak annual increase in GDP is $19 billion to $48 billion, and the maximum annual increase in employment is 121,000 to 304,000 jobs. Since it is a net benefit analysis, the results also include negative ratepayer effects, or costs to fund programs and losses from avoided electricity generation. The study applies the Regional Economic Models Inc. (REMI) PI+ model which estimates the net economic impact of a new policy scenario by comparing a base case annual economic forecast to an alternate forecast that includes new dollars of investment in energy efficiency, the resulting dollars of savings that are realized and reinvested, and any negative offsets. Efficiency resources contribute to economic growth and job creation because on the one hand saving energy starts with smart spending. Saving energy requires investment in energy efficiency products as well as community labour like hiring contractors to install insulation or new windows, generating increased local spending and jobs. On the other hand, saving energy is less expensive relative to other energy options. On average, efficiency programs costs 2 - 4 cents to save a lifetime kilowatt-hour of electricity. By comparison, coal-fired generation can cost 10 cents/kWh. Thus, investing in energy efficiency lowers the cost of the energy system and saves all ratepayers money. In addition, improving the energy efficiency of homes and businesses lowers consumer energy bills. Nationally, the scenarios modelled in this study save $94 - $220 billion in avoided energy costs from 2012 to 2040. Lower energy bills reduce the cost of living and of doing business, leading to increased discretionary spending (dining out, renovations, travel) and improved industrial competitiveness, which drives new economic output.
Wade, Joanne; Wiltshire, Victoria; Scrase, Ivan, 2000
The study considers the employment impacts of 44 energy efficiency investment programmes (fiscal, regulatory, educational, others) that are ongoing or were recently implemented at that time in 9 EU countries. A case study approach is complemented both by an enhanced form of input-output (I/O) modelling in the residential sector and secondly, by a general equilibrium modelling (GEM) approach, considering the macro-economic impacts of the basket of energy efficiency programmes represented in the case studies. All three approaches found that, in the majority of cases, energy efficiency investment programmes increased employment. The case studies identify a positive employment impact which ranges from 4 to 14 person-years per million Euros invested. The jobs created are often in sectors, locations and skill groups that are prioritised in employment policies. In the residential sector employment gains were typically higher than in other sectors. However the investments tended to be less cost-effective in terms of energy savings than in other sectors. According to the input-output analysis, fiscal initiatives in the residential sector were estimated to result in a net increase in total employment over a 15 year period, ranging from 9 to 14 person-years per million Euros invested. Regulatory initiatives in the residential sector were estimated to result in a mean gain of 27 person-years per million Euros invested, while other types of policies returned even higher employment gains. The macro-economic modelling approach confirms the positive employment impact and additionally suggests that where countries unilaterally initiate energy efficiency programmes there can be some job losses at the EU level in the short term. However at the national level negative outcomes are very rare in terms of employment, and in the longer term the outcome is always positive.
Holmes, Ingrid; Mohanty, Rohan, 2012
In response to the Euro crisis, more expansionary macroeconomic policies will be vital to supporting demand. Such stimulus should focus on the most beneficial investments in terms of providing resilience against systemic macroeconomic risks and provide a foundation for future productivity and growth. An energy efficiency-focused stimulus is a strong candidate on both counts. A study looking at US data estimated that a 1 % improvement in total useful work in the economy − a proxy for energy efficiency − results in a 0.18 % increase in long‐run GDP. Quantitative analysis undertaken by Cambridge Econometrics found that the UK’s energy efficiency policies between 2000 and 2010 increased real annual GDP by 0.1 %. Also, increased energy efficiency investment can act as a key ‘hedge’ against fossil fuel price spikes, delivering increased energy security and economic resilience. Further compelling macroeconomic arguments for focusing on energy efficiency include the creation of employment opportunities to utilise spare capacity in the labour market, reduce several direct costs on the European economy and enhance living standards. Moreover there is a clear need for governments to help kick‐start scaled energy efficiency markets. Of the $260 billion spent globally on clean energy in 2011, less than 7 % went to energy efficiency. Realising the investment potential will require enhanced efforts both from Europe and from Member State governments to create the incentive frameworks to overcome market inertia, secure demand and facilitate private capital provision. At EU level the focus should be on securing the ambition of the European market; removing conflicting energy price signals; requiring Member States to scale up their institutional response; and kick‐starting Member State markets with EU public financing. At Member State level the focus should be on the design of long‐term regulatory frameworks focused where possible on outcomes rather prescription to enable innovation. Additional institutional capacity will undoubtedly be needed − and should be focused on addressing the specific needs of each sector. Energy efficient upgrade of the EU’s infrastructure − kick‐started by targeted fiscal stimulus and set up to complement wider structural reforms − could provide a convincing route map to European recovery. However it is only likely to happen if the EU and Member State governments start to regard identification and delivery of energy efficient projects as being on a par with delivery of other major infrastructure projects − and provide fair and equivalent treatment to supply and demand side solutions.
Sauter, Robert; Volkery, Axel, 2013
There is a lot of empirical evidence that energy savings measures often provide an effective, cost-efficient approach to reducing greenhouse gas emissions, while generating co-benefits on employment and competiveness. This report presents the empirical evidence on costs and benefits reported in ex-post evaluations for the residential/buildings sector, the industrial sector, transport sector and energy infrastructure as well as cross-sectoral results. It also points to the opportunities of export markets for European energy efficiency technologies. The evaluations presented strongly suggest that the benefits outweigh the costs of energy efficiency measures both from the perspective of the beneficiaries and the public authorities providing financing for the relevant measures or programmes. For example, for the KfW energy efficiency programme in Germany it is estimated that in 2011 alone public authorities at the regional and federal have enjoyed a net benefit of EUR 3 billion based on conservative assumptions covering investments directly supported by the KfW programme. The total net benefits could be as high as EUR 10 billion if all induced investments are taken into account. The highest benefits arise from the VAT income on the goods and services delivered and the additional income tax and social security contributions. Avoided unemployment costs are also an important component in the overall benefits. These benefits by far outweigh the total programme costs of EUR 952 million. However, it is important to note that these benefits occur at the time of programme implementation and can only be maintained if the programme is continued. As soon as the loan repayments are higher than new investments the overall picture changes and net impact on GDP becomes negative. The evaluation of the Swedish programme for improving energy efficiency in energy-intensive industries estimated that between 2005 and 2009 companies invested EUR 70.8 million in electricity savings measures leading to net annual energy savings of between 689 and 1015 GWh. It is further estimated that each MWh of saved electricity cost between EUR 9.30 and 13.60 compared to an average annual wholesale price of EUR 29 and 51 in the same period. Similarly the evaluation of the Irish energy savings programme in SME estimated costs of between 1.8c (to 2020) and 0.7c (to 2030) for energy savings measures compared to average electricity cost of 8.2c per kWh.
Kerr, Niall; Gouldson, Andy; Barrett, John, 2017
The rationale for energy eﬃciency policy can be framed in terms of a variety of diﬀerent beneﬁts. This paper considers how diﬀerent beneﬁts have been used within the overall rationale for energy eﬃcient retroﬁt policy in diﬀerent contexts. It posits that diﬀerent rationales may be used for the same policy response, and that the form of rationale used may aﬀect the design, delivery or the level of policy support, with diﬀerent rationales making it easier to account for diﬀerent results. Considering retroﬁt policy in the contexts of the UK, Germany, New Zealand and Ireland, the study characterises policy rationale in each case, assessing what the key perceived beneﬁts have been, and whether they have changed over time. The analysis identiﬁes some marked diﬀerences between cases with the recognition of beneﬁts and the ensuing policy rationale resulting from a complex mix of political, social and economic inﬂuences. We ﬁnd that recognition of multiple beneﬁts may not equate with multiplied policy support, and instead it is more likely that diﬀerent rationales will have relevance at diﬀerent times, for diﬀerent audiences. The ﬁndings highlight that, alongside evidence for policy, it is important to also consider how the overall rationale for policy is eventually framed.
Rosenow, Jan; Bayer, Edith, 2017
The economics of energy efficiency programmes have been subject to considerable academic debate lasting well over three decades now. This paper contributes to this debate by reviewing the costs and benefits of a specific type of policy instrument that recently gained significant traction in Europe – Energy Efficiency Obligations - EEOs. Following the introduction of the EU Energy Efficiency Directive in 2012 the number of EEOs in Europe has grown from five schemes to now 16 EEOs in operation or planned across the EU. There is 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 Energy Efficiency Obligations. This paper draws on this new data and provides a) a comparative analysis of the costs and benefits of EEOs in a number of European countries, b) discusses the uncertainties and challenges around calculating the costs of Energy Efficiency Obligations, and c) provides a categorisation of the multiple benefits often overlooked in cost-benefit-analyses.
Liu, Hongxun; Lin, Boqiang, 2017
As buildings are constructed to be more energy-efﬁcient and environmental friendly, the building construction industry, which is a basic and leading industry of the national economy development, has become one of the key sectors for energy conservation and emission reduction in China. This paper aims at quantifying both inter-factor and inter-energy substitution for China's building construction industry and investigates the main driving forces behind energy efﬁciency changes as well as the CO2 abatement effect of a uniform carbon tax in this sector. The model is established employing provincial pooled data over 2003-2012 in China by regions; hence, results between different regions are compared. The main ﬁndings indicate that a) energy and non-energy are substitutes whereas individual energy inputs are complementary in China's building construction industry. The substitution effect varies across regions due to different factor endowments and marketisation levels. b) Energy price increase and construction scale expansion leads to energy efﬁciency improvement while substitution and technology present negative inﬂuences on energy efﬁciency. c) Approximately 3 % of the CO2 emissions in China's building construction industry can be reduced by carbon taxation based on the integrated own- and cross-price elasticities of each type of energy.
Pollitt, Hector; Alexandri, Eva; Anagnostopoulos, Filippos; De Rose, Antonio; Farhangi, Cyrus; Hoste, Thijs; Markannen, Sanna; Theillard, Perrine; Vergez, Coralie; Voogt, Monique, 2017
This study presents a comprehensive assessment of the macro-level and sectoral impacts of energy efficiency policies. It is a first attempt to apply this framework to make a comprehensive quantitative assessment of such multiple benefits and their trade-offs. It shows that enhanced energy efficiency in Europe beyond a 27% target for 2030 could led to substantial social, economic and environmental effects. The six impact areas analysed are : economy and labour market; health; the environment; social impacts; public budgets; and industrial competitiveness.
DianaÜrge-Vorsatz, Agnes Kelemen, Sergio Tirado-Herrero, StefanThomas, Johannes Thema, Nora Mzavanadze, Dorothea Hauptstock, Felix Suerkemper, Jens Teubler, Mukesh Gupta, Souran Chatterjee, 2016
The paper identifies a few key challenges to the evaluation of the co-impacts of low-carbon options and demonstrates that these are more complex for co-impacts than for the direct ones. Such challenges include several layers of additionality, high context dependency, and accounting for distributional effects.