IEA Study Evaluates Economic Instruments for Energy Efficiency in Buildings

IEA29 January 2013: The International Energy Agency (IEA) has issued a report that evaluates the effectiveness of taxes, loans and grants, public procurement and other “economic instruments” in enhancing energy efficiency in the building sector.

IEA commissioned the report, titled “Mobilising Investment in Energy Efficiency: Economic Instruments for Low-Energy Buildings,” in recognition that, although economic instruments promise to kick-start private financial markets and motivate private investors, relatively little has been done to evaluate their effectiveness in regard to energy efficiency.

The report centers on three themes: economic instruments in energy efficiency policy; economic instruments to mobilize investment in energy efficiency buildings; and funding economic instruments. Detailed case studies explore these themes in Canada, France, Germany, Ireland and Italy, in order to demonstrate to policy makers how the selection and design of economic instruments can better address policy objectives and national contexts.

Among the report's many findings is the conclusion that current targets and eligibility requirements attached to economic instruments for energy efficient buildings are not very ambitious. It further discusses options for policymaking in light of administrative simplicity, public budget constraints, and other factors relevant to the selection of funding streams for economic instruments for energy efficiency.

The report also explores economic instruments in relation to carbon markets, noting that such emission trading schemes like the Clean Development Mechanism are yet to deliver on their potential to deliver energy efficiency to the building sector. [Publication: Mobilising Investment in Energy Efficiency]