The energy-efficiency gap What does it mean?
TL;DR: In this paper, the authors identify five distinct notions of optimality: the economists' economic potential, the technologists' technical potential, hypothetical potential, narrow social optimum and true social optimum.
About: This article is published in Energy Policy.The article was published on 1994-10-01. It has received 1402 citations till now. The article focuses on the topics: Energy efficiency gap.
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TL;DR: This work uses a behavioral approach to examine the reasonably achievable potential for near-term reductions by altered adoption and use of available technologies in US homes and nonbusiness travel and estimates the plasticity of 17 household action types in 5 behaviorally distinct categories.
Abstract: Most climate change policy attention has been addressed to long-term options, such as inducing new, low-carbon energy technologies and creating cap-and-trade regimes for emissions. We use a behavioral approach to examine the reasonably achievable potential for near-term reductions by altered adoption and use of available technologies in US homes and nonbusiness travel. We estimate the plasticity of 17 household action types in 5 behaviorally distinct categories by use of data on the most effective documented interventions that do not involve new regulatory measures. These interventions vary by type of action and typically combine several policy tools and strong social marketing. National implementation could save an estimated 123 million metric tons of carbon per year in year 10, which is 20% of household direct emissions or 7.4% of US national emissions, with little or no reduction in household well-being. The potential of household action deserves increased policy attention. Future analyses of this potential should incorporate behavioral as well as economic and engineering elements.
1,226 citations
TL;DR: In this paper, the authors examined the relationship between financial incentives, charging infrastructure, and local presence of production facilities to determine the relationship of one such policy instrument (consumer financial incentives) to electric vehicle adoption.
895 citations
Cites background from "The energy-efficiency gap What does..."
...Thus, in place of calculating out the total cost of ownership of a product, consumers often rely on heuristics or rules of thumb to guide their purchasing behavior (Jaffe and Stavins, 1994; Schleich, 2009)....
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01 Oct 2012
TL;DR: The Global Energy Assessment (GEA) as mentioned in this paper brings together over 300 international researchers to provide an independent, scientifically based, integrated and policy-relevant analysis of current and emerging energy issues and options.
Abstract: The Global Energy Assessment (GEA) brings together over 300 international researchers to provide an independent, scientifically based, integrated and policy-relevant analysis of current and emerging energy issues and options. It has been peer-reviewed anonymously by an additional 200 international experts. The GEA assesses the major global challenges for sustainable development and their linkages to energy; the technologies and resources available for providing energy services; future energy systems that address the major challenges; and the policies and other measures that are needed to realize transformational change toward sustainable energy futures. The GEA goes beyond existing studies on energy issues by presenting a comprehensive and integrated analysis of energy chalenges, opportunities and strategies, for developing, industrialized and emerging economies. This volume is a invaluable resource for energy specialists and technologists in all sectors (academia, industry and government) as well as policymakers, development economists and practitioners in international organizations and national governments.
812 citations
TL;DR: In this paper, four diverse perspectives are reviewed, including conventional and behavioral economics, technology adoption theory and attitude-based decision making, social and environmental psychology, and sociology, applied to decisions affecting residential energy use.
Abstract: Research traditions across the social sciences have explored the drivers of individual behavior and proposed different models of decision making. Four diverse perspectives are reviewed here: conventional and behavioral economics, technology adoption theory and attitude-based decision making, social and environmental psychology, and sociology. The individual decision models in these traditions differ axiomatically. Some are founded on informed rationality or psychological variables, and others emphasize physical or contextual factors from individual to social scales. Each perspective suggests particular lessons for designing interventions to change behavior. Throughout the review, these lessons are applied to decisions affecting residential energy use. Examples are drawn from both intuitive and reasoning-based types of decision as well as from a range of decision contexts that include capital investments in weatherization and repetitive behaviors such as appliance use. Areas of difference and similarity be...
782 citations
TL;DR: In this article, the authors highlight the needs of industrial companies for integrating energy efficiency performance in production management and demonstrate that there exists a gap between the solutions available and the actual implementation in industrial companies.
672 citations
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TL;DR: In this article, the authors present some simple models of irreversible investment, and show how optimal investment rules and the valuation of projects and firms can be obtained from contingent claims analysis, or alternatively from dynamic programming.
Abstract: Most investment expenditures have two important characteristics: First, they are largely irreversible; the firm cannot disinvest, so the expenditures are sunk costs. Second, they can be delayed, allowing the firm to wait for new information about prices, costs, and other market conditions before committing resources. An emerging literature has shown that this has important implications for investment decisions, and for the determinants of investment spending. Irreversible investment is especially sensitive to risk, whether with respect to future cash flows, interest rates, or the ultimate cost of the investment. Thus if a policy goal is to stimulate investment, stability and credibility may be more important than tax incentives or interest rates. This paper presents some simple models of irreversible investment, and shows how optimal investment rules and the valuation of projects and firms can be obtained from contingent claims analysis, or alternatively from dynamic programming. It demonstrates some strengths and limitations of the methodology, and shows how the resulting investment rules depend on various parameters that come from the market environment. It also reviews a number of results and insights that have appeared in the literature recently, and discusses possible policy implications.
2,230 citations
TL;DR: In this article, the authors review some basic models of irreversible investment to illustrate the option-like characteristics of investment opportunities, and show how optimal investment rules can be obtained from methods of option pricing, or alternatively from dynamic programming.
Abstract: Despite its importance to economic growth and the evolution of market structure, the investment behavior of firms, industries, and countries remains poorly understood. This paper has several objectives. First, it reviews some basic models of irreversible investment to illustrate the option-like characteristics of investment opportunities, and to show how optimal investment rules can be obtained from methods of option pricing, or alternatively from dynamic programming. Second, it discusses the implication of irreversibility for the empirical analysis of investment behavior. Finally, it discusses briefly some of the implications that the irreversibility of investment may have for policy. For example, policies that stabilize prices or exchange rates may be effective ways of stimulating investment.
1,797 citations
TL;DR: In this paper, it was observed that firms do not invest as soon a price rises above long-run average cost; instead, firms wait until price rises substantially above long run average cost.
Abstract: It seems that firms behave contrary to the standard economic theory of investment. We observe that firms do not invest as soon a price rises above long-run average cost; instead firms wait until price rises substantially above long-run average cost. On the downside, firms stay in business for lengthy periods while absorbing operating losses, and price can fall substantially below average variable cost without inducing disinvestment or exit. Recent developments in the theory of investment under uncertainty offer an interesting new explanation. The new approach builds on an interesting analogy between real investments and options in financial markets: In the timing of investment, waiting has positive value because time brings more information about the future prospects of a project. This new approach suggests that textbook pictures of the dynamics of a competitive industry need to be substantially redrawn. More generally, it says that a great deal of inertia is optimal when dynamic decisions are being made in an uncertain environment.
1,011 citations
TL;DR: In this paper, the authors develop a framework for thinking about the "paradox" of very gradual diffusion of apparently cost-effective energy-conservation technologies, focusing on the factors that cause this to be the case, including those associated with potential market failures, information problems, principal/agent slippage, and unobserved costs.
653 citations
TL;DR: In this article, the authors develop a framework for comparing empirically the effects of alternative environmental policy instruments on the diffusion of new technology, by estimating the economic penalty that firms, through their actions, reveal to be associated with violation of standards.
535 citations