Utility rebates for ENERGY STAR appliances: Are they effective?

Datta, S. and Gulati, S. (2014) Utility rebates for ENERGY STAR appliances: Are they effective? Journal of Environmental Economics and Management, 68(3), pp. 480-506. (doi: 10.1016/j.jeem.2014.09.003)

Abstract

We estimate the impact of utility cash rebates on the market share of ENERGY STAR appliances by exploiting the variation in timing and size of rebates across US states. We find that a dollar increase in the population-weighted utility rebate raises the share of ENERGY STAR qualified clothes washers by 0.4%, but does not affect dishwasher and refrigerator shares. Using information on energy saved by an ENERGY STAR appliance and assuming a redemption rate of 40%, the cost per tonne of carbon saved is about $140 for the clothes washers rebate program. The corresponding cost of a megawatt hour saved, about $28, is lower than the estimated cost of building and operating an additional power plant and the average on-peak spot price. We conclude that the ENERGY STAR clothes washers rebate program is, on average, a cost-effective way for utilities to reduce electricity demand.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Datta, Souvik
• Authors: Datta, S., and Gulati, S.
• College/School: College of Social Sciences > Adam Smith Business School > Economics
• Journal Name: Journal of Environmental Economics and Management
• Publisher: Elsevier
• ISSN: 00950696
• ISSN (Online): 1096-0449
• Published Online: 22 September 2014
• Copyright Holders: Copyright © 2014 Elsevier
• First Published: First published in Journal of Environmental Economics and Management 68(3):480-506
• Publisher Policy: Reproduced in accordance with the copyright policy of the publisher