We estimate freeriding rates of 73% to 92%
across our three appliance categories. As a result, our measures of
cost-effectiveness, ranging from $0.44 to $1.46 per kWh saved, are an
order of magnitude greater than the $0.06 per kWh average
cost-effectiveness estimated for utility-sponsored energy efficiency
programs. Even after generous assumptions about accelerated replacement,
the cost per kWh saved of C4A remains 4 to 16 times greater than this
average in the literature.
While our empirical analysis focused on
the implementation of a 2009 Recovery Act program, it has implications
for energy efficiency policies in an array of contexts. First,
energy-efficient appliance rebate programs are a common element of
state, local, and utility energy programs and an emerging element of
U.S. climate change policy. The Northeast and Mid-Atlantic states that
operate the Regional Greenhouse Gas Initiative, a utility-sector carbon
dioxide cap-and-trade program, direct some of the revenues generated
through the quarterly auctions of emission allowances to
energy-efficient appliance rebate programs. As noted above, the
Environmental Protection Agency has also identified energy-efficient
appliance rebate programs as one policy option in implementing power
sector greenhouse gas emission performance standards. Second, the energy
policy space is characterized by a mix of overlapping policy
instruments. This analysis illustrates the potential for the presence of
multiple pre-existing instruments to undermine the cost-effectiveness
of a new (marginal) policy instrument. Instrument design that fails to
account for this complicated policy space may risk higher costs and/or
lower efficacy."
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