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Measuring the Welfare Effects of Residential Energy Efficiency Programs

April 28, 2017
By Hunt Allcott, Michael Greenstone

Energy efficiency programs implemented by the Obama administration saved only a portion of the energy promised and wound up reducing overall social welfare.

The cost of two of former President Obama’s energy efficiency program tracked by this study exceeded the value of the energy savings and the environmental benefits. In advance of the programs, computer models projected the subsidies provided to homeowners would save far more money than they actually did. The energy savings were 42 percent less than predicted. the two programs studied generated only $0.20 in environmental benefits per subsidy dollar spent, and reduced overall social welfare  $0.18 per every dollar of subsidy. Overall the programs had a negative (-) 4 percent.
Article Tags
Energy Environment
Sub-topic
Energy: Subsidies