” This article is about the energy efficiency gap. For issues related to gerrymandering and elections (eg, Stephanopoulos and McGhee, 2014), see Wasted vote. ” Energy efficiency gap refers to the improvement of energy efficiency or the difference between the cost-minimizing level of energy efficiency and the level of energy efficiency. energy efficiency actually realized. It has attracted considerable attention among energy policy analysts, because it exists for the sake of cost-effective investment in energy efficiency, even though they could significantly reduce energy consumption at low cost. This term was first coined by Eric Hirst and Marilyn Brown in a paper entitled “Closing the Efficiency Gap: Barriers to the Efficient Use of Energy” in 1990.
ENERGY EFFICIENCY REPRESENTATIONS IN THE ENVIRONMENT AND ENERGY EFFICIENCY OF ENERGY CONSUMPTION. Gross Domestic Product (GDP) is one indicator of energy efficiency. Many people have attempted to measure the energy efficiency gap, and their approaches differ from the definition of the optimal level of energy use. A popular theme is Hirst and Brown (1990) ‘s definition: energy efficiency gap is the unexploited economic potential for energy efficiency, in other words, it emphasizes the technically feasible energy efficiency measures that are cost effective. Many other studies have used this definition, such as International Energy Agency (2007) and Koopmans and Velde. Jaffe and Stavins (1994) identify five types of optimality and the corresponding definitions of the energy-efficiency gap: the economists ‘economic potential, the technologists’ economic potential, hypothetical potential, the narrow social optimum and the true social optimum. In particular, economists ‘economic potential could be achieved by eliminating market failures in the energy efficiency technology market, while technologists’ economic potential could be achieved by eliminating both market and non-market failures. Achieving the hypothesis of potential market failure in the whole energy market, for instance, having energy prices that reflect all externalities.
Energy efficiency gaps exist because market failures exist. It is important to identify and understand those barriers. According to Hirst and Brown (1990), various barriers to structural and behavioral barriers can be divided into two categories: structural barriers and behavioral barriers. Structural barriers result from the actions of public and private organizations, and are usually beyond the control of the individual energy end user. Some examples are as follows: Distortion in fuel prices. The fuel prices of consumers do not reflect the social and environmental costs associated with fuel production, distribution and consumption. Consumers tend to invest in energy efficiency technologies due to this distortion. Uncertainty about future fuel prices. There have been great uncertainties with the prices for fuels, such as electricity and petroleum. More stringent environmental regulations and global warming concerns also increase the volatility of fuel prices. These uncertainties prevent consumers from making rational purchases of new energy-using systems. Limited access to capital. Consumers often face high up-front costs for energy-efficient systems. In addition, they are used to make tradeoffs between the initial capital investment and the red operating costs, which also hinder the investments in energy-efficiency technologies. Fiscal and regulatory policies. Government policies tend to encourage energy consumption, rather than energy efficiency. For instance, government support has focused more on energy production, and the profit of electric utilities is a function of sales. Codes and standards.The development of codes and standards often lag behind the development of technologies. It also takes a long time to adopt and modify standards, which becomes a barrier for energy efficiency and technological innovation. Supply infrastructure limitations. The deployment of energy efficiency technologies is highly restricted by geography, infrastructure and human resources. Behavioral barriers are problems that characterize the end-user’s decision-marking relating to energy consumption. Four examples are discussed below. Attitudes towards energy efficiency.Public’s awareness and attitudes towards energy efficiency can greatly affect their energy-related purchase and consumption behaviors. Perceived risk of energy-efficiency investments. Consumers and businesses can be very risk averse in terms of investing in energy efficiency technologies. Energy efficiency and energy efficiency are the most important factors in energy efficiency. There is a lack of information on the performance of energy-efficient technologies. The main-agent problem and a lack of life-cycle thinking on costs and savings for the economy.Jaffe and Stavins (1994) categorize the barriers differently They believe that both market failures and non-market failures could account for the limited market success of the cost-effective energy-efficiency technologies. One important source of market failure is imperfect information, for instance the public of information and information asymmetry. Non-market failure may include the heterogeneity and inertia of consumers, and the uncertainty of energy savings.
Energy efficiency gap exists in various sectors, ranging from households, small businesses, corporations, and governments. Many policies and programs have been developed to close the barriers and close the energy efficiency gap. Subsidies and incentives for energy-efficient technologies. ” ‘Insufficient capital investment could be overcome by aggressive rates, loan guarantees, and low-interest government loans for energy efficient technologies. Minimum building and equipment efficiency standards. Minimum building and equipment efficiency standards are cost-effective approaches to save energy. Effective implementation and upgrading of building energy efficiency standards while equipment efficiency standards could help reduce energy consumption and pollution during the life-cycle of equipment. Information programs. Research has been able to provide accurate and reliable information on energy use. Three forms of information programs can be implemented and rationalized. The first one is the information applicable to all energy decisions, such as forecasts of future energy pricies; the second type of program is to provide comparative information to facilitate technology and product choices, such as product rating and labeling systems; the third type of program is to offer specific recommendations for producers ‘and consumers’ investment choices or behavior changes. Government procurement programs for energy-efficient technologies. Government agencies could be required to provide energy-efficient products. This would help improve the energy efficiency of government sector, and the “learning by doing” impact would create early markets for energy-efficient technologies. Some of the following are examples of the following: EU’s energy consumption labeling scheme, US DOE’s energy efficiency program, and EPA’s and DOE’s ENERGY STAR® voluntary labeling programs.