Environmental Engineering Reference
In-Depth Information
did the standards raise costs of energy and how much was the cost per unit of
energy saved? Moreover, where they do carry out the studies some elements of the
cost of making the reduction are ignored (such as costs of changing practices,
procedures etc.).
The literature also shows that the largest effects of these instruments could be
obtained in developing countries, where the stock of buildings is still growing.
Iwaro and Mwasha [
47
] survey 60 counties from Africa, Latin America and Middle
East, and suggest that despite the growth in the number of standards during last
years and some improvement in energy ef
ciency, most of them are far from the
minimum level required in industrialized countries.
Finally recent reviews of the literature on standards shows that instruments such
as energy ef
ciency standards (e.g. Energy Performance of Buildings Directive)
have been one of the main drivers of innovation [
58
]. The literature also suggests
that public R&D
nancing plays an important role in innovation as compensation
for underinvestment in the private sector [
63
].
4.2 Fiscal Instruments
Energy taxes also have a long history that has raised a multitude of ex post
empirical evaluations from the different policy initiatives introduced by govern-
ments all around the world. The transport sector is one of the preferred targets for
tax policies (there are not many precedents of energy ef
ciency taxation in the
residential sector), in particular road transport, which represents nearly 70 % of the
CO
2
emissions from transport. The most common taxes used in this sector are fuel
taxes, taxes on vehicle purchase and annual property taxes (the last two are usually
based on different attributes of the vehicle). The
nal goal of these policies can be
revenue raising, environmental or related to energy dependence (see [
33
]). In the
European Union purchases and property taxes have been shifting from taxing
engine power or size to CO
2
emissions or fuel consumption. For an overview of the
existing research in this area see Ryan et al. [
65
]. The effect of such taxes on energy
demand is well established: witness the difference in car engine size and fuel
consumption between North America where fuel taxes are low and Europe where
they are much higher.
The cost effectiveness of tax schemes is less well researched. We know that there
are welfare losses associated with taxes but how much are we paying in terms of
such losses per unit increase in energy ef
ciency? A study by Markandya et al. [
53
]
looked at this question for a policy of increase in energy taxes and found in general
that the cost per ton of CO
2
reduced in selected European countries was negative in
the case of energy savings from refrigerators, water heaters and light bulbs. This
cost included the traditional welfare cost to consumers as well as administrative
costs of implementing the tax and welfare gains to producers of more expensive
equipment. Thus a tax option at least in this context looks like an attractive option
for increasing energy ef
ciency.
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