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The impact of policy on residential energy consumption

  • Author(s)/Creator(s):
    Erdal Aydin
    Dirk Brounen
  • Publisher(s)/Producter(s):

Due to the growing concerns about global climate change and energy dependence, many countries have introduced regulations targeting the energy efficiency of the residential sector. However, whether these policies have been effective in reducing the total residential consumption of energy is still unclear. In this paper, we analyze the impact of residential energy efficiency policies on household energy consumption across Europe for the period 1980–2016. We examine the electricity and non-electricity energy consumption separately, as these are generally used for different purposes (appliances and heating) by households and are subject to different energy efficiency policies. We focus on two distinct types of regulations – mandatory energy efficiency labels for household appliances and building standards. After controlling for county-specific effects and changes in income, energy prices, demography and climate conditions over our sample period, our results offer compelling evidence that both the energy labeling requirements for appliances and the stricter building codes lead up to lower residential energy consumption. According to our estimation results, we should expect a 0.24% reduction in residential electricity use after governments introduce a mandatory disclosure of energy labels for an appliance group that represent ten percent of households' electricity use. Similarly, given that U-values proxy the thermal quality of the new dwellings, we find that a 0.1 unit decrease in the U-value requirement triggers a lasting 0.28% annual decrease in residential non-electricity energy consumption. These results can help policymakers to shape future regulations targeted on reducing our energy use in the years to come.

Policy Quality
Personal Finance
Corporate Finance
Public Finance