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Revaluing the costs and benefits of energy efficiency: A systematic review

  • Author(s)/Creator(s):
    Athar Kamal
    Sami G. Al-Ghamdi
    Muammer Koc
  • Publisher(s)/Producter(s):

Policy and decision makers, economists and engineers often have to choose between new-energy-generation installations for producing additional energy or reducing the energy consumption through energy efficiency measures. To enhance the decision-making process of the concerned parties with evidence-based comprehensive tools, we perform a literature review on the costs and benefits associated with energy efficiency and evaluate these costs and benefits against a new proposed framework. Energy projects are primarily developed to meet increases in demand for energy or to overhaul aging infrastructure. The costs and benefits associated with these projects are usually linked to monetary terms, and even though other costs are calculated, these other “environmental costs” are usually evaluated against some standards and then internalized in monetary terms. While economic and environmental costs are calculated for these projects, the “social costs” are often ignored. Our methodology follows the technique of quantifying a qualitative study by organizing, coding and interpreting results from the literature review. We find that on average, efficiency studies estimate only 6 of the 22 total efficiency benefits identified. Moreover, further analysis reveals the focus of such studies is primarily towards determining economic benefits whilst neglecting environmental and social utility of energy efficiency measures. This underestimation makes energy efficiency measures a less favorable option compared with new energy infrastructure installations, which usually introduces additional upfront costs, emissions and hazards to the land, water and air in addition to long-term social effects and costs.

Policy Quality
Public Finance
Personal Finance
Corporation Finance