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Are the Benefits to the Weatherization Assistance Program’s Energy Efficiency Investments Four Times the Costs?
Michael Greenstone and his colleagues evaluate a recent DOE analysis of the federal Weatherization Assistance Program.
The urgency of climate change demands solutions that work. And so, a clear-eyed assessment of how well existing policies and programs are performing is critical, no matter the results. Using rigorous evidence to inform policy design and implementation is the only way to ensure that we effectively confront climate change. The need for objective evidence is particularly important in the case of energy efficiency investments because they play a central role in virtually every single climate change mitigation plan.
Recently, we conducted a first-of-its-kind, randomized controlled trial of the nation’s largest residential energy efficiency program, the federal Weatherization Assistance Program (WAP). The trial consisted of a sample of more than 30,000 WAP-eligible households in the state of Michigan. Our research revealed that investments in residential energy efficiency upgrades among weatherized households in our study cost about double what these households will save on their energy bills (efficiency retrofits cost about $4,600 per household and estimated energy savings are only $2,400). You can read more about our results here.
These findings contradicted commonly held beliefs about the benefits of energy efficiency investments and generated a heated debate. Our previous blog post responded to some of the key concerns.
The Department of Energy (DOE) has since released 36 documents, totaling 4,446 pages, evaluating WAP. The boldly stated conclusion of the evaluation is that the benefits of the investments are four times the costs.
We have spent many hours poring over these opaque documents. Our judgment is that many of the DOE’s conclusions are based on dubious assumptions, invalid extrapolations, the invention of a new formula to measure benefits that does not produce meaningful results, and no effort to evaluate statistical significance. Using the DOE’s findings, we show below that costs exceed energy savings by a significant margin. We also document major problems with the valuation of non-energy benefits, which comprise the vast majority of estimated program benefits.
Overall, the poor quality of the DOE’s analysis fails to provide a credible basis for the conclusion that the benefits of energy efficiency investments conducted under WAP substantially outweigh the costs. This blog summarizes our assessment of the DOE’s analysis for a general audience...