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Why Won’t People Invest in Energy Efficiency—Even When It Saves Them Money?
RFF's Margaret Walls highlights a recent study coauthored by Michael Greenstone.
Energy analysts have long noted that people fail to invest in energy-efficiency improvements that seem to more than pay for themselves in operating cost savings. Whether compact fluorescent and LED light bulbs or Energy Star-rated furnaces or fiberglass insulation, it has been hard to get folks to pay a premium up front for savings over a product’s lifetime. Economists call this the “energy paradox” or the “energy efficiency gap.”
Nowhere is the gap more prevalent than in homes, which account for about 20% of U.S. energy consumption. In a recent study, my colleague, Karen Palmer, and I found that 22% of homeowners who had home-energy audits didn’t follow up at all on the cheapest of the recommendations, air sealing and weatherstripping, and 36% didn’t follow up on insulation recommendations. And these are people who spent time and money on an audit, which only about 3-4% of homeowners have done.
A recent study of a federal government audit and retrofit program has led to a heated discussion over its findings that the program is generating smaller than expected energy savings at relatively high cost. But largely ignored in the debate has been how hard it was to get homeowners to sign up for the program in the first place, even though the audits and about $5,000 worth of improvements were completely free.