Domestic energy efficiency in Ireland: correcting market failure

Abstract

If the benefits of domestic energy efficiency are so great, why are they not reaped in actuality and what can be done about it? This paper deals with these crucial questions. It is based on the findings of a recent comprehensive study evaluating the costs (labour and materials) and benefits (energy cost savings, environmental benefits, including reductions in emissions of CO 2, NO x , SO 2 and PM 10, comfort gains and mortality and morbidity impacts) to Irish society of bringing the entire housing stock up to the latest Building Regulations. The reasons for the lack of take-up of energy-conservation measures are discussed. The paper formulates policy proposals to address the impediments to effective action in the market for domestic energy efficiency. The various policy instruments available to overcome these barriers are outlined. Past performance, citing specific exemplars, both from abroad and from experience in Ireland, is reported. The final section suggests a mix of policy instruments to assist the realisation of the potential benefits of the energy-conservation programme. The principal initiatives recommended include the provision of a combination of grants to low-income households and a clear State-led information campaign explaining the benefits of conserving energy to the householder.