Abstract
To achieve the energy targets, energy policy of the European Union (EU) is trying to discourage residential electricity consumption employing different measures but without worsening the quality of life and jeopardizing its economic growth and development at the same time. This paper aims to directly and indirectly explore the effects of energy taxes on household electricity consumption and test the validity of the household electricity environmental Kuznets curve (EEKC) in a multivariate setting and a system generalized method of moments framework for EU member countries in the period 2005–2016. The results reveal that energy taxes influence electricity consumption more efficiently through energy prices than directly and in the long-run. Efficiency of energy taxes can be reinforced by combining changes in energy prices and policy measures that change the electricity consumption behavior patterns. As for the EEKC, the paper corroborates its inverted U-shaped form, assuming thereby at least the same level of policy efforts directed to accomplish the energy targets and household willingness to use goods in an environmentally friendly way.
Highlights
The European Union (EU) wants to become a competitive, low-carbon and energy efficient economy [1,2,3]
According to the Eurostat database on energy [4], households account for approximately 30% of final electricity consumption and 25% of final energy consumption in the EU
An improvement in electricity efficiency does not necessarily lead to energy saving or adverse greenhouse gas (GHG) emission reduction, it is assumed in this paper that reducing residential electricity consumption is beneficial and desirable until it results in deteriorating the quality of life
Summary
The European Union (EU) wants to become a competitive, low-carbon and energy efficient economy [1,2,3]. The EU has used several energy policy instruments and adopted a number of measures to influence the behavior of economic agents including households, improve energy efficiency in general, reduce energy consumption and reduce GHG emissions. Such measures include, for example, energy price increases through the introduction of ecological taxes, tradable or non-tradable emission permits; green, white or brown certificates; subsidies; and mandatory energy-saving measures in the construction and renovation of buildings [5]
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