Energy Burden Alleviation and Greenhouse Gas Emissions Reduction: Can We Reach Two Objectives With One Policy?

Abstract

In this article, we assess French current public policies designed to reduce greenhouse gas (GHG) emissions and abate household energy burden, through a simulation of changes in residential sector characteristics over the long run. We build on an existing partial equilibrium model to take into consideration key determinants of excessive energy burden among vulnerable households. This analysis reveals that current public policies are not sufficient to reach the ambitious objectives for reducing energy consumption and GHG emissions in France. Moreover, the decreases that might occur mask significant social disparities across households. The joint implementation of multiple instruments leads to interactions that diminish overall policy outcomes. Overall, current public policies produce estimated free-riding rates of 75%. Energy efficiency measures are thus insufficient in themselves; the government should focus more on monetary poverty as a cause of low home improvement rates and consider subsidizing renovation costs as a potential solution.