Evaluation of the efficiency of Chinese energy-saving household appliance subsidy policy: An economic benefit perspective

Abstract

China has made great efforts to control energy consumption and reduce environmental pressure in recent decades. In the residential sector, the dramatic increase in the ownership of household appliances has driven the growth of electricity consumption, which calls for effective energy-saving policies. In this study, we exemplified the sales of refrigerators in Beijing, aiming to evaluate the effectiveness of current subsidy policies for stimulating the purchase of energy-efficient household appliances. In specific, we first selected ten pairs of refrigerators from six brands having similar functions, however different in their energy efficiency grades (EEG). By applying a combination of net present value (NPV) difference method and Conversion Method of Electrical Engineering Coefficient, we calculated and compared the changes in the NPV difference and dynamic investment payback period (DIPP) to evaluate the effectiveness of the policy. The results revealed that economic benefits were mainly generated in EEG2; thereby we suggest that the government can cancel subsidies for EEG2 refrigerators, and increase the subsidy amount for EGG1 refrigerators at a potential rate of 24% in the future.