Introducing mandatory standards for select household appliances in Lebanon: A cost-benefit analysis

Abstract

Lebanon's energy sector crisis leads to a lack of access to uninterrupted, basic modern electricity services that affects all sectors of the economy. Energy conservation measures are nearly inexistent yet they can potentially lead to substantial reductions in energy demand growth, environmental damages and public expenditures. This paper presents an analysis of the costs and benefits associated with the introduction of mandatory standards for energy efficiency for four different household appliances (refrigerator/freezers, AC split units, washing machines and lighting) over the period 2013–2027. Our results show potential savings in electricity consumption reaching 2054GWh annually in 2027 as well as a reduction of subsidies paid to the public utility of 3.6 billion USD in 2027 while CO2 emissions avoided amount to 8.9 million tons over the period of analysis. Furthermore, we propose a financially attractive refrigerator/freezer replacement program for low income households. If this program would cover all existing low-income households in 2013, the savings in electricity consumption would lead to a reduction in subsidies of 9 billion USD (NPV) over the period 2013–2027, while full funding for this program would cost the government 223.8 million USD. This program would thereby benefit consumers, the government and further economic development.