Some Like it Hot: The Role of Environmental Concern and Comfort Expectations in Energy Retrofit Decisions

Abstract

This study investigates the role of environmental concern and comfort expectations in the decision to retrofit a dwelling and their implications for the rebound effect. We ex-ante elicit individual preferences for deep thermal energy-saving measures in residential buildings by means of a Discrete Choice Experiment (DCE) among 3,161 owner-occupiers and tenants in Germany. Besides room temperature, we include air quality, level of control over the system, noise reduction, and aesthetics of the dwelling as proxies for indoor comfort. Our model also accounts for monthly payments related to the implementation of the measure – and customized based on tenancy status, building type, and size of the dwelling – as well as technical energy cost savings. Econometric estimation provides significant results for most of nthe parameter coefficients. Findings show that thermal comfort preferences are heterogeneous: 33% of the respondents attach positive values to an increase in indoor temperature that would result from the deep retrofit, providing evidence in favor of a technical rebound effect. While environmental concern explains heterogeneity in most of the attributes, its interaction with thermal comfort is not significant. Thermal comfort is, however, the least important attribute in the analysis.