https://orcid.org/0000-0002-5972-4439
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ABSTRACT
Buildings are responsible for around 45% of total energy consumption and one-third of CO2 emissions annually in Switzerland. Policymakers have argued that an increased rate of energy-saving retrofits in existing buildings will play a critical role in meeting the energy and climate policy goals. This article examines the determinants for the households’ investment decisions to undertake energy-efficient retrofits and investigates the role of policy measures. We estimate random effects probit models using a rich data for 1663 owned single-family Swiss households for retrofits undertaken during 2010 to 2014. Results suggest that while the building vintage appears to be a relevant determinant; energy-related attitudes of decision makers and policy instruments are also likely to play an important role. In particular, we find a suggestive evidence of tax deduction policy in supporting households’ decisions to undertake energy-saving retrofits as well as the intensity of renovation. Direct monetary policies such as tax deductions should be focused particularly upon poorly insulated old buildings and those that rely on non-renewable energy sources for heating purposes.
Supplementary material
Supplemental data for this article can be accessed online at https://doi.org/10.1080/13504851.2022.2156456.
Acknowledgements
This research has been funded by the Swiss Federal Office of Energy (FOEN) under contract number SI/501886-01. Neither FOEN nor any other partners were responsible for the survey design, analysis and interpretation of the data. We would also like to thank Björn Lalin for assistance in data collection on policy measures, two anonymous reviewers for their suggestions, and researchers at CEPE, ETH Zurich for their feedback during internal discussions. All omissions and remaining errors are our responsibility.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
1 The EU, as well as Switzerland, have undertaken initiatives to boost the energy-efficiency retrofits. For example, see European Commission (Citation2021) and Swiss National Science Foundation (Citation2021).
2 For example, see European Energy Efficiency Platform (Citation2021) and Energy Star (Citation2021).
3 For an extensive review of different retrofit policy instruments for existing residential buildings across several countries, please refer to Zhang et al. (Citation2021). The authors categorize around 165 retrofit policies into 4 groups of measures: direction and command, assessment and disclosure, research and service, and financial incentives, and summarize their implementation, success, and obstacles. They point out that even though buildings are ageing and several policies are available, the EER rates still remain very low across the world. They go on to identify several hurdles in successful uptake of policies, such as awareness and information issues, technical issues, financial issues, and management and other issues.
4 Our survey captured information on different types of EERs, namely, energy-saving retrofits of windows or doors, roof, façade, space heating system, water heating system, and other measures performed during the last five years.
5 For a discussion on the concept of energy literacy and its link with financial literacy and bounded rationality, see (Blasch et al. Citation2017; Blasch, Filippini, and Kumar Citation2019).
6 Figure A.1 in the supplementary material shows the overall number of renovations carried out by households within our sample. As basic checks, we also estimated panel count models using both Poisson regression and negative binomial approach for the number of EERs undertaken. The overall essence of the main results, important determinants etc. are similar to reported findings.
7 Switzerland is a federal state composed of 26 cantons that are relatively independent in defining and implementing policy measures that aim to promote energy efficient renovations. This heterogeneity in the energy policy measures can be exploited by researchers in empirical analysis. In the supplementary material, we summarize the policy information and the data sources collected as part of this exercise. While exploring external data sources, we found that there is a general lack of a systematic collection, storage and availability of information on policy measures (both current as well as historical) across different regions and cantons.
8 This variable also encompasses personnel and material expenses for cantonal energy policy measures, but do not include expenses towards renovation of cantonal buildings or budget for subsidy programs. Information on the three policy measures were collected from annual reports ‘Stand der Klima- und Energiepolitik der Kantone’ published by the BFE for the years 2010–2018. Table A.1 in the supplementary material presents an overview of the three policy variables across all Swiss cantons from 2010 to 2014.
9 We followed several propensity score matching based strategies as robustness check for the impact of the tax deduction policy. The result supports a positive role of the cantonal tax deduction policy towards EER investments. In order to restrict this analysis to more homogeneous households, we considered another specification with two adjacent cantons – one with the policy and the other without. The positive and significant role of the cantonal tax deduction policy remained robust. These results are reported in Table A.3 in the supplementary materials. However, we keep the panel data random effects model used in the main analysis as we are also able to consider time-invariant unobserved heterogeneity.
10 Different subsets of the dataset have been used in research articles focusing on some other topics related to energy efficiency and household energy use (Blasch et al. Citation2017; Blasch, Filippini, and Kumar Citation2019; Blasch et al. Citation2021).
11 Table A.2 in the supplementary material reports summary statistics for the full CEPE 2015 dataset for reference.
12 The dichotomous variables related to moral obligation and concern for free-riding are equal to one for respondents who agreed, or strongly agreed, to the two statements: ‘I feel morally obliged to reduce my energy consumption’. and ‘I am not willing to reduce my energy consumption if others don’t do the same’..