Technical evidence for assessing the performance of markets affecting energy efficiency

Abstract

This paper focuses on the empirical basis for skepticism about the effectiveness of the market mechanism in promoting cost-effective energy-efficiency improvements. We present a framework for evaluating engineering economic evidence on the diffusion of energy-efficiency improvements, and then present a series of examples within this framework that provide evidence for the existence of market imperfections related to energy efficiency. We conclude with a challenge to economists, policy analysts, and technologists to take this empirical evidence seriously and sponsor further collaborative research in this area.