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Lecture 15

URBN PL 121 Lecture Notes - Lecture 15: Plug Load, Kilowatt Hour, Solar Water Heating

Urban Planning
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Energy efficiency:
- The Intergovernmental Panel on Climate Change (IPCC) suggests improved energy
efficiency as a key strategy to reduce CO2 emissions.
- IPCC states in its 2007 report… “mitigation opportunities with negative costs have the
potential to reduce emissions by 6 Gt Co2eq/yr in 2030. However realizing the energy
efficiency gains requires dealing with implementation barriers.”
Energy efficiency gap (hirst and brown)
- Structural barriers
- Distortion in energy prices
- Limited access to capital (up front costs)
- Lack of fiscal and regulatory policies
- Availability of technology
- Behavioral barriers
- Attitudes towards energy efficiency
- Perceived risk
- Information asymmetries
- Misplaced incentives
Split incentive
- Misplaced, or split incentives where the economic benefits of energy conservation do not
accrue to the person who is trying to conserve (Golove and Eto 1996)
Why an energy efficiency gap?
- There are growing efforts and attention to increasing energy efficiency (EE)
- Some projects guarantee a payback in less than 2 years
- Some projects can improve other variables: quality of life, health, etc
- Why are the adoption rates for energy efficient technologies so low?
- What affects the adoption rates?
The challenges of behavior change
- US electricity generation > 40% of CO2 emissions.
- Household electricity is invisible” to the consumer
- Inattentive, present-biased consumers
- Electricity is cheap (Residential electricity bills are small compared to total household
- Avg. Monthly Electric Bill: $65-135 (50 largest utilities); Price per kWh: ~11-13
- Pollution and social costs of energy production are outside of any market transaction
- Behavior change is difficult, and it is reversible
Consumer misperception of appliance usage:
- Households overestimate lighting and HVAC use by 75% and underestimate plug load
usage by 29%
Additional notes:
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