Energy saving measures and their distributional effects – a study of households in Germany

Panel: 9. Dynamics of consumption

This is a peer-reviewed paper.

Authors:
Katja Schumacher, Öeko-Institut (Institute for Applied Ecology), Germany
Johanna Cludius, Öko-Institut, Germany
Hannah Förster, Öko-Institut, Germany
Martin Beznoska, Free University Berlin, Germany
Corinna Fischer, Öko-Institut, Germany
Tanja Kenkmann, Öko-Institu, Germany

Abstract

We evaluate the distribution of selected energy saving potentials at the household level as identified in an ongoing project for the German Federal Environment Ministry, including measures related to behavioral and lifestyle changes. The core of our paper is a distribution analysis to assess how saving potentials are distributed across households(characteristics). The final goal is to understand in how far financial incentives play a role in triggering energy savings and which household (target) groups would be most promisingly and fairly targeted when designing policy measures.

The analysis is based on the German Income and Expenditure Survey which contains detailed information on income sources, expenditure patterns and other household characteristics.

The analysis reveals that for measures that affect all households uniformly, absolute savings in kWh are often highest for high income households, while monetary savings relative to household income are higher in lower income households. This is due to the fact that low income households spend a relatively lager share of their income on energy. For some measures the picture looks different, such as measures in the area of mobility which concern mainly higher income households and both absolute energy and monetary savings are higher in this group. For the average household, however, monetary savings (relative to income) turn out to be rather small. Moreover, physical and monetary savings can be negatively correlated. That is, those households with the highest energy saving potentials have the lowest monetary gain. Thus, the highest absolute reduction potentials may be most difficult to reach as they occur in households that are least likely to appreciate related financial savings. This underlines the general challenge associated with energy saving measures. For most households, we expect that monetary savings associated with the investigated measures do not provide sufficient incentives to change behavior or lifestyles. They will need to be complemented with policies and measures that specifically address barriers and provide additional motivation for specific target groups to implementing these potentials.