Residential energy efficiency improvements twice the cost of benefits

Energy efficiency investments are widely popular because they are believed to deliver a double win: saving consumers money by reducing the amount of energy they use, while cutting climate-forcing greenhouse gas emissions and other pollutants harmful to human health. But a new study by a team of economists finds residential energy efficiency investments may not deliver on all that they promise. Through a randomized controlled trial of more than 30,000 households in Michigan - where one-quarter of the households were encouraged to make residential energy efficiency investments and received assistance - the economists find that the costs to deploy the efficiency upgrades were about double the energy savings.

While the researchers found that the upgrades did reduce the households' energy consumption by about 10 to 20 percent each month that only translated into $2,400 in savings over the lifetime of the upgrades - half of what was originally spent to make the upgrades, and less than half of projected energy savings. "In actuality, the energy efficiency investments we evaluated delivered significantly lower savings than the models predict." Further, some say that the broader societal benefits - savings as a result of reductions in pollution from energy production- justify the investments. But the findings did not support this. The cost per ton of CO2 avoided in the sample amounted to $329, significantly larger than the $38 per ton that the federal government estimates as the social cost of carbon.