Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/266551 
Year of Publication: 
2022
Series/Report no.: 
Working Paper Series in Production and Energy No. 67
Publisher: 
Karlsruhe Institute of Technology (KIT), Institute for Industrial Production (IIP), Karlsruhe
Abstract: 
We revisit optimal investment in energy-efficiency, presenting a decision framework built around the agent's wealth and wealth dynamic. An investment rule in the form of a trigger is derived such that the agent invests the first time the energy-carrier price crosses this threshold from below. Wealthier consumers, and those whose wealth grows faster, are seen to have less incentive to invest in energy-efficiency and alternative technologies. We investigate the market for heat pump upgrades in Germany and find scant evidence of an energy-efficiency gap. Modest carbon taxes coupled with subsidies suffice to generate stated policy goals in the short term.
Subjects: 
energy-efficiency gap
energetic building retrofits
wealth dynamics
JEL: 
D15
D31
D81
H23
O33
Q48
Q49
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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