International Review of Environmental and Resource Economics > Vol 8 > Issue 1

What Impedes Household Investment in Energy Efficiency and Renewable Energy?

Nadia Ameli, OECD, France, , Nicola Brandt, OECD, France
Suggested Citation
Nadia Ameli and Nicola Brandt (2015), "What Impedes Household Investment in Energy Efficiency and Renewable Energy?", International Review of Environmental and Resource Economics: Vol. 8: No. 1, pp 101-138.

Publication Date: 20 May 2015
© 2015 N. Ameli and N. Brandt
Environmental Economics
Energy efficiency gapmarket failuresbehavioural failures


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In this article:
1. Introduction 
2. Apparent Underinvestment in Energy Efficiency 
3. Market Failures That Can Explain an Underinvestment in Energy Efficiency 
4. Behavioural Issues 
5. Attitudes, Socioeconomic Characteristics and Beliefs 
6. Conclusion 


Energy efficiency and renewable energy technologies provide important opportunities to reduce greenhouse gas emissions. However, households fail to take up many clean energy investments that are cost-effective. This article reviews different explanations for apparent underinvestment in energy efficiency that have been put forward in the literature. While investments in renewable energy technologies are typically not (yet) profitable, many of its drivers are similar to those that determine energy efficiency investments, and the two types of investment are therefore assessed jointly. The article also provides new evidence regarding barriers to investment in energy efficiency based on the OECD Survey on Household Environmental Behaviour and Attitudes. Finally, policy solutions that would help overcome some of these barriers are also presented.