Energy efficiency fund for energy demand management

Given the unsatisfactory results of the income tax compensation approach, in the next scenario the revenues of the energy import tax are used to stimulate energy conservation both in households and in companies. We propose that the additional tax revenues are used in a fund for improving energy efficiency. Thus special programmes to improve the energy quality of buildings and equipment could be launched. Our simulations assume that the energy tax revenues are split between households and companies. Estimates have to be made about the potential-energy saving effect and the impact on investment and non-energy consumption.

A conservative estimate drawn from various pilot projects leads to the conclusion that the energy conservation investments would lead to an annual reduction in energy flows of 15 per cent. There is also plenty of evidence that at least at the margin an energy unit saved is not more expensive than an energy unit consumed. We therefore assume that the amount of energy costs saved is used for investments in buildings and equipment with households and with companies. Thus the revenues of the energy fund are sufficient to maintain a 15 per cent reduction in energy flows without reducing the related energy services.

This demand management scenario will generate over the first five years between 10,000 and 26,000 additional jobs and will have a strong-short term impact on real GDP.

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