The European experience with tax relief for energy efficient equipment in industry – all bad or just second best?

摘要

Improvements in energy efficiency in industry are crucial toachieving not only environmental and energy security objectives,but also to improving productivity and competitivenessat enterprise level. Yet, reluctance to finance energy efficiencyimprovements is prevalent in many organisations. A range ofpolicy measures are put in place by governments to overcomethe market failures preventing increased investment in energyefficiency measures. Although not a first-best policy instrumenton a number of levels, tax relief for energy efficient equipmentin the industrial and commercial sectors is one mechanism utilisedby policymakers in many countries to encourage increasedinvestment in energy efficient equipment by companies.This paper examines the evidence from three such programmes,in the Netherlands, the United Kingdom, and in Ireland,using evaluation criteria grouped under effectiveness andefficiency headings. The case studies suggest that these kinds ofprogrammes appear to be quite effective in encouraging greatermarket uptake of energy efficient equipment at quite low costto the public purse. There is however, significant free-ridershipand overlap with other policies that reduce the efficiency of thispolicy instrument. Nevertheless, the experiences of these threecountries suggest that these programmes have led to increasedawareness of energy efficiency in industry and leverage of privatefinance and therefore there may be multiplier effects thatjustify such programmes.The authors would like to thank the reviewers for their carefuland detailed comments.