France, RES-IRF Modeling the savings potential in the residential sector Philippe QUIRION, CIRED

1. Res-IRF, modeling the savings potential
in the French residential sector
Louis-Gaëtan Giraudet,
Céline Guivarch and Philippe Quirion
CIRED (www.centre-cired.fr)

2. Outline
Res-IRF: Residential module of Imaclim-R France
1. Model description
2. Dynamics in the reference scenario
3. Policy simulations
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3. Model description

4. Res-IRF: technological features
• Energy consumption covered
– Space heating (2/3 of French household demand)
– Electricity, natural gas & fuel oil (+ wood in new version)
• Energy efficiency improvements (including fuel switch)
– New constructions (standard/low energy/passive)
– Retrofitting of existing dwellings
G F E D C B A
G
F
E
D
C
B
A
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5. Res-IRF: microeconomic features
LCCi , f 
PRi , f 
 LCCi ,h 
h i
LCCi , f  CINVi , f  CENER f  ICi , f
Barriers to energy efficiency Tentative representation in Res-IRF
(non-exhaustive list) (parameterized according to expert elicitation)
Market Uncertainty Myopic expectation CENER
barriers Hidden costs Fixed intangible costs a . IC
Heterogeneity Heterogeneity parameter ν
Market Split incentives Heterogeneous discount rates (7%...50%) CENER
failures Information externalities Decreasing intangible costs (1-a) IC
Innovation externalities Learning-by-doing functions CINV
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6. Efficiency, ‘Sufficiency’ and the
rebound effect
Unrestrictive behavior
Data: EDF R&D (see Cayre et al., 2011, ECEEE Proceedings)
LE/A
B
C
Sufficiency
D
Restrictive behavior
E F G
Energy efficiency Energy price
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7. Dynamics in the
reference scenario

8. Endogenous retrofitting dynamics
Adoption spillovers prevail (self-reinforcing) ‘Natural’ exhaustion prevails
65% 90%
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9. Potential for energy conservation in
existing dwellings
Reference savings: -37%
« Sufficiency » gap: -10%
« Private efficiency » gap: -4%
« Social efficiency » gap: -8%
NB: subject to slightly increasing energy price (~0.5% p.a.) 9

10. Policy simulations

11. Policy simulation
Income tax credits 2009-2020
• Subsidy of 30% of investment cost
• Capped at €8,000 per dwelling
Zero rate loans 2009-2020
• Subsidy equal to the interests of a 10-year loan at 4%
• Base capped at €30,000 per dwelling
2010 2020 2030 2040 2050
Carbon tax
• €32/tCO2 in 2010
• Increasing by 5.8% pa until 2030, 4% afterwards
Retrofitting obligation for each occupancy change
• Dwellings rated below class C must upgrade to minimum class C
• Incremental implementation, from class G in 2016…to class D in 2028
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12. Ineffectiveness of the policy packages assessed
€200/tCO2
in 2010
National Target -38%
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13. Policy impacts on existing dwellings in
2050
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14. Why in the end, tax outperforms
Rebound
Sufficiency
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15. Conclusions
• Policy ranking
– Subsidies & regulations increase efficiency, thus adoption
externalities (pro) and the rebound effect (con)
– Tax: low impact on efficiency, but encourages sufficiency
–  both necessary
– Despite unrepresented measures (information policies)
and technologies (fuel-wood, district heating), French
targets hard to meet
• New developments and perspectives
– Fuel-wood
– Uncertainty analysis
– Econometric estimation
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16. Thanks for your attention
contact: quirion@centre-cired.fr
Giraudet, L.-G., C. Guivarch, P. Quirion, 2011:
• Comparing and combining energy saving policies. Will proposed
residential sector policies meet French official targets?
Energy Journal, 32(SI1): 213-242
• Exploring the potential for energy conservation in French
households through hybrid modelling, Energy Economics,
doi:10.1016/j.eneco.2011.07.010
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