Instruments to achieve reductions in energy consumption through sufficiency: Financial impacts for households and distributional considerations

1. www.oeko.de
Instruments to achieve reductions in
energy consumption through sufficiency:
Financial impacts for households and
distributional considerations
Behave 2018
F5. Policy implementation
and evaluation II
Johanna Cludius, Corinna Fischer, Tanja
Kenkmann, Katja Schumacher, Tilman Fries, Lars
Brischke
Results from a current project for the Federal Environment Agency (FKZ 37EV 16 124 0)

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www.oeko.de Project on behalf of the Federal Environment
Agency: Instrumenting the reduction of energy consumption
through changes in behaviour
• Reduction of living space, reduction of electricity consumption
• Step 1: Identifying target groups
• Step 2: Identifying overall reduction potentials
• Step 3: Analysis of barriers (literature, interviews)
• Step 4: Developing policy instruments
• Step 5: Quantifying reduction potential per policy instrument
and associated costs
• Step 6: Analysing impacts for households that carry out the
measures addressed by policy instrument
• …
Financial impacts and distributional considerations│Johanna Cludius│Behave
2018│07.09.2018

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Why look at financial impacts and distributional
effects?
• Financial impacts of a measure can help us understand how
attractive this measure may be financially from the point of
view of a household – and whether this attractiveness varies
between different household types
• This information can be used to design policy instruments
• Consumption of and expenditure for heat and electricity are
distributed unevenly in society
• Need to analyse whether novel policy instruments may lead to
positive or adverse distributional effects
Financial impacts and distributional considerations│Johanna Cludius│Behave
2018│07.09.2018

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www.oeko.de
Heating energy consumption per income deciles of
German households
Source: Research Data Centre (FDZ) of the federal statistical office and
statistical offices of the Laender: Income and Expenditure Survey 2013
(EVS 2013); own estimation and illustration
Financial impacts and distributional considerations│Johanna Cludius│Behave
2018│07.09.2018
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
20 000
Bottom
5%
1st decile 2nd decile 3rd decile 4th decile 5th decile 6th decile 7th decile 8th decile 9th decile 10th
decile
%Disposablehouseholdincome
kWh/year
Deciles household net equivalent income
Coal
Electricity
District heating
Oil
Natural gas
Expenditure for heating in % disposable household income

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Electricity consumption per income deciles of German
households
Source: Research Data Centre (FDZ) of the federal statistical office and
statistical offices of the Laender: Income and Expenditure Survey 2013
(EVS 2013); own estimation and illustration
Financial impacts and distributional considerations│Johanna Cludius│Behave
2018│07.09.2018
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
Bottom
5%
1st decile 2nd decile 3rd decile 4th decile 5th decile 6th decile 7th decile 8th decile 9th decile 10th
decile
%disposablehouseholdincome
kWh/year
Deciles household net equivalent income
Average electricity consumption per year (kWh)
Expenditure for electricity in % of disposable household income

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Reduction in living space
• Measures
• Splitting the owner-occupied home
• Sub-letting a room
• Moving into a smaller apartment
• Instrument: Combination of information
schemes (a local office advising households
on space-saving housing alternatives) and
investment support
Financial impacts and distributional considerations│Johanna Cludius│Behave
2018│07.09.2018

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Target groups for a reduction in living space
Source: Research Data Centre (FDZ) of the federal statistical office and
statistical offices of the Laender: Income and Expenditure Survey 2013
(EVS 2013); own estimation and illustration
Financial impacts and distributional considerations│Johanna Cludius│Behave
2018│07.09.2018
0
20
40
60
80
100
120
140
Pensioneers with large per-
capita living space
Soon-to-be pensioneers Grown-up kids in household National average
sqm
Living space total
Living space per-capita

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Splitting the owner-occupied house
In which income deciles can we find the target group?
Source: Research Data Centre (FDZ) of the federal statistical office and
statistical offices of the Laender: Income and Expenditure Survey 2013
(EVS 2013); own estimation and illustration
Financial impacts and distributional considerations│Johanna Cludius│Behave
2018│07.09.2018
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1st decile 2nd decile 3rd decile 4th decile 5th decile 6th decile 7th decile 8th decile 9th decile 10th decile
Share
Deciles household net equivalent income
Living space remaining households Living space of target group

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Distribution of financial impact: Household splitting
their owner-occupied home
Source: Research Data Centre (FDZ) of the federal statistical office and
statistical offices of the Laender: Income and Expenditure Survey 2013
(EVS 2013); own estimation and illustration
Financial impacts and distributional considerations│Johanna Cludius│Behave
2018│07.09.2018
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
1st decile 2nd decile 3rd decile 4th decile 5th decile 6th decile 7th decile 8th decile 9th decile 10th decile
Investmentcost,savedexpendituresandrentalincome
in%ofdisopsableincome
Deciles household net equivalent income (only households carrying out the measure)
Additional rental income Saved heating expenditure
Monthly installment investment credit (10 years) Total effect

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Reduction of household electriciy consumption
• Measures
• Scrapping a freezer that is no longer used
• Buying adequately sized appliances
• Reducing electricity consumption for showering
• Reducing TV time
• Instruments: Mix of information campaigns, free
appliances, Ecodesign changes, scrappage bonus
Financial impacts and distributional considerations│Johanna Cludius│Behave
2018│07.09.2018

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Reducing electricity consumption for showering
In which income deciles can we find the target group?
Source: Research Data Centre (FDZ) of the federal statistical office and
statistical offices of the Laender: Income and Expenditure Survey 2013
(EVS 2013); own estimation and illustration
Financial impacts and distributional considerations│Johanna Cludius│Behave
2018│07.09.2018
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1st decile 2nd decile 3rd decile 4th decile 5th decile 6th decile 7th decile 8th decile 9th decile 10th decile
Share
Deciles household net equivalent income
Remaining households Target group

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Distribution of financial impact: Showering one less
time a week
Source: Research Data Centre (FDZ) of the federal statistical office and
statistical offices of the Laender: Income and Expenditure Survey 2013
(EVS 2013); own estimation and illustration
Financial impacts and distributional considerations│Johanna Cludius│Behave
2018│07.09.2018
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
0.7%
0.8%
0.9%
1.0%
1.1%
0
20
40
60
80
100
1st decile 2nd decile 3rd decile 4th decile 5th decile 6th decile 7th decile 8th decile 9th decile 10th decile
Savingsin%ofdisposableincome
Averagesavingsonelectricityexpenditure(€/year)
Deciles household net equivalent income (only households carrying out the measure)
Reduction in yearly electricity expenditure (€/year)
Savings in % of disposable household income

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Target group for reducing TV time
Source: Research Data Centre (FDZ) of the federal statistical office and
statistical offices of the Laender: Income and Expenditure Survey 2013
(EVS 2013); own estimation and illustration
Financial impacts and distributional considerations│Johanna Cludius│Behave
2018│07.09.2018
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1st decile 2nd decile 3rd decile 4th decile 5th decile 6th decile 7th decile 8th decile 9th decile 10th decile
Share
Deciles household net equivalent income
Remaining households Target group

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To sum up
• Analysis of socio-economic effects given a household has
decided to carry out the measure
• Measures are economically advantageous for households
carrying them out and are socially compatible in providing
relatively higher benefits to low-income households.
• In addition to highlighting non-financial benefits, information
on financial impacts can be used in communication to
overcome barriers.
• This applies not only to saving on energy expenditure, but
also, f.e. additional rental income
Financial impacts and distributional considerations│Johanna Cludius│Behave
2018│07.09.2018

15. www.oeko.de
Thank you for your kind attention
Any questions? ?

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Financial impacts and distributional considerations│Johanna Cludius│Behave
2018│07.09.2018
Your contacts at Öko-Institut
Johanna Cludius
Öko-Institut e.V.
Büro Berlin
Schicklerstr.5-7
10179 Berlin
Telefon: +49 30 405085 - 375
E-Mail: j.cludius@oeko.de
Tanja Kenkmann
Öko-Institut e.V.
Büro Freiburg
Merzhauser Str. 173
79100 Freiburg
Telefon +49 761 45295-263
E-Mail: c.fischer@oeko.de
Corinna Fischer
Öko-Institut e.V.
Büro Darmstadt
Rheinstraße 95
64295 Darmstadt
Telefon +49 6151 8191-131
E-Mail: c.fischer@oeko.de

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Backup

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Distribution of financial impact: Household splitting
their owner-occupied home 5 year payback time
Source: Research Data Centre (FDZ) of the federal statistical office and
statistical offices of the Laender: Income and Expenditure Survey 2013
(EVS 2013); own estimation and illustration
Financial impacts and distributional considerations│Johanna Cludius│Behave
2018│07.09.2018
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
1st decile 2nd decile 3rd decile 4th decile 5th decile 6th decile 7th decile 8th decile 9th decile 10th decile
Investmentcost,savedexpendituresandrentalincome
in%ofdisopsableincome
Deciles household net equivalent income (only households carrying out the measure)
Additional rental income Saved heating expenditure
Monthly installment investment credit (10 years) Total effect