Building Energy Efficiency - Policy, learning and technology change

University dissertation from International Institute for Industrial Environmental Economics, Lund University

Abstract: Experience shows that energy efficiency improvements are the most cost-effective path to meeting global energy challenges. To promote energy efficiency, various policy instruments have been in place since the 1970s. Nevertheless, energy efficiency improvements still lag behind their potential in the building sector, which indicates that there is a lack of knowledge about the performance of policies. To further encourage energy efficiency in buildings, there is a need for ‘policy learning’ to gain knowledge and experience about polices and their performance. This doctoral thesis analyses the role of policy instruments and policy packages in the development of energy efficient end-use building technologies and their emerging markets. Technologies include windows, insulation, heat pumps and passive houses. By using the lenses of innovation theory, the concept of learning, and transaction cost economics, this work analyses the outcome of various policy packages, the development of technologies and markets, and policies influencing such development. The research identifies key policy instruments for technology change. The results show that technology change requires timely, long-term and flexible policy support. This involves diverse policy packages, rather than single policy instruments, designed to support technology development and their emerging markets. The research also highlights the importance of policy support for learning processes in the innovation system and as a determinant of technology change. Building codes, technology procurement and voluntary standards were found to be essential drivers for introducing energy efficient technologies to the market. Beside regulatory and voluntary building standards, testing facilities and networking activities have been identified as key drivers for technology change. Transaction costs, on the other hand, can significantly hinder energy efficiency improvements. Transaction costs of single technologies implemented in passive house renovations can be 200% higher than the transaction costs of conventional technologies. These costs, however, can be reduced. New approaches to transaction cost reduction and flexible, long-term, policy packages have resulted in more energy efficient windows, improved insulation, widespread use of high quality ground-source heat pumps and growing demand for the application of passive technologies and the passive house concept. In Sweden, for example, the thermal performance of the best available windows has improved more than two-fold in the past forty years. In the same period, the market share of energy efficient windows increased from 20% to 80%. Another example of successful policy interventions is the emergence of markets for ground-source heat pumps in Sweden and Switzerland. Since the mid-1990s, the efficiency of ground-source heat pumps has improved by 13-36%, annual sales have increased around 20-30% and costs decreased between 50% and 80%, in Sweden and Switzerland, respectively. As the case of a Swedish passive house-oriented renovation shows new approaches to promote learning, e.g. enhanced organizational awareness-raising and new forms of collaboration and information platforms, ultimately result in significant cost reductions at different actors’ stake. This thesis delivers important inputs to the field of policy learning that can be used to enhance, reshape and improve future policies for the development and diffusion of building-sector energy efficiency technologies. Enhanced policy learning, in turn, will help overcome barriers to energy efficiency to support innovation and facilitate technology change for sustainable energy use.

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