Do Energy Efficiency Investments Deliver? Evidence from the Weatherization Assistance Program

Strategies to confront climate change rely heavily on energy efficiency investments that are widely believed to save consumers money, while also reducing carbon diox-ide and other pollutants. The evidence on energy efficiency investments comes almost entirely from engineering models of technology performance, energy savings potential, and associated costs. We apply experimental and quasi-experimental techniques to de-tailed data from the nation’s largest residential energy efficiency program, the Federal Weatherization Assistance Program (WAP). We find that participating households’ energy consumption declined significantly. We also present suggestive evidence that households modestly increased indoor temperatures by about 0.6 degrees F, providing some of the first direct evidence on the “rebound ” effect in the building sector. Im-portantly, we show that the net present value of these savings, accounting for both reduced energy expenditures and increased utility from indoor heating, are lower than the direct program costs under a range of plausible assumptions on both the average lifetimes of the energy efficiency measures and discount rates. The implied cost per ton of avoided CO2 emissions significantly exceeds the US governments estimate of damages. ∗We received many helpful comments from seminar participants at Carnegie Mellon, Columbia University