Which policy option can be more cost-effective in promoting the use of energy efficient appliances in Europe?

The document compares different policy instruments for increasing energy efficiency in appliances across several EU member states, finding that while subsidies often lead to greater CO2 reductions, energy taxes generally provide higher welfare gains and lower administrative costs. The effectiveness of these policies varies significantly by product type and country, with tax credits for boilers proving highly cost-effective in Italy and Denmark, and the ban of inefficient washing machines being preferable to manufacturer tax credits in Italy and Poland, despite high overall welfare costs.

• For refrigerators in France and Denmark, energy taxes are preferable to subsidies because they present higher welfare gains, although subsidies result in larger CO2 reductions.
• In Italy and Poland, banning inefficient washing machines (removing B-class and lower from the market) is more feasible and cost-effective than providing tax credits for manufacturers, though both options are noted to have unacceptably high welfare costs for CO2 reduction projects.
• Tax credits for consumers are more cost-effective than energy taxes (gas price increases) for boilers in both Denmark and Italy. In Italy, the tax credit generates a net welfare gain of €287 million and reduces CO2 by 1.3 million tons per year.
• The cost-effectiveness of subsidies versus energy taxes for compact fluorescent lamps (CFLi) varies by country: subsidies are more cost-effective in Poland, whereas energy taxes are more cost-effective in France.
• Generally, subsidies produce larger CO2 reductions than energy taxes but do so at higher welfare costs and significantly higher administrative costs.
• Energy taxes offer the distinct advantage of generating government revenue, whereas subsidies create a budgetary burden.

APA

Ortiz, R. A., & Markandya, A. (2009). Which policy option can be more cost-effective in promoting the use of energy efficient appliances in Europe? Basque Centre for Climate Change. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201005071242541131025472.pdf

Chicago

Ortiz, Ramon Arigoni, and Anil Markandya. Which policy option can be more cost-effective in promoting the use of energy efficient appliances in Europe? Basque Centre for Climate Change, 2009. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201005071242541131025472.pdf.

Wikipedia

{{cite report |last1=Ortiz |first1=Ramon Arigoni |last2=Markandya |first2=Anil |title=Which policy option can be more cost-effective in promoting the use of energy efficient appliances in Europe? |publisher=Basque Centre for Climate Change |date=December 2009 |url=https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201005071242541131025472.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ortiz2009which, author = {Ortiz, Ramon Arigoni and Markandya, Anil}, title = {{Which policy option can be more cost-effective in promoting the use of energy efficient appliances in Europe?}}, institution = {Basque Centre for Climate Change}, year = {2009}, month = dec, url = {https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201005071242541131025472.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }