Economic Efficiency, Environmental Effectiveness and Political Feasibility of Energy Efficiency Rebates: the Case of the Spanish Energy Efficiency “Renove” Plan

The paper evaluates the Spanish "Renove" plan, which provides rebates for A+ labelled energy-efficient appliances. Using a model of close substitutes, the authors find that a standalone 80€ subsidy for dishwashers in the Basque Autonomous Community increases total market demand by 1.5%, leading to a "rebound effect" that increases the total energy bill by 197,399€ and costs the government over 1 M€. In contrast, a 40€ tax on non-efficient appliances reduces total appliance demand by 1.6%, generates approximately 0.8 M€ in revenue, and saves nearly 300,000€ in energy costs. The authors argue that combining taxes and subsidies can optimize outcomes; for example, a 40€ subsidy paired with a 20€ tax avoids a deficit, prevents the rebound effect, and reduces deadweight loss compared to single-instrument policies.

• A standalone 80€ subsidy for energy-efficient dishwashers in the Basque Autonomous Community increases the demand for labelled units by 5.1% and total market demand by 1.5%, resulting in a rebound effect that increases the total energy bill by 197,399€.
• The 80€ subsidy policy is costly for public finances, with a subsidy cost exceeding 1 M€ and a welfare loss of approximately 26,000€.
• Implementing a 40€ tax on non-efficient appliances is more effective than a subsidy alone, as it reduces total appliance demand by 1.6%, collects nearly 1 M€ in revenue, and generates energy bill savings of almost 300,000€ without a rebound effect.
• Combining subsidies and taxes can satisfy economic efficiency, environmental effectiveness, and political feasibility simultaneously; specifically, a 40€ subsidy and 20€ tax combination generates no deficit, avoids the rebound effect, and produces lower deadweight loss than either a pure tax or pure subsidy.
• To minimize economic efficiency losses (deadweight loss), the authors find that taxes on non-labelled goods should be kept below 36€.

APA

Galarraga, I., Abadie, L. M., & Ansuategi, A. (2013). Economic Efficiency, Environmental Effectiveness and Political Feasibility of Energy Efficiency Rebates: the Case of the Spanish Energy Efficiency “Renove” Plan. Basque Centre for Climate Change. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201409220939281561884519.pdf

Chicago

Galarraga, Ibon, Luis María Abadie, and Alberto Ansuategi. Economic Efficiency, Environmental Effectiveness and Political Feasibility of Energy Efficiency Rebates: the Case of the Spanish Energy Efficiency “Renove” Plan. Basque Centre for Climate Change, 2013. https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201409220939281561884519.pdf.

Wikipedia

{{cite report |last1=Galarraga |first1=Ibon |last2=Abadie |first2=Luis María |last3=Ansuategi |first3=Alberto |title=Economic Efficiency, Environmental Effectiveness and Political Feasibility of Energy Efficiency Rebates: the Case of the Spanish Energy Efficiency “Renove” Plan |publisher=Basque Centre for Climate Change |date=February 2013 |url=https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201409220939281561884519.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{galarraga2013economic, author = {Galarraga, Ibon and Abadie, Luis María and Ansuategi, Alberto}, title = {{Economic Efficiency, Environmental Effectiveness and Political Feasibility of Energy Efficiency Rebates: the Case of the Spanish Energy Efficiency “Renove” Plan}}, institution = {Basque Centre for Climate Change}, year = {2013}, month = feb, url = {https://www.bc3research.org/h6T8Uy8Nm4gFs0O/201409220939281561884519.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }