Conference Agenda

A number of local governments and some state governments in the USA have embraced building electrification and require all-electric equipment in newly constructed buildings. This paper builds a model of the dynamic process by which electrification in newly constructed buildings spreads to electrification in existing buildings. The key channel of spillover is the rising prices of piped gas resulting from a high share of fixed cost in operating a gas distribution system and a slowly declining customer base. The paper takes into account that there are heterogeneous fixed costs in electrifying existing buildings across households. We show that the resulting dynamics depend crucially on how building owners form expectations about the future price of natural gas. We model near rational expectations formation processes based on level-k thinking and show that the rising price of gas can substantially accelerate the rate of decline of gas throughput, aka speed up electrification of the full building stock. We calibrate the model with micro level data from the ResStock and ComStock databases provided by NREL and illustrate the resulting dynamics based on a random sample with detailed building level information in Washington DC.

This meta-analysis studies how different types of incentives – informational, financial, and techno- logical automation – can influence households to shift their peak electricity consumption over time. Our analysis integrates 150 average treatment effects from 45 articles published since 2007, offering a comprehensive evaluation of these strategies both individually and in combination.

We find that each of these stimuli in isolation only reduces peak electricity demand by around 4% on average. However, when information, financial incentives, and automation are combined, the reduction in demand jumps to 19%. This synergy occurs because information-based stimuli help people notice the financial benefits of reducing peak consumption, while automation technology makes it easier to make changes. In addition, we find that all types of financial incentives are similarly effective, but informational strategies that leverage social comparisons tend to outperform those based on broader social appeals.

Our finding highlights the importance of combining financial incentives, information-based stimuli, and smart automation in making demand more responsive, thus sup- porting the integration of renewable energy sources.

A second emissions trading system (EU ETS2) for buildings, road transport and small energy and industrial installations is expected to be introduced in the European Union (EU) from 2027. Until 2030, however, the EU ETS2 is not an independent pillar of EU climate policy, but is intended to support Member States in meeting their national targets under the Effort Sharing Regulation. We analyze the EU ETS2 for the year 2030 using the general equilibrium model DART. In our analysis, the introduction of an EU ETS2 generates about a quarter of the efficiency gains of a comprehensive emissions trading system, provided that nation states make use of the flexibility mechanisms of the Effort Sharing Regulation and compensate for the regional shift in abatement through intergovernmental emissions trading. However, this is only true if there is no far-reaching price stabilization in the EU ETS2.

Heating buildings contributes about 20 per cent of global CO2 emissions. Decarbonizing heating requires substituting fossil fuel-based with renewable technologies. This technological change promises environmental benefits but comes with financial costs and (perceived) uncertainty about the performance of the new technologies. We examine the effect of adopting heat pumps on electricity and gas consumption in a staggered difference-in-difference design, exploring the timing and variation of heat pump adoption within postcode areas in the United Kingdom. We find heat pump adoption reduces gas consumption and increases electricity consumption, resulting in a net reduction of energy consumption. We further analyse heterogeneous effects, contemporaneous technology amortization costs, and optimal subsidy size with and without accounting for CO2 savings and carbon price.