Informational Barriers to Energy Efficiency - Theory and European Policies. Bruges European Economic Research (BEER) Papers 15/2009

This BEER addresses informational barriers to energy efficiency. It is a widely acknowledged result that an energy efficiency gap exists implying that the level of energy efficiency is at an inefficiently low level. Several barriers to energy efficiency create this gap and the presence of asymmetric information is likely to be one such barrier. In this article a theoretical framework is presented addressing the issues of moral hazard and adverse selection related to energy efficiency. Based on the theoretical framework, European policies on energy efficiency are evaluated. The article is divided into two main parts. The first part presents the theory on information asymmetries and its consequences on energy efficiency focusing on the problems of moral hazard and adverse selection. Having established a theoretical framework to understand the agency barriers to energy efficiency, the second part evaluates the policies of the European Union on energy efficiency. The BEER finds that problems of moral hazard and adverse selection indeed can help explain the seemingly low levels of energy. In both presented models the cost to the principal from implementing high energy efficiency outcome is increased with the informational asymmetries. The theory reveals two implications to policies on energy efficiency. First, the development of measures to enable contractual parties to base remuneration on energy performance must be enhanced, and second, the information on technologies and the education of consumers and installers on energy efficiency must be increased. This could be complemented with certification of installers and energy efficiency advisors to enable consumers to select good agents. Finally, it is found that the preferred EU policy instrument on energy efficiency, so far, seems to be the use of minimum requirements. Less used in EU legislation is the use of measuring and verification as well as the use of certifications. Therefore, it is concluded that the EU should consider an increased use of these instruments, and in particular focus on a further development of standards on measurability and verification as well as an increased focus on education of consumers as well as installers and advisors on energy efficiency.

Explaining and Comparing - Improving United States and European Union-Africa Economic Relations: Policy Memo. ACES Working Papers, 2012

As evidenced by the disparities seen in the world, development does not occur uniformly around the world. Global superpowers like the United States and the European Union collectively dominate other parts of the world simply because of their ability to develop at a faster rate. With the rise of globalization and the increasing connectivity of the world economy, the world has reached a time where it is imperative that those nations and unions holding power to commit to elevating their fellow nations through supportive policy ties. The United States and the European Union, as leading global nations, have an important role in developing the economies of other countries; by taking various policy measures, the US and EU can create stronger economic ties to Africa and create a advantageous relationship for all the regions involved.