Evidence for Action on Energy Efficiency

The E2e Project is a joint initiative of the University of California at Berkeley, the University of Chicago, and the Massachusetts Institute of Technology.

World class researchers tackling the energy efficiency gap

E2e has built a community of top tier researchers pursuing the frontier of energy efficiency research.

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A growing body of evidence

With several recently-launched and on-going projects, E2e researchers are analyzing all aspects of the energy efficiency gap.

Featured Research

Efficiency and Equity Impacts of Energy Subsidies

Economic theory suggests that energy subsidies can lead to excessive consumption and environmental degradation. However, the precise impact of energy subsidies is not well understood. We analyze a large energy subsidy: the California Alternate Rates for Energy (CARE). CARE provides a price reduction for low-income consumers of natural gas and electricity. Using a natural field experiment, we estimate the price elasticity of demand for natural gas to be about -0.35 for CARE customers. An economic model of this subsidy yields three results. First, the natural gas subsidy appears to reduce welfare. Second, the economic impact of various policies, such as cap-and-trade, depends on whether prices for various customers move closer to the marginal social cost. Third, benefits to CARE customers need to increase by 6% to offset the costs of the program.