Lawrence Berkeley National Laboratory

Incentive programs are an essential policy tool to move the market toward energy-efficient products. They offer a favorable complement to mandatory standards and labeling policies by accelerating the market penetration of energy-efficient products above equipment standard requirements and by preparing the market for increased future mandatory requirements. They sway purchase decisions and in some cases production decisions and retail stocking decisions toward energy-efficient products. Incentive programs are structured according to their regulatory environment, the way they are financed, by how the incentive is targeted, and by who administers them. This report categorizes the main elements of incentive programs, using case studies from the Major Economies Forum to illustrate their characteristics. To inform future policy and program design, it seeks to recognize design advantages and disadvantages through a qualitative overview of the variety of programs in use around the globe. Examples range from rebate programs administered by utilities under an Energy-Efficiency Resource Standards (EERS) regulatory framework (California, USA) to the distribution of Eco-Points that reward customers for buying efficient appliances under a government recovery program (Japan). We found that evaluations have demonstrated that financial incentives programs have greater impact when they target highly efficient technologies that have a small market share. We also found that the benefits and drawbacks of different program design aspects depend on the market barriers addressed, the target equipment, and the local market context and that no program design surpasses the others. The key to successful program design and implementation is a thorough understanding of the market and effective identification of the most important local factors hindering the penetration of energy-efficient technologies.