Center for Effective Global Action

The literature assessing demand-side energy efficiency potential, and the policiesthat can be deployed to tap this potential has traditionally focused on developed andemerging economies. We review the state of knowledge on demand-side energy efficiency investments, and reframe the discussion in terms that are better suited to a low income country setting. This reframing opens up new lines of inquiry which have been under-emphasized to date. We provide a conceptual framework for exploring questions concerning the returns on investment in energy efficiency, market failures and barriers that can lead to under-investment, rebound effects, and policies designed to accelerate cost-effective investment. We highlight some institutional considerations that should inform policy prioritization and implementation in LIC settings. A case study of a large scale efficiency program in India underscores both the challenges and the potential forwelfare improving energy efficiency programs in the developing world.