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2.5.2 The Nature of Barriers: A Taxonomy Based on Sorrell et al. (2004, 2011)

As discussed above, barriers to energy efficiency are very diverse and are classified in a variety of ways, see Table 2.4. Relying on the taxonomy developed in Sorrell et al. (2004, 2011), this section provides a brief summary of the main concepts of barriers to energy efficiency, which is heavily based on Sorrell et al. (2004, 2011) and Schleich (2009). It is important to stress out that some of the barriers are interrelated and also there may be an interaction between them.

We next comment on each of these barriers.

Table 2.4 A taxonomy of barriers to energy efficiency

Barrier

Claim

Risk

The short paybacks required for energy efficiency investments may represent a rational response to risk. This could be because such investments represent a higher technical or financial risk than other types of investment, or that business and market uncertainty encourages short time horizons

Imperfect information

Lack of information on energy efficiency opportunities may lead to costeffective opportunities being missed. In some cases, imperfect information may lead to inefficient products driving efficient products out of the market

Hidden costs

Engineering-economic analyses may fail to account for either the reduction in utility associated with energy efficient technologies, or the additional costs associated with them. As a consequence, the studies may overestimate energy efficiency potential. Examples of hidden costs include overhead costs for management, disruptions to production, staff replacement and training, and the costs associated with gathering, analyzing and applying information

Access to capital

If an organization has insufficient capital through internal funds, and has difficulty raising additional funds through borrowing or share issues, energy efficient investments may be prevented from going ahead. Investment could also be inhibited by internal capital budgeting procedures, investment appraisal rules and the short-term incentives of energy management staff

Split incentives

Energy efficiency opportunities are likely to be foregone if actors cannot appropriate the benefits of the investment. For example, if individual departments within an organization are not accountable for their energy use they will have no incentive to improve energy efficiency

Bounded rationality

Owing to constraints on time, attention, and the ability to process information, individuals do not make decisions in the manner assumed in economic models. As a consequence, they may neglect energy efficiency opportunities, even when given good information and appropriate incentives

Source: Sorrell et al. (2004)

 
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