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Energy Efficiency Investment Decisions: Lessons from the Heavy-Duty Trucking and Supermarket Refrigeration Sectors
RFF Academic Seminar
Presenter
Heather Klemick,
National Center for Environmental Economics, Environmental Protection Agency
Abstract
Economic theory suggests that profit maximizing firms should have an incentive to incorporate technologies into their products that are cost-effective, absent consideration of externalities. Even in the presence of uncertainty and imperfect information – conditions that hold to some degree in every market – firms are expected to make decisions that are in the best interest of the company and its owners and/or shareholders. However, simple net present value calculations comparing upfront costs of fuel-saving technologies to future savings suggest this is not always the case. While a variety of hypotheses could explain this behavior, lack of empirical evidence on why businesses do not always invest in seemingly cost-effective energy saving technologies limits our ability to judge whether and when a given hypothesis is likely to be valid. In this paper, we undertake qualitative research to explore how capital investment decisions are made for energy-efficient technologies in two energy-intensive industries: heavy-duty trucking and supermarkets. We collect information via a combination of facilitated focus groups and one-on-one interviews with individuals involved in making a firm’s capital investment decisions, focusing on class 7 and 8 tractor investments for heavy-duty trucking firms and commercial refrigeration systems for supermarkets. Our approach yields insight into what factors might explain apparent under-investment in emission reducing technologies absent government regulation.
Date
Thursday, March 20, 2014
12:00 - 1:30 p.m. EDT
A light lunch will be provided.
Location
7th Floor Conference Room
All seminars will be in the 7th Floor Conference Room at RFF, 1616 P Street NW unless otherwise noted. Attendance is open, but involves pre-registration no later than two days prior to the event. For questions and to register to an event, please contact Karen Furman at furman@rff.org. Updates to our academic seminars schedule will be posted at www.rff.org/academicseminarseries.
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