Efficiency Investment and Curtailment Action

Abstract

Households’ energy-saving activities are often categorized into efficiency investment and curtailment action, which previous studies have analyzed separately, even though households use both activity types simultaneously. In this study, we develop an energy-saving model based on a household production framework to show how these two activities are related. Our household production framework predicts that a household uses energy efficiency investment and curtailment action jointly and not alternatively. Specifically, a household that invests heavily in energy efficiency spends more time on curtailment action. Our empirical analysis uses micro-level data from the Survey on Carbon Dioxide Emissions from Households in Japan to examine the validity of this prediction in a real-world setting. We compare the intensities of curtailment actions by households that keep using old appliances beyond the appropriate replacement period with those by households that use appliances within an appropriate replacement cycle. Our empirical results reveal that the former households, which do not invest in energy efficiency adequately, are less engaged in curtailment actions than the latter households, which invest in energy efficiency adequately. Therefore, the empirical results support the theoretical prediction.