Valuing the wider benefits of energy efficiency: governance lessons from a review of novel appraisal frameworks in the United Kingdom

Abstract

Extended abstract 3-199-26 Efforts to meet European net-zero targets can enhance energy security, create jobs, promote healthy living, and improve local air quality. These wider benefits – or ‘co-benefits’ – of low-carbon actions are often excluded or treated as secondary in energy policy appraisal, which typically focuses on comparing the direct financial costs and benefits of policies. Since many of these co-benefits are specific to low-energy pathways, this narrow focus can undervalue energy demand solutions in comparison to supply-side options. Highlighting the co-benefits of energy demand solutions can strengthen their investment case and help embed demand-side action across policy levels and sectors. Therefore, new policy appraisal frameworks are needed to create a more level playing field for assessing energy supply- and demand-side measures.  In the UK, national and local policymakers are starting to use policy appraisal frameworks which better recognise the co-benefits of energy demand reduction in pathways to net zero, local authority decision-making, and public procurement. This paper examines how the use of these new appraisal frameworks is helping to overcome implementation barriers faced by energy demand solutions. This analysis is informed by a methodological review of 28 frameworks, 27 expert interviews, and analysis of reforms to policy appraisal guidance. We found that the co-benefits of low-carbon actions are being incorporated into energy policy appraisal using expanded cost-benefit analyses, multi-criteria analysis, and risk-opportunity analysis.   Through the lens of policy entrepreneurship, we show that these frameworks are helping to make demand-side measures more visible, financeable, and politically feasible by evidencing the economic or strategic value of their co-benefits to elected officials. This strengthens the case for public investment in energy demand reduction under mainstream fiscal rules. We reflect on the implications of these findings for the governance, financing, and political feasibility of low-energy pathways in the UK and Europe.  Read the full abstract. Download presentation.