Do we have the right incentives to promote a more circular economy?

 

ImageSandaruwani, Dassanayake, (Fiverr.com/Sanda5)

To create an economic system that is both cost-effective and environmentally sustainable, policy makers need to understand how households, companies, and states respond to incentives. In his thesis, Alejandro Egüez, have examined how different incentives affect three fundamental sectors for a more circular economy: energy efficiency, district heating, and waste management.

Encouraging energy efficiency

Alejandro Egüez

ImageMattias Pettersson

More energy efficient buildings would contribute to a more resource-efficient economy, but many households do not invest in energy efficiency even though it would benefit them to do so. Alejandro Egüez and his colleagues have investigated if more information can encourage energy efficient investments.
“In one of the chapters of my thesis, we evaluate the effect of an information-based instrument called “Energy Performance Certificates” (EPCs), on energy efficiency investments in single-family houses. It turns out that EPCs are only effective in promoting a few heating system-related measures and that they have no effect for most of the other measures that a household can take to improve the energy performance of their house. The limited effectiveness of EPCs raises concerns about their cost-effectiveness,” says Alejandro Egüez.

Ownership matters

Together with his co-supervisor Thomas Broberg, Alejandro Egüez can also demonstrate that tenant-owned buildings show better energy performance than rental apartment buildings, where the heating bill is usually included in the rent.
“These differences highlight the potential for improvements in energy performance in all types of multi-dwelling buildings. In another chapter of my thesis I also find that district heating prices are slightly higher in private networks than in municipally-owned networks. The different objectives of municipal and private companies may partially explain these differences.”

Effective waste management regulations

The EU Waste Hierarchy (EWH) aim towards a more efficient waste management in EU member states. It prescribes an order to prioritize waste treatment options. Waste prevention and re-use are at the top of the hierarchy, and waste disposal methods such as incineration and landfilling are at the bottom.
“When looking at the EWH, I can see that enforcement of environmental regulations have a positive effect on compliance with the EWH. Enforcement of environmental regulations are also associated with a decrease in landfilling,” says Alejandro Egüez.

Collaboration with the industry

Alejandro Egüez is part of the The Industrial Doctoral School for Research and Innovation at Umeå University (IDS), and his project co-financed by local energy company Umeå Energi AB.
“Being part of the IDS allowed me to learn from other disciplines, reflect on my research, and develop useful communication skills. During my internship at Umeå Energi AB, I had the unique opportunity to interact with highly qualified practitioners and see how a combined heat and power plant operates daily.  I hope that this research can contribute to a better understanding of how households, companies, and states respond to incentives and environmental policy to promote the circular economy,” concludes Alejandro Egüez.

Download the thesis: Energy efficiency, district heating and waste management: essays on environmental economics