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A recent study by economists from New York University and the University of Chicago found the cost of two of former President Barack Obama’s energy efficiency programs, part of his efforts to fight climate change, vastly exceeded the value of the energy savings and the environmental benefits.
Researchers compared 100,000 households in Wisconsin from June 2012 to February 2013, who were offered two federally-funded residential energy efficiency programs: one subsidized home energy audits educating homeowners about steps they could take to improve efficiency, and a second subsidized recommended energy efficiency projects. The researchers found computer models projected the subsidies provided to homeowners would save far more money than they actually realized.
Audit subsidies did encourage homeowners to undergo energy audits. However, of the homeowners who underwent an audit, many ultimately decided not to adopt the recommended efficiency upgrades, largely based on “non-monetary factors such as hassle costs, aesthetics, and environmental concerns.” Even when homeowners went through both programs, they only realized 58 percent of the savings predicted by computer models, and had higher upfront costs than predicted. As a result, the combined programs only produced $0.20 in environmental benefits per dollar of subsidy. When all the benefits and costs of the program had been calculated, the auditing program had a minus-four percent (or negative) rate of return.