IPCC Fourth Assessment Report: Climate Change 2007
Climate Change 2007: Working Group III: Mitigation of Climate Change

6.7.8 Other barriers

Due to space limitations, not all barriers to energy efficiency identified in Table 6.5 can be detailed here. Other important barriers in the buildings sector include the limited availability of capital and limited access to capital markets of low-income households and small businesses, especially in developing countries (Reddy, 1991); limited availability of energy-efficient equipment along the retail chain (Brown et al., 1991); the case of poor power quality in some developing countries interfering with the operation of the electronics needed for energy efficient end-use devices (EAP UNDP, 2000); and the inadequate levels of energy services (e.g., insufficient illumination levels in schools, or unsafe wiring) in many public buildings in developing countries and economies in transition. This latter problem can severely limit the cost-effectiveness of efficiency investments, since a proposed efficiency upgrade must also address these issues, offsetting most or all of the energy and cost savings associated with improved efficiency and in turn make it difficult to secure financing or pay back a loan from energy cost savings.

Table 6.5: Taxonomy of barriers that hinder the penetration of energy efficient technologies/practices in the buildings sector

Barrier categories  Definition Examples 
Financial costs/benefits Ratio of investment cost to value of energy savings Higher up-front costs for more efficient equipment  
Lack of access to financing  
Energy subsidies  
Lack of internalization of environmental, health and other external costs 
Hidden costs/benefits Cost or risks (real or perceived) that are not captured directly in financial flows Costs and risks due to potential incompatibilities, performance risks, transaction costs etc.  
Poor power quality, particularly in some developing countries 
Market failures Market structures and constraints that prevent the consistent trade-off between specific energy-efficient investment and the energy saving benefits Limitations of the typical building design process  
Fragmented market structure  
Landlord/tenant split and misplaced incentives  
Administrative and regulatory barriers (e.g., in the incorporation of distributed generation technologies)  
Imperfect information 
Behavioural and organizational non-optimalities  Behavioural characteristics of individuals and organizational characteristics of companies that hinder energy efficiency technologies and practices  Tendency to ignore small opportunities for energy conservation  
Organizational failures (e.g., internal split incentives)  
Non-payment and electricity theft  
Tradition, behaviour, lack of awareness and lifestyle  

Source: Carbon Trust, 2005.