Perhaps you might consider the broader ramifications of a policy initiative as to do otherwise is misleading and counterproductive.

You may want to revise Tinbergen (1951). If you have multiple goals, you need multiple instruments. If you regulate properly, ancillary benefits by and large vanish. If you regulate improperly, the cost of improper regulation largely cancel the ancillary benefits.

But your numbers makes no sense considered in isolation from the substantial ancillary benefits. This is not a criteria for evaluating a policy unless a claim was made that “this policy is exclusively an emissions reduction strategy”. I would imagine that this policy was implemented to address several issues including energy savings, energy security, climate change, job creation, comfort and health benefits.

You acknowledge these additional benefits but make the unsubstantiated claim that they can be cancelled out by your overestimation of the carbon savings number. That is clearly not true.

The EPA report isn’t wrong, just categorizes emissions in a different way. Emissions from electricity used in buildings (eg: for heating and lighting) are excluded (counted in power generation).

My number comes from here:

http://www.sei.ie/Publications/Statistics_Publications/Energy_in_Ireland/Energy_in_Ireland_1990-2007.pdf

p 79

So, per tonne, NEEAP is even more expensive than my estimates.

Where did you get 11 MMTCO2? Is the EPA report to the UNFCCC wrong?

I would disagree with you there on your first point. The market failure exists because efficient investments are not made due to informational deficits etc. Obviously can agree to disagree on this.

In 2007 residential sector energy-related CO2 emissions were 11,186 kt CO2 (so you are right, not quite 12). HES scheme supports grants for interventions which affect both direct and non-direct emissions so that should be the starting point for calculations.

NEEAP projections suggest CO2 savings for HES of 157KtCO2 http://www.dcenr.gov.ie/NR/rdonlyres/FC3D76AF-7FF1-483F-81CD-52DCB0C73097/0/NEEAP_full_launch_report.pdf.

Where did you get that direct household emissions are 12 MMTCO2? The ESRI Environmental Accounts have 7 MMTCO2, and they reproduce the UNFCCC reports.

My estimate is that 250 TMTCO2 could be saved. What does the secret SEI report say?

I don’t believe it is confidential, it just hasn’t been published. I will email you a copy further to clarification with SEI that this is ok.

While we are on the subject, I note from a previous post “If Irish home owners do not sufficiently invest in their house, that is their business”.

Do you not believe that the market can fail?

And:

“Third, will it reduce carbon dioxide emissions? Yes, if the subsidies are taken up. Direct emissions of carbon dioxide by households are some 7 million tonnes of carbon dioxide.

You forgot about about another 5Mt of emissions comes from energy use in homes.

“Let us assume that 5 million tonnes of that are for home heating (too high)”

No too low.

“and that the insulation programming reduces the energy bill by half (too high)”

depends on the intervention, but about right in many cases

“for one percent (too high) of houses”.

about 4%, but many will only choose one or two interventions which would reduce the energy savings

“Then 25,000 tCO2 is saved this year, but this is an investment so let us multiply by 10. Saving 250,000 tCO2 for €100 mln is 400 €/tCO2. Last Friday, emission permits traded for 8.65 €/tCO2. The 400 €/tCO2 is conservative on the one hand, but it omits the benefits of warmer homes…”

a positive with ancillary benefits on health and morbidity

“…and lower energy bills”.

If we accept your estimates, ie: half average bills (=€1000 on 2008 prices) on 1% of homes (175,000), that’s €17.5 million saved per annum, -20% comfort take up (this is where the health etc benefits come from) is €14 million p/a energy savings. That’s starting to look like money well spent all of a sudden!

“If the two cancel…”

That’s two positives. How can they cancel?!!

“…..the government overpays for CO2 emission reduction by a factor 50! (This factor is comparable to getting your hair cut in Florida rather than in Dublin.)

Clearly not.

Am I missing something?

This is what I meant:
“Thousands of jobs” can mean anything between 1,000 and 10,000. If the actual number is closer to 1,000, then it would be cheaper to keep these people on the dole. If the number is closer to 10,000, this may be a smart labour policy. It is a bit worrying that the government’s impact assessment is so vague at so crucial a point.

There is a policy imperative to reduce greenhouse gas emissions. There is no policy imperative to reduce greenhouse gas emissions by insulating houses.

Your numbers (the 1,000 employed ‘horror story’) make no sense, and assume that people can just roll up and demand the money up front from the State rather than clawed back. I refer you to the original press release:

After registering with SEI, homeowners can immediately arrange for a BER assessment to be carried out, if they wish, without awaiting from grant approval. However, the grant for the BER will only be payable after upgrade measures and follow up BER are completed. Applicants must complete the formal application form and await written grant approval before having upgrade measures carried out.

So, there have to be people employed to do this, who can be expected to only be able to do so much work per annum. So, more money only gets paid if more people are employed.

Now, there is certainly an attempt at justifying this in stimulative terms (which econmists can argue over to their heart’s content, rightly or wrongly). But there’s also a policy imperative here in combating climate change, but this is a politcal decision, not an economic one (or at least one hopes, given the lessons on display from the late administration of the unlamented Bush the younger).

The thing about energy efficiency is that it is a bit like lean manufacturing - you can only realise what gains and improvements are possible when you actually seriously try the thing. The first pass only gets you the first set of improvements. Going back, you get further improvements.

More importantly, your people learn the skills. They develop an appreciation for how things should actually be done.

So is what the government doing more symbolic than practical? For sure. But that doesn’t mean it won’t do good.

The attractive thing about this is you can expect contractors employed by LAs to have tax clearance certificates - not sure private owners could be expected to secure same from the guys they hire.