What is the ‘Energy Efficiency Gap’? Analyzing market failures to energy efficiency

Abstract

Energy efficiency is key to establishing a sustainable and clean environment for present and future generations. Without initiatives to develop energy efficiency, there are doubts that the path towards greater sustainability can ever be achieved. The literature on energy efficiency has long demonstrated the presence and persistence of an ‘energy efficiency gap.’ This paper examines the nature and size of this gap, identifies vital explanatory factors, and explores approaches by which to bridge the gap between potential and actual improvements in energy efficiency for sustainable development.