Policy instruments to foster energy efficiency

In this chapter we start by enumerating the reasons why progress in realizing the energy efficiency potential has been so limited both for firms and households. Then we turn to the role of policy in moving agents closer to an optimal level of energy efficiency. Governments have a range of instruments at their disposal for doing so and while some of them have been successful others have not. Lessons can therefore be learnt from the experience in implementing these different measures. The paper ends with some thoughts on how policies can be made more effective.