The economic effects of energy conservation in the Finnish building stock

The economic effects of investing in energy efficiency in buildings in Finland was estimated. First conservation potentials in space heating for two different scenarios with different levels of investment in energy efficiency were quantified. This was done relying on statistical data and future projections of the development of the building stock. Then economic modelling was used to estimate the effects on energy sector and the economy at large. The results show that a rather modest increase resulting in a few percent rise in annual construction and renovation investments can decrease total primary energy consumption 3.8-5.3 % by 2020 and 4.7-6.8 % by 2050 compared to a baseline scenario. On the short term a slight decrease in the level of GDP and employment is expected. On the medium to long term, however, the effects on both would be positive. The rebound effect is estimated to stay within the range typical to OECD countries, that is, under 60 % of energy saved. Furthermore, a significant drop in harmful emissions and hence external costs is anticipated. Overall, a clear net benefit is expected from adopting the energy conservation measures. The study demonstrates that improvements in the energy efficiency of buildings are an economically sound and effective way to save energy. The required investments carry manageable costs. Furthermore, the results show that the energy sector can adapt quite painlessly to the changes, the most significant effect being a generally lower need for new energy production capacity.