Improving energy efficiency in low- and middle-income countries is considered an important strategy to address the dual problems of high particulate and carbon emissions in electricity generation and low aggregate energy production. An emerging literature provides evidence on the existence and drivers of energy efficiency gaps. However, the emphasis of this research agenda has been largely in high-income, highly industrialized countries. An increasingly popular solution to overcome information constraints is an energy audit. Energy audit programs can be voluntary (with and without financial incentives) or compulsory for certain energy users. The existing studies have mostly investigated the effects of subsidized voluntary energy audit programs. Given the lack of evidence on the impacts of compulsory energy audits on firms in the context of low and high-income countries, the researchers will study a mandatory energy audit program in Vietnam. First, does an energy audit mandate work? Second, what are the costs and benefits of a compulsory energy audit to enterprises? Third, does the effect of a mandated energy audit depend on the heterogenous characteristics of firm, such as the gender of the firm’s head, the firm’s size, and finance? Fourth, can or do firms comply with the mandate or do firms strategically avoid compliance?
The researchers will make use of a unique monthly firm-level dataset of 13,000 firms in Vietnam from 2008 to 2019. This data will be obtained from Vietnam Electricity, the country’s state-owned and sole electricity provider, and will be paired with annual enterprise survey data provided by the General Statistics Office of Vietnam. The researchers’ empirical research methodology will leverage a discontinuity in a 2010 law that requires enterprises whose annual electricity consumption exceeds some policy-determined threshold to conduct an energy audit every three years. They will exploit a discontinuity in the energy audit obligation rule and will use regression discontinuity design to credibly address the research questions.
This project will contribute to the emerging literature on energy efficiency gaps by addressing the contexts of compulsory energy audits and energy audits in a low-income country setting. This project will also provide insight for policymakers into whether an energy audit mandate works to encourage firms, especially energy-intensive firms, to conserve electricity.
