Triggers and barriers to energy efficiency measures in the ceramic, cement and lime sectors

• Multiple case study of 16 Belgian construction material producers.
• 53 energy efficiency investments (completed and potential) are discussed.
• Capital budgeting and study of feasibility/profitability are principal barriers.
• Bounded rationality aggravates barriers.
• Emission trading and voluntary agreement address different barriers.

Evaluating and understanding the interplay of barriers to the diffusion of energy efficiency measures is highly relevant because, if policies are effective in overcoming these barriers, CO2 emissions can be decreased at low cost. The study aims to understand how managers make decisions to invest in energy efficiency, how perceived barriers affect these decisions and how policy can overcome these barriers. We apply neo-classical economic theory as well as insights from transaction cost economics and behavioural economics to understand why hurdle rates, even when omitted costs and risk are taken into account, are higher than the weighted average cost of capital. We find that internal capital budgeting rules and the effort of studying technical feasibility and profitability are relevant to understanding the efficiency gap. The results indicate that the voluntary agreement and the emission trading scheme are complementary, addressing different barriers in different contexts.