The importance of engaging residential energy customers' hearts and minds

• Residential energy demand is estimated for 14 European OECD countries between 1978 and 2008.
• Investigate the relative contributions of Underlying Energy Demand Trend (UEDT) which captures exogenous technical progress.
• The most effective policies target behavioural, lifestyle and cultural factors to reduce residential energy consumption.

In an attempt to reduce the contribution of residential greenhouse gas emissions the EU has implemented a variety of policy measures. The focus has been to promote domestic energy efficiency and ultimately a reduction in residential energy demand. In this study we estimate residential energy demand using Underlying Energy Demand Trend (UEDT) and Asymmetric Price Responses for 14 European OECD countries between 1978 and 2008. Our results support the conclusion that policies to reduce residential energy consumption and the consequent emissions need to account for behavioural, lifestyle and cultural factors in order to be effective.