An Evaluation Of A Public Energy Loan Program: The Characteristics Influencing Inquiry And Participation By Firms

Abstract

Public programs designed to subsidize the use of energy conserving technologies are becoming widely used policy initiatives targeting both the public and private sector. Proponents of such initiatives point to its win-win nature of promoting energy conservation:  it not only benefits the economy as a whole, but also allows private benefits to accrue to program participants.  This paper attempts to identify the firm-level and regional characteristics that influence the likelihood of participation for firms in a public energy loan program.  The results show that the loan amount requested by firms is inversely related to participation.  Participation falls with proprietorships, partnerships, and corporations when compared with charitable associations, non-profits and government entities.  Those companies benefiting the most from small changes in energy efficiency exhibit a significant increase in participation rates.  Firms located in metropolitan areas are associated with increased participation when compared with their non-metropolitan counterparts.  There is also evidence that program inquiries move with interest rates, suggesting that during periods of rising rates, companies may seek out the program's reduced interest rate to subsidize investment projects.  Policymakers may use these findings to better understand how energy-related issues apply to the profit-maximizing decision of the firm.