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Abstract: Economic principles have been applied to elicit the conditions under which there will be benefit to power companies in offering rebates to consumers to encourage them to adopt energy saving measures. The analysis also provides an answer to how rebate rate should be determined to maximise social benefit. However, the analysis of the rebate-based demand side management (DSM) programmes launched by the two power companies in Hong Kong in the year 2000 showed that the prerequisite conditions that would permit the power companies to derive benefits from the programmes were unlikely to exist. This suggests that use of this economic instrument for promoting energy efficiency requires governmental influence; it will not emerge solely as a commercial decision of the power companies in Hong Kong. [Copyright &y& Elsevier]

A major strength of the voluntary building environmental assessment method is to encourage good environmental practice beyond the current industry practice. For a successful voluntary scheme, the credit scale must be attractive to investors and performance-based criteria should be used. However, most of the current schemes use a combination of prescriptive and performance-based criteria, and credits are allocated using subjective judgement, irrespective of cost and practical implications of attaining improved performances. This is pointed to the need to establish an incentive-crediting scheme, which is oriented towards performance-based scales having credits linked to cost and performance. In formulating the incentive-crediting scheme, the cost effectiveness of different energy-saving level in a base building is investigated under the premise that the investors would pursue a strategy in the most cost-effective manner. This paper presents a conceptual framework for policy makers to formulate an incentive-crediting scale for accrediting criteria within the greenhouse gas objectives of a building environmental assessment scheme in Hong Kong, aiming to attract participation of the profit-maximising investors. Establishment of an incentive-crediting scale starts from developing a carbon dioxide abatement curve for greenhouse gas emission. This is subsequently followed by dividing the maximum energy-saving potential into ten equal energy reduction intervals. The incentive-crediting scheme is formulated on a basis that proportionally more credits would be rewarded for diminishing investment return of consecutive reduction levels in a base building. [Copyright &y& Elsevier]