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September 17, 2026Energy Research & Social ScienceOpen Access

Distributional implications of selection into heating-system retrofit subsidies

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Authors

SCS. E.M. ClarkeJRJouni RäihäHKHanna-Liisa Kangas

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Overview

Administrative data study reveals heating retrofit subsidies disproportionately benefit wealthier households, indicating that subsidy mechanisms strongly shape equitable energy transition outcomes.

Key Points

  • Evaluate the distributional implications and household selection patterns across three subsidy designs aimed at replacing residential oil-based heating systems.
  • Analyzed comprehensive administrative data from Finland covering 2020–2022 to examine residential heating retrofit subsidy applications.
  • Compared subsidy applicants against both households that completed unsubsidized retrofits prior to program implementation and households that had not renovated.
  • Evaluated participant income and demographic distributions across three subsidy mechanisms, specifically comparing tax credits against lump-sum grants.
  • Subsidy uptake was heavily concentrated among wealthier households, closely matching the participation patterns of earlier unsubsidized retrofits.
  • The introduction of subsidy programs did not substantially alter the demographic or socioeconomic profile of households replacing oil heating systems.
  • Tax credits operated as a regressive policy instrument, whereas simpler lump-sum grants engaged a more socioeconomically diverse pool of applicants.

Cite This Study

Clarke et al. (2026) studied this question.

synapsesocial.com/papers/6aabb6d85f706d05830e593ehttps://doi.org/10.1016/j.erss.2026.104958
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