If investment inefficiencies - consumers and firms do not undertake privately profitable investments in energy efficiency - are the only market failure, the first-best policy is to address the inefficiency directly - for example, by providing information to imperfectly informed consumers. If there are both investment inefficiencies and energy-use externalities, then taxes should be used in combination with some welfare-improving energy efficiency policy (Allcott and Greenstone, 2012; Gillingham and Palmer, 2013). A clear, predictable carbon price is likely to be an important driver of change.