This paper proposes an integrated analytical framework consisting of the following three steps: (1) investigation of consumers' preferences, (2) prediction of technology diffusion by taking into account consumers' preferences, and (3) estimation of CO2 emission reduction caused by the diffusion of the examined technology. By using this framework, this paper evaluates the policy measures implemented for disseminating photovoltaics and solar water heaters in terms of the contribution to reducing CO2 emissions from the residential sector. We investigated consumer preferences for these technologies as well as the effects of attributes such as installation cost, energy price, energy efficiency, and perception on consumers' choices. Considering these effects, we developed a model that estimates the diffusion of these technologies into the residential sector of Japan through 2025 and the resulting CO2 emission reduction. We found that the policy measures for the diffusion of photovoltaics that reduce initial cost (e.g., subsidy programs) are more cost effective for reducing CO2 emission than those reducing users' operating expenditure (e.g., feed-in tariff programs). For solar water heater to be able to reduce the CO2 emissions considerably, the public perception must be improved. (c) 2012 Elsevier Ltd. All rights reserved.