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Proof of concept that requiring energy labels for dwellings can induce retrofitting

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  • Comerford, David A.
  • Lange, Ian
  • Moro, Mirko

Abstract

How to induce households to install energy efficient technology remains a puzzle. Could an energy labeling requirement for residential real estate help? We propose that the salient color-letter grades on the English Energy Performance Certificate (EPC) served as targets, motivating vendors to invest in energy efficiency. To test our hypothesis we look to a random sample of over 16,000 homes in England. In the post-EPC data we find a cluster of homes with energy efficiency scores just above the D-grade threshold. This cluster was not present prior to the requirement, replicates in an independently-drawn random sample and is significantly larger amongst properties that can be identified as treated by the EPC requirement. We conclude that the EPC requirement induced investment, and hence that energy efficiency labels have potential to green the housing stock. We infer from our analysis how the design of the EPC could be altered to motivate greater investment in energy efficiency.

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  • Comerford, David A. & Lange, Ian & Moro, Mirko, 2018. "Proof of concept that requiring energy labels for dwellings can induce retrofitting," Energy Economics, Elsevier, vol. 69(C), pages 204-212.
    • Handle: RePEc:eee:eneeco:v:69:y:2018:i:c:p:204-212
    DOI: 10.1016/j.eneco.2017.11.013
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    Cited by:

    1. Hyunjoo Lee & Misuk Lee & Sesil Lim, 2018. "Do Consumers Care about the Energy Efficiency of Buildings? Understanding Residential Choice Based on Energy Performance Certificates," Sustainability, MDPI, vol. 10(11), pages 1-18, November.
    2. Huaccha, Gissell, 2023. "Regional persistence of the energy efficiency gap: Evidence from England and Wales," Energy Economics, Elsevier, vol. 127(PA).
    3. Khadidja Rahmani & Atef Ahriz & Nahla Bouaziz, 2022. "Development of a New Residential Energy Management Approach for Retrofit and Transition, Based on Hybrid Energy Sources," Sustainability, MDPI, vol. 14(7), pages 1-23, March.
    4. Luiz de Mello, 2023. "Real Estate in a Post-Pandemic World: How Can Policies Make Housing More Enviromentally Sustainable and Affordable?," Hacienda Pública Española / Review of Public Economics, IEF, vol. 244(1), pages 111-139, March.
    5. Morgan, J. & Chu, C.M. & Haines-Doran, T., 2023. "Competent retrofitting policy and inflation resilience: The cheapest energy is that which you don't use," Energy Economics, Elsevier, vol. 121(C).
    6. Rodolfo Sejas-Portillo & David Comerford & Mirko Moro & Till Stowasser, 2020. "Limited Attention in the Housing Market: Threshold Effects of Energy-Performance Certificates on Property Prices and Energy-Efficiency Investments," CESifo Working Paper Series 8669, CESifo.
    7. Franziska Schütze, 2020. "Transition Risks and Opportunities in Residential Mortgages," Discussion Papers of DIW Berlin 1910, DIW Berlin, German Institute for Economic Research.
    8. Clayton, Jim & Devine, Avis & Holtermans, Rogier, 2021. "Beyond building certification: The impact of environmental interventions on commercial real estate operations," Energy Economics, Elsevier, vol. 93(C).
    9. Atasoy, Ayse Tugba, 2020. "Behavioral responses of green builders to discontinuous certification schemes," Resource and Energy Economics, Elsevier, vol. 60(C).
    10. Goeschl, Timo, 2019. "Cold Case: The forensic economics of energy efficiency labels for domestic refrigeration appliances," Energy Economics, Elsevier, vol. 84(S1).
    11. Chaudhuri, Kausik & Huaccha, Gissell, 2023. "Who bears the energy cost? Local income deprivation and the household energy efficiency gap," Energy Economics, Elsevier, vol. 127(PA).
    12. Qiu, Yueming & Kahn, Matthew E., 2019. "Impact of voluntary green certification on building energy performance," Energy Economics, Elsevier, vol. 80(C), pages 461-475.
    13. Li, Y. & Kubicki, S. & Guerriero, A. & Rezgui, Y., 2019. "Review of building energy performance certification schemes towards future improvement," Renewable and Sustainable Energy Reviews, Elsevier, vol. 113(C), pages 1-1.
    14. Hettinga, Sanne & van ’t Veer, Rein & Boter, Jaap, 2023. "Large scale energy labelling with models: The EU TABULA model versus machine learning with open data," Energy, Elsevier, vol. 264(C).

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    More about this item

    Keywords

    Energy labels; Retrofitting; Selective attention; Residential energy use; Notches; Energy efficiency gap;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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