IDEAS home Printed from
   My bibliography  Save this paper

The Economics of Energy Efficiency in Buildings


  • Trevor Houser

    () (Peterson Institute for International Economics)


At the 2008 summit in Hokkaido, Japan, and again this summer in L'Aquila, Italy, G-8 leaders called for a 50 percent reduction in greenhouse gas (GHG) emissions by 2050 in order to avert the most serious dangers from global climate change. Improving the energy efficiency of buildings is essential: The International Energy Agency (IEA) has estimated that meeting the G-8's emission-reductions goal will require reducing annual GHG emissions from the building sector by 8.2 billion tons by 2050 below business as usual. While previous studies have shown that the cost of emissions abatement in the buildings sector is cheaper than in many other sectors, few studies have attempted to model what policies will be required to reduce building-sector emissions in line with the IEA's calculations. Trevor Houser, expanding on his earlier PIIE policy brief, uses the World Business Council for Sustainable Development's (WBCSD) model to study the economics of improving building-sector energy efficiency. Houser agrees with previous studies that the GHG abatement costs of improved building efficiency are cheaper than the abatement costs in other sectors (though more expensive than previous studies suggest), but he finds significant barriers to investments in energy efficiency. A carbon price alone--a key part of any successful climate policy--will not be enough to overcome these barriers, and complementary measures, such as improved financing approaches and enhanced standards and codes for building energy efficiency, will be needed to incentivize long-term building-sector investments and to meet the emission-reductions goals outlined by the IEA. Failure to enact such policies, and thus to take advantage of lower cost GHG abatement opportunities in the building sector, will force greater emission reductions in other sectors and will carry a much higher price tag.

Suggested Citation

  • Trevor Houser, 2009. "The Economics of Energy Efficiency in Buildings," Policy Briefs PB09-17, Peterson Institute for International Economics.
  • Handle: RePEc:iie:pbrief:pb09-17

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Burtraw, Dallas & Sweeney, Richard & Walls, Margaret, 2009. "The Incidence of U.S. Climate Policy: Alternative Uses of Revenues From a Cap-and-Trade Auction," National Tax Journal, National Tax Association;National Tax Journal, vol. 62(3), pages 497-518, September.
    2. Burtraw, Dallas & Sweeney, Richard & Walls, Margaret, 2008. "The Incidence of U.S. Climate Policy: Where You Stand Depends on Where You Sit," Discussion Papers dp-08-28, Resources For the Future.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iie:pbrief:pb09-17. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peterson Institute webmaster). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.