Energy efficiency as a credence good: A review of informational barriers to energy savings in the building sector

Giraudet, Louis-Gaëtan

doi:10.1016/j.eneco.2020.104698

Cited by 64 publications

(44 citation statements)

References 120 publications

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“…The EPBD introduced Energy Performance Certificates (EPCs) to provide tenants and buyers with synthetic and third-party information regarding the efficiency of real estate to eliminate market asymmetries. Such a strategy is relevant since market failures, in the form of imperfect information and asymmetries, are suggested to be barriers in the diffusion of efficient buildings [3], producing an "energy gap" (i.e., a rate of adoption well below the social optimum) [4]. Therefore, the recast of the Directive in 2010 (2010/31/EU) made it mandatory to include EPC labels in the marketing of almost all new and existing buildings in order to inform prospective users.…”

Section: Introductionmentioning

confidence: 99%

The Uneven Price Impact of Energy Efficiency Ratings on Housing Segments. Implications for Public Policy and Private Markets

Duarte

2019

Sustainability

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In the literature, there is extensive, although in some cases inconclusive, evidence on the impact of Energy Performance Certificates (EPC) on housing prices. Nonetheless, the question of whether such an impact is homogenous across residential segments remains highly unexplored. This paper addresses this latter issue utilizing multifamily listing data in metropolitan Barcelona. In doing so, first the entire sample is analyzed using a hedonic model. Second, the sample is split on the basis of a multivariate segmentation. Finally, separated hedonic models are specified again. The results suggest that in general, there is a modest impact of EPC ratings on listing prices, nonetheless it is not homogeneous across housing segments: (1) for the most modern apartments, with state-of-the-art features and active environmental comfort, energy ratings seem to play a null role in the formation of prices; (2) conversely, for the cheapest apartments, apartments boasting the most basic features, and apartments located in low-income areas, the "brown discount" is enormously significant, potentially depreciating the equity of those who have the least resources to carry out an energy retrofit. These results have implications for the assessment of the EPBD and its Spanish transposition, since a very well-intentioned environmental policy could have potentially harmful social repercussions in the absence of corrective measures.Commission saw the EPC scheme as "a power tool to create a demand-driven market for energy efficient buildings (p. 5) [6].Among all the real estate markets, the residential one is a special case since, due to the size of its stock, it consumes much more energy than commercial properties [7]. In the literature, there is extensive, yet in some case inconclusive, evidence regarding the existence of market premiums for efficient homes. According to the studies reviewed in the next section, home selling prices can vary up to 30.5% (for rating A, the most efficient one, in relation to rating G as the most inefficient) in the Danish case [8] or as little as 5% (A/G) in the case of the Irish renting market [9]. However, there is evidence suggesting that EPC labels do not play any role in price discrimination in the Oslo market [1]. Differences in climate and energy costs in relation to home prices and, perhaps, environmental concerns may be behind such divergences. As such, there are no reasons to believe that the impact of EPC labels is stationary across housing segments within the same city, where household budgets, personal tastes, and priorities, as well as home attributes and prices also vary in a significant manner. As a matter of fact, in the office market, there is evidence suggesting that "green labels" are contingent to characteristics of buildings in the determination of prices [10].The aim of this paper is to test whether the impact of EPC ratings on housing prices is the same in different market segments within a city. This analysis is relevant since the identification of divergent impacts may help to orien...

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Section: Introductionmentioning

confidence: 99%

The Uneven Price Impact of Energy Efficiency Ratings on Housing Segments. Implications for Public Policy and Private Markets

Duarte

2019

Sustainability

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“…Research suggests a wide range of factors may act as barriers to the acceptance, support and adoption of energy-efficient behaviours and deep renovation technologies and projects. These include social norms (and habits), a lack of information about the implication of alternative actions on the environment, split incentives, a lack of instruction on how to use new technologies, a lack of information on energy consumption and energy saving opportunities, short-termism and disturbance of daily routines including hygiene factors [7,14,[22][23][24][25][26][27][28][29]. It should be noted that there is evidence that household characteristics impact the adoption of energy-efficient technologies including education, age and house-hold composition, and these factors vary across European countries [14].…”

Section: Human Barriers To Deep Renovation Adoption and Usementioning

confidence: 99%

RINNO: Towards an Open Renovation Platform for Integrated Design and Delivery of Deep Renovation Projects

et al. 2021

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The building stock accounts for a significant portion of worldwide energy consumption and greenhouse gas emissions. While the majority of the existing building stock has poor energy performance, deep renovation efforts are stymied by a wide range of human, technological, organisational and external environment factors across the value chain. A key challenge is integrating appropriate human resources, materials, fabrication, information and automation systems and knowledge management in a proper manner to achieve the required outcomes and meet the relevant regulatory standards, while satisfying a wide range of stakeholders with differing, often conflicting, motivations. RINNO is a Horizon 2020 project that aims to deliver a set of processes that, when working together, provide a system, repository, marketplace and enabling workflow process for managing deep renovation projects from inception to implementation. This paper presents a roadmap for an open renovation platform for managing and delivering deep renovation projects for residential buildings based on seven design principles. We illustrate a preliminary stepwise framework for applying the platform across the full-lifecycle of a deep renovation project. Based on this work, RINNO will develop a new open renovation software platform that will be implemented and evaluated at four pilot sites with varying construction, regulatory, market and climate contexts.

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“…An increasing number of studies point to energy retrofit projects that fail to deliver predicted energy savings (Metcalf and Hassett, 1999;Graff Zivin and Novan, 2016;Fowlie et al, 2018). While these studies attribute the missing savings to modeling flaws in engineering calculations, Giraudet et al (2018) propose an alternative explanation rooted in information asymmetries. Evaluating a home weatherization program conducted in Florida, the authors provide evidence that retrofit contractors engage in moral hazard by under-providing quality in hard-to-observe measures such as insulation installation or duct sealing.…”

Section: Testable Hypothesesmentioning

confidence: 99%

How Do Lenders Price Energy Efficiency? Evidence From Personal Consumption Loans

2019

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At least ex ante, energy efficiency improvements increase investor's solvency. Associated loans should therefore carry lower interest rates than do otherwise conventional loans. We test this hypothesis using unique weekly panel data on posted interest rates scraped from loan simulators made available online by French credit institutions during 2015-2016. On average, we find that lenders charged a green premium in 2015 but offered a green discount in 2016. We also find that, absent green attributes, interest rates are higher for home retrofit loans than for vehicle loans, which suggests that lenders use the loan purpose as a screening device of unobserved borrower characteristics. Our results together imply that loans for home energy renovation were consistently charged relatively high interest rates, with adverse consequences for scaling up home energy renovation.

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Energy efficiency as a credence good: A review of informational barriers to energy savings in the building sector

Cited by 64 publications

References 120 publications

The Uneven Price Impact of Energy Efficiency Ratings on Housing Segments. Implications for Public Policy and Private Markets

The Uneven Price Impact of Energy Efficiency Ratings on Housing Segments. Implications for Public Policy and Private Markets

RINNO: Towards an Open Renovation Platform for Integrated Design and Delivery of Deep Renovation Projects

How Do Lenders Price Energy Efficiency? Evidence From Personal Consumption Loans

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