Visualizing Energy Efficiency: A Picture is Worth More Than 1,022 Words

We deploy a randomized controlled trial involving approximately 12,500 householdsshowing that providing consumers with a visual depiction of heat loss on utility bills leads toconsiderably larger energy savings compared to a popular social comparison “nudge”. Imagesshowing roof heat loss were provided to approximately 4,000 randomly selected householdsin on-bill messaging. Heat loss is visualized using infrared images taken from an aircraft-mounted infrared sensor during the winter heating season. A similarly-sized randomlyselected group received bill messaging with a ‘traditional’ social norm comparing theirconsumption to similar homes. We also find that the heat loss treatment results in a higherrate of realized energy efficiency durables investment and leads households to conserve in amanner consistent with private and social efficiency: the most inefficient households exhibitmuch larger energy reductions relative to the traditional social comparison

Energy Codes and the Landlord-Tenant Problem

I estimate the energy efficiency premium in unlabeled office buildings by exploiting variation in mandatory building energy standard implementations, as a result of the U.S. 1992 Energy Policy Act. A more stringent energy code leads to rent and price premiums of approximately 4% and 9%, respectively. Significant heterogeneity in the rent premium is observed based on who pays the utility bills, as would be expected absent asymmetric information about energy conservation characteristics among real estate market participants. The rent and price premiums are larger in hotter, more humid climates, and are consistent with full capitalization of the energy savings from a more stringent standard

Pre-Labeling Market Valuations in the U.S. Green Building Stock and the Causal Effect of Green Labels

While green-labeled buildings have been found to sell at a premium compared to nearby controls with similar observable characteristics, the voluntary nature of the labeling decision implies green-labeled buildings may have different unmeasured characteristics that may account for at least a portion of the premium. Therefore, it is unclear whether green-labeled building premiums are a causal effect of the labels. I use data on repeat sales transactions and detailed hedonic characteristics to test whether green-labeled office buildings were selling at a premium before they were labeled, and combine these results with post-labeling price premium estimates to identify realized cost-benefit ratios for green-labeling policies. The data suggest the causal net benefits of green labels range from $11.50-$19.95 per square foot. The estimated net benefits are smaller than previous estimates that have focused solely on the benefits and ignored the potential biases from nonrandom selection

Setting the Standard: Commercial Electricity Consumption Responses to Energy Codes

The adoption rate of building energy standards in the US has been increasing since the mid- 1990s as a result of the Energy Policy Act of 1992 (EPAct). However, most of the evidence on the energy savings that accrue from commercial building energy standards is based on engineering simulations, which do not account for realized behavior once a standard is actually adopted. This paper uses plausibly exogenous variation in commercial building energy standard adoptions, combined with a unique state-level dataset on electricity consumption, energy prices, and the prevalence of “plus-utilities” tenancy contracts in commercial buildings, to estimate the realized electricity consumption response to commercial energy codes. The results suggest that in states with a large fraction of post-EPAct new construction under a code, per capita commercial electricity consumption is lower by about 13%. In addition, a one percentage point increase in the rate of tenancy contracts where tenants pay directly for energy utilities is associated with a 1% decrease in per capita electricity demand. The realized energy savings are less than half of predicted simulated savings

Utilities Included: Split Incentives in Commercial Electricity Contracts

The largest decile of commercial electricity customers comprises half of commercial sector electricity usage. We quantify a substantial split incentives problem that exists when these large firms are on electricity-included property lease contracts. Using exogenous variation in weather shocks, we show that customers on tenant-paid contracts use 6-14% less electricity in summer months. The policy implications are promising. Nationwide energy savings from aligning incentives for the largest 10% of commercial customers exceeds analogous savings from the entire residential electricity sector. It is also cost-effective: switching to tenant-paid contracts via sub-metering has a private payoff period of under one year

How do Carbon Emissions Respond to Business-Cycle Shocks?

Carbon dioxide emissions are highly correlated with cyclical fluctuations in the U.S. economy; they increase during booms and fall during busts. We examine this relationship focusing on the sources of busines

Energy Codes and the Landlord-Tenant Problem

This paper assesses whether commercial real estate participants are willing to pay a premium for an energy efficient building that has not received a green label. I utilize a unique dataset of detailed building-level observations and a spatial semiparametric matching framework that exploits quasi-experimental state-by-year variation in the implementation of mandatory building energy codes, to estimate selling price and rent premiums for a more stringent code. I find that buildings constructed under a more stringent energy code are associated with rent and selling price premiums of approximately 2.7% and 10%, respectively, compared to buildings constructed just before the code came into effect. When tenants pay directly for utilities, buildings constructed under an energy code are associated with 5.7% higher rents. These premiums are consistent with complete capitalization of estimated building-level savings, and therefore cast doubt on the existence of an energy efficiency gap resulting from adverse selection between landlords and tenants

Energy Codes and the Landlord-Tenant Problem

This paper assesses whether commercial real estate participants are willing to pay apremium for an energy efficient building that has not received a green label. I utilizea unique dataset of detailed building-level observations and a spatial semiparametricmatching framework that exploits quasi-experimental state-by-year variation in the implementationof mandatory building energy codes, to estimate selling price and rentpremiums for a more stringent code. I find that buildings constructed under a morestringent energy code are associated with rent and selling price premiums of approximately2.7% and 10%, respectively, compared to buildings constructed just before thecode came into effect. When tenants pay directly for utilities, buildings constructedunder an energy code are associated with 5.7% higher rents. These premiums are consistentwith complete capitalization of estimated building-level savings, and thereforecast doubt on the existence of an energy efficiency gap resulting from adverse selectionbetween landlords and tenants in commercial buildings

Energy Codes and the Landlord-Tenant Problem

This paper assesses whether commercial real estate participants are willing to pay a premium for an energy efficient building that has not received a green label. I utilize a unique dataset of detailed building-level observations and a spatial semiparametric matching framework that exploits quasi-experimental state-by-year variation in the implementation of mandatory building energy codes, to estimate selling price and rent premiums for a more stringent code. I find that buildings constructed under a more stringent energy code are associated with rent and selling price premiums of approximately 2.7% and 10%, respectively, compared to buildings constructed just before the code came into effect. When tenants pay directly for utilities, buildings constructed under an energy code are associated with 5.7% higher rents. These premiums are consistent with complete capitalization of estimated building-level savings, and therefore cast doubt on the existence of an energy efficiency gap resulting from adverse selection between landlords and tenants

Essays on the Economics of Energy and the Environment

This dissertation explores two aspects of environmental economics and the evaluation of energy policies in the buildings sector. The first chapter focuses on energy standards, and the second chapter focuses on green labels.The first chapter assesses whether commercial real estate market participants are willing to pay a premium for an energy efficient building that has not received a green label. I utilize a unique dataset of detailed building-level observations and a spatial semiparametric matching framework that exploits quasi experimental state-by-year variation in the implementation of mandatory building energy codes, to estimate selling price and rent premiums for a more stringent code. I find that buildings constructed under a more stringent energy code are associated with rent and selling price premiums of approximately 2.7% and 10%, respectively, compared to buildings constructed just before the code came into effect. When tenants pay directly for utilities, buildings constructed under an energy code are associated with 5.7% higher rents. While building energy codes have been promoted to address landlord-tenant informational asymmetries that would not be addressed by a carbon pricing strategy, these estimated premiums are consistent with complete capitalization of estimated building-level savings, and as such they cast doubt on the existence of an energy efficiency gap resulting from adverse selection between landlords and tenants. In the second chapter, I assess whether nonrandom selection affects the frequently-touted benefits of green-labeling policies in the commercial building stock. While green-labeled buildings have been found to sell at a premium compared to nearby controls with similar observable characteristics, the voluntary nature of the labeling decision implies green-labeled buildings may have different unmeasured characteristics that may account for at least a portion of the premium. Therefore, it is unclear whether green-labeled building premiums are a causal effect of the labels. I use data on repeat sales transactions and detailed hedonic characteristics to test whether green-labeled office buildings were selling at a premium before they were labeled, and combine these results with post-labeling price premium estimates to identify realized cost-benefit ratios for green-labeling policies. The data suggest the causal net benefits of green labels range from $11.50-$19.95 per square foot. The estimated net benefits are smaller than previous estimates that have focused solely on the benefits and ignored the potential biases from nonrandom selection