For a variety of reasons, U.S. households, businesses, manufacturers, and government agencies all fail to take full advantage of cost-effective, energy-efficiency opportunities. Despite a growing environmental ethic among Americans and a concern for energy independence, consumers in this country are underinvesting in technologies, products, and practices that would cut their energy bills. The result is a large untapped potential for improving energy productivity, economic competitiveness, environmental quality, and energy security. The thesis of this paper is that the marketplace for energy efficiency, in general, is not operating perfectly, and the marketplace for energy-efficient buildings, in particular, is flawed. The reasons for underinvestments in cost-effective, energy efficiency are numerous and complicated. They also vary from sector to sector: the principal causes of energy inefficiencies in agriculture, manufacturing, and transportation are not the same as the causes of inefficiencies in homes and office buildings, although there are some similarities. One of the reasons for these differences is that the structure of marketplace for delivering new technologies and products in each sector differs. Energy-efficiency improvements in the buildings sector is critical to reducing greenhouse gas emissions, since most of the energy consumed in buildings comes from the burning of fossil fuels. This paper therefore begins by describing energy use and energy trends in the U.S. buildings sector. Characteristics of the marketplace for delivering energy efficiency technologies and products are then described in detail, arguing that this marketplace structure significantly inhibits rapid efficiency improvements
