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The Supply-side Effects of Energy Efficiency Labels

Author

Listed:
  • David Comerford

    (Division of Economics, University of Stirling)

  • Ian Lange

    (Division of Economics and Business, Colorado School of Mines)

  • Mirko Moro

    (Division of Economics, University of Stirling)

Abstract
We build on research documenting demand-side consequences of energy-efficiency labels for buildings by testing for a supply-side response. We exploit a natural experiment to test whether the introduction of mandatory energy labels for residential homes influenced investment in home energy efficiency. From 2008, vendors and lettors in the UK were required to publish a property's energy performance certificate (EPC). The EPC evaluates home energy efficiency overlaying a color-coded letter grade (from a green A to red G, respectively) on a pre-existent 0-100 point scale, the Standard Assessment Procedure (SAP) score. We hypothesize that the salient color letter grades will serve as targets when home owners are deciding the scale of investment to make in home energy efficiency. Consistent with this hypothesis, we find fewer homes just below, and more homes just above, the D grade threshold in the treatment years relative to the control years. This clustering is higher for homes that were traded after the EPC requirement was in effect. We conclude that there is a supply-side response to energy-efficiency labels.

Suggested Citation

  • David Comerford & Ian Lange & Mirko Moro, 2016. "The Supply-side Effects of Energy Efficiency Labels," Working Papers 2016-01, Colorado School of Mines, Division of Economics and Business.
    • Handle: RePEc:mns:wpaper:wp201601
    as

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    File URL: http://econbus-papers.mines.edu/working-papers/wp201601.pdf
    File Function: First version, 2016
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    References listed on IDEAS

    as
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    6. Brounen, Dirk & Kok, Nils, 2011. "On the economics of energy labels in the housing market," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 166-179, September.
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Marie Hyland & Anna Alberini & Se n Lyons, 2016. "The Effect of Energy Efficiency Labeling: Bunching and Prices in the Irish Residential Property Market," Trinity Economics Papers tep0516, Trinity College Dublin, Department of Economics, revised Aug 2016.
    2. Fleckinger, Pierre & Glachant, Matthieu & Tamokoué Kamga, Paul-Hervé, 2019. "Energy Performance Certificates and investments in building energy efficiency: A theoretical analysis," Energy Economics, Elsevier, vol. 84(S1).
    3. Collins, Matthew & Curtis, John, 2018. "Bunching of residential building energy performance certificates at threshold values," Applied Energy, Elsevier, vol. 211(C), pages 662-676.

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    More about this item

    Keywords

    energy efficiency; bunching; labels; thresholds;
    All these keywords.

    JEL classification:

    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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