The Supply-side Effects of Energy Efficiency Labels

David Comerford, Ian Lange and Mirko Moro

No 2016-01, Working Papers from Colorado School of Mines, Division of Economics and Business

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.

Keywords: energy efficiency; bunching; labels; thresholds (search for similar items in EconPapers)
JEL-codes: H23 L15 Q48 Q58 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2016-01
New Economics Papers: this item is included in nep-ene, nep-ino and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:mns:wpaper:wp201601

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