The Price Premium of Residential Energy Performance Certificates: A Scoping Review of the European Literature

Yunbei Ou, Nick Bailey, David Philip McArthur and Qunshan Zhao
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Nick Bailey: University of Glasgow

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Abstract: Reduction in energy demand and decarbonisation of energy supply is crucial to achieve overall goals for net-zero by 2050, underscoring the importance of housing energy efficiency improvement in the housing sector. While Energy Performance Certificates (EPCs) in the EU are important tools to encourage investment in energy efficiency through market incentives, their effectiveness remains in question. This review aims to summarise the European literature in English on the price premium of residential EPCs. The objectives are to summarise research scope and scale, methodological approaches and limitations, and synthesise price premium. Adopting a scoping review approach with digital databases and artificial intelligence tools for literature searching, 68 studies and 111 models are included covering studies from 2011 to 2024. Findings show that studies are mainly concentrated in those parts of Europe where EPC data are openly available, and that the publication pace is increasing in recent years. With hedonic models being the dominant approach, major limitations found in this field include property-level data availability and omitted variable bias (OVB), rendering difficulties in isolating the impact of energy efficiency. Results synthesis shows a positive price premium for energy-efficient homes, as well as variation between some submarkets. It suggests future research leverage new forms of data and methods to address the OVB, as well as exploring submarket studies and studies on wider housing market impact. To realise a sustainable transition, policymakers should support property-level data infrastructure, strengthen the implementation and harmonisation of the EPC system, and tailor energy retrofit policies for different submarkets.

Date: 2024-10-23
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DOI: 10.31219/osf.io/bm9xk

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