Hurdling Financial Barriers to Low Energy Buildings: Experiences from the USA and Europe on Financial Incentives and Monetizing Building Energy Savings in Private Investment Decisions

Steve Baden, Residential Energy Services Network
Philip Fairey, Florida Solar Energy Center
Paul Waide, Philippine de T’serclaes, and Jens Laustsen, International Energy Agency

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Abstract

There is a growing awareness by policy makers, the news media and consumers on both sides of the Atlantic that private investment decisions concerning the energy performance of the building stock do not reflect the cradle to grave value of potential building energy saving investments. Not only is a large part of the building stock leased to tenants, thereby taking away the owners direct interest in investments to lower energy bills, but the vast majority of owneroccupied buildings undergo multiple changes in ownership during their lifetimes and thus each individual owner has a limited financial interest in undertaking investments to minimize the buildings long-term energy costs.

If low or zero energy buildings are to be achieved beyond a niche market for “early adopters” and the wealthy, it is necessary to adopt market forces that will enhance the demand for such buildings. Financing practices that monetize long-term energy costs in near-term investment decisions can make a major contribution to this effort. This paper reports on a number of such initiatives that have been implemented in the European Union and the United States. It also examines complementary policies in both regions that are creating a more favorable environment for such investments. The paper will also explore new options to financing and identify areas where the European Union and the United States can cooperate.