September 20, 2009
California Energy Efficiency Transparency In Buildings

Prospective buyers and renters will have more visibility into future building heating, cooling, and lighting costs for commercial buildings sold in California.

Assembly Bill 1103, signed into law in 2007 and set to start taking effect in 2010, will require owners to provide 12 months’ worth of comparable energy-use information to prospective buyers or full-building tenants as well as financiers. It was originally scheduled to take effect for all properties Jan. 1, but draft implementation regulations from the California Energy Commission last month proposed a three-year phase-in period, starting with the largest buildings in July 2010.

I see this as a positive step since it increases market transparency. This can lead to higher energy efficiency in a few ways. First off, current owners will have incentives to look for ways to increase efficiency at least a year before a sale. Second, buyers with better skills at boosting energy efficiency could conceivably hunt around for buildings that have poor energy efficiency and hence lower resale value so that the buyers can buy inefficient buildings and improve efficiency for a profit. Third, companies constructing buildings will have more incentive to use more energy efficient designs since efficiency will play a larger role in determining eventual sales price.

One of the ways the market fails with building energy efficiency is with rental apartments where the renter pays all the utility bills. The renter typically doesn't own the refrigerator or heater or air conditioner. The owner doesn't have as much incentive to put in more efficient equipment since it is the tenant paying the bills. The tenants typically do not get to see the utility bills of the previous tenants. So the tenants can't choose more efficient apartments.

I'd like to see more policy changes for houses and apartments that provide better incentives for higher efficiency. We need these improvements before more Peak Oil price shocks make people too poor to do lots of retrofitting for efficiency.

Share |      Randall Parker, 2009 September 20 04:04 PM  Energy Policy

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