Is there a silver bullet? A comparative assessment of twenty policy instruments applied worldwide for enhancing energy efficiency in buildings

While the commercial and domestic building sectors account for 33 % of all energy-related CO2 emissions worldwide, approximately 30 % of this energy consumption can be saved economically. However, numerous barriers such as hidden costs and benefits, distorted energy pricing, imperfect information, market failures and misplaced incentives prevent the realization of these energy saving potentials. For this reason, countries apply a variety of policy instruments such as building codes, energy efficiency obligations, subsidies and information campaigns. Since these instruments differ considerably in terms of their effects and costs, a research project conducted under the framework of the Fourth Assessment Report of the Intergovernmental Panel on Climate Change has reviewed more than 60 ex-post policy evaluation reports for the 20 most commonly used policy instruments from app. 30 countries worldwide. The paper presents the results of this exercise regarding the environmental effectiveness and cost-effectiveness of these instruments, as well as identifies special conditions for their success.

While most policy instruments achieved significant energy savings, appliance standards, building codes, tax exemptions and labelling were revealed as most effective policy instruments. Other instruments such as Kyoto Protocol flexible mechanisms or taxation have been less successful in the building sector. Several policy instruments achieved energy savings at negative costs for society; most cost-effective in our sample were appliance standards, demand-side management programs and mandatory labelling. Since no single policy instrument can capture the entire potential for energy-efficiency, buildings require a diverse portfolio of policy instruments for effective energy use reductions and for taking advantage of synergistic effects.