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Energy Efficiency Premiums in Unlabeled Office Buildings

Maya Papineau

Year: 2017
Volume: Volume 38
Number: Number 4
DOI: 10.5547/01956574.38.4.mpap
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Abstract:
Whether commercial real estate market participants effectively evaluate building energy efficiency characteristics in the absence of a green label has so far remained unaddressed in the literature. I estimate the energy efficiency premium in unlabeled office buildings by exploiting variation in mandatory building energy standard implementations as a result of the 1992 U.S. Energy Policy Act. A more stringent energy code leads to rent and price premiums of approximately 4 percent and 9 percent, respectively. Heterogeneity in the rent premium is also observed based on who pays the utility bills, as would be expected if market participants correctly evaluate energy conservation characteristics. The rent and price premiums are consistent with full capitalization of the energy savings from a more stringent standard.



Utilities Included: Split Incentives in Commercial Electricity Contracts

Katrina Jessoe, Maya Papineau, and David Rapson

Year: 2020
Volume: Volume 41
Number: Number 5
DOI: 10.5547/01956574.41.5.kjes
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Abstract:
This paper quantifies a tenant-side �split incentives� problem that exists when the largest commercial sector customers are on electricity-included property lease contracts, causing them to face a marginal electricity price of zero. We use exogenous variation in weather shocks to show that the largest firms on tenant-paid contracts use up to 14 percent less electricity in response to summer temperature fluctuations. The result is retrieved under weaker identifying assumptions than previous split incentives papers, and is robust when exposed to several opportunities to fail. The electricity reduction in response to temperature increases is likely to be a lower bound when generalized nationwide and suggests that policymakers should consider a sub-metering policy to expose the largest commercial tenants to the prevailing retail electricity price.





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