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Improving Energy Codes

Grant Jacobsen

Year: 2016
Volume: Volume 37
Number: Number 1
DOI: 10.5547/01956574.37.2.gjac
View Abstract

Energy codes set efficiency standards for buildings in the majority of U.S. states. Under most energy codes, builders can comply by demonstrating that the projected private expenditures on energy bills for a proposed building are less than a certain threshold. Using theory and evidence, I show that energy codes would be improved if compliance was instead determined by the projected social damages. Relative to current practice, damage-based codes would likely provide stronger incentives for electricity than natural gas conservation, in most states. Implementation of damage-based codes would lead to substantial welfare gains.

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