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Improving Energy Codes

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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Energy Specializations: Energy Efficiency – Residential and Commercial Buildings; Renewables – Policy and Regulation; Natural Gas – Policy and Regulation; Petroleum – Policy and Regulation; Energy Efficiency – Barriers to Adoption; Energy and the Economy – Other

JEL Codes:
Q59 - Environmental Economics: Other
Q52 - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
E60 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
Q49 - Energy: Other

Keywords: Energy efficiency, Energy codes, Differentiated policy, Environmental policy, Building codes, Climate change, Carbon emissions

DOI: 10.5547/01956574.37.2.gjac

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Published in Volume 37, Number 1 of The Quarterly Journal of the IAEE's Energy Economics Education Foundation.