Discussion Paper

Does Information Provision Shrink the Energy Efficiency Gap? A Cross-City Comparison of Commercial Building Benchmarking and Disclosure Laws

Summary

Energy benchmarking and disclosure laws in Austin, New York, San Francisco, and Seattle have reduced utility expenditures by about three percent.

Abstract

Information failures may help explain the so-called “energy efficiency gap” in commercial buildings, which account for approximately 20 percent of annual US energy consumption and CO2 emissions. Building owners may not fully comprehend what influences energy use in their buildings and may have difficulty credibly communicating building energy performance to prospective tenants and buyers. Ten US cities and one county have addressed this problem by passing energy benchmarking and disclosure laws. The laws require commercial buildings to report their annual energy use to the government. We evaluate whether the laws have had an effect on utility expenditures in office buildings covered by the laws in four of the early adopting cities—Austin, New York, San Francisco, and Seattle—and find that they have reduced utility expenditures by about 3 percent. Our view is that these estimated effects in the early days of the programs are largely attributable to increased attentiveness to energy use.