Does Energy Star Certification Reduce Energy Use in Commercial Buildings?

A new paper finds evidence that the Energy Star program is likely identifying buildings that are already energy-efficient, rather than persuading building owners to make efficiency upgrades.

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Date

Sept. 11, 2020

Authors

Becka Brolinson, Karen Palmer, and Margaret A. Walls

Publication

Working Paper

Reading time

1 minute

Abstract

A number of policies and programs are aimed at reducing energy use in buildings—buildingenergy codes, disclosure laws, energy-use benchmarking, and mandated or subsidized energyaudits. In the United States, many of these initiatives are enacted at the state or local level. Atthe federal level, one of the main programs is Energy Star certification, which provides a label totop energy-performing buildings. In this paper, we evaluate changes in rents and utility expen-ditures following Energy Star certification using a national sample of over 4,400 office buildingscombined with Energy Star data from the US Environmental Protection Agency (EPA). We findthat building rents increase by 3.7 percent following certification, but that utility expendituresremain unchanged. We provide novel evidence that buildings do not make upgrades or capitalinvestments to obtain a certification, suggesting that the Energy Star program primarily certifiesbuildings that are already energy-efficient.

Key Findings

  • Rents per square foot in Energy Star certified office buildings in the United States are 3.7 percent higher, on average, than rents in similar uncertified buildings.
  • Energy Star certification does not cause a change in building utility expenditures.
  • We find no evidence that the Energy Star program causes building owners to invest in building upgrades.
  • Taken together, our results suggest that Energy Star serves an information provision function, allowing building owners to communicate to prospective tenants the energy efficiency of their buildings relative to other, similar buildings.

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