Energy Performance Certificates and Investments in Building Energy Efficiency: A Theoretical Analysis

IEB Working Paper N. 2018/11

28 Pages Posted: 14 Oct 2018

See all articles by Pierre Fleckinger

Pierre Fleckinger

Université Paris-Dauphine, PSL Research University - MINES ParisTech; Paris School of Economics (PSE)

Matthieu Glachant

MINES ParisTech

Paul-Hervé Tamokoué Kamga

Université Paris-Dauphine, PSL Research University - MINES ParisTech

Date Written: September 21, 2018

Abstract

In the European Union, Energy Performance Certificates (EPCs) provide potential buyers or tenants with information on a property's energy performance. By mitigating informational asymmetries on real estate markets, the conventional wisdom is that they will reduce energy use, increase energy-efficiency investments, and improve social welfare. We develop a dynamic model that partly contradicts these predictions. Although EPCs always improve social welfare, their impact on energy use and investments is ambiguous. This implies that, in a second-best world where energy externalities are under-priced and/or homeowners have behavioral biases hindering investments (myopia), EPCs can damage social welfare. This calls for using mandatory energy labeling in contexts where additional instruments efficiently mitigate the other imperfections.

Keywords: Energy labeling, energy efficiency, buildings

JEL Classification: Q48, R31

Suggested Citation

Fleckinger, Pierre and Glachant, Matthieu and Tamokoué Kamga, Paul-Hervé, Energy Performance Certificates and Investments in Building Energy Efficiency: A Theoretical Analysis (September 21, 2018). IEB Working Paper N. 2018/11, Available at SSRN: https://ssrn.com/abstract=3253030 or http://dx.doi.org/10.2139/ssrn.3253030

Pierre Fleckinger

Université Paris-Dauphine, PSL Research University - MINES ParisTech ( email )

60 boulevard Saint Michel
Paris, 75272
France

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Matthieu Glachant (Contact Author)

MINES ParisTech ( email )

60, boulevard Saint Michel
75272 Paris cedex 06, 75006
France
+33 1 40 51 9229 (Phone)

Paul-Hervé Tamokoué Kamga

Université Paris-Dauphine, PSL Research University - MINES ParisTech ( email )

60 boulevard Saint Michel
Paris, 75272
France

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
17
Abstract Views
266
PlumX Metrics