How Green Is Your House? Mandatory Energy Performance Certificates and Energy Consumption

Abstract

Mandatory energy performance certification for buildings is increasingly used in many countries and is seen as a key policy instrument for reducing energy consumption. Despite their widespread use, empirical evidence on whether mandatory certification reduces residential energy consumption is nonexistent. I study the introduction of mandatory energy performance certificates (EPCs) since November 2008 in Flanders, Belgium. I find that houses sold after mandatory certification consume 8% less energy. This reduction in energy usage primarily stems from decreased expenditures on fossil fuels. I provide suggestive evidence that the mechanism is through investments in energy efficiency. Alternative theories fail to explain the lower energy consumption in houses sold after mandatory certification.

Keywords: mandatory energy performance certificates, energy efficiency, residential energy consumption

JEL Classification: R31, Q48, D83