Analysis Group Consultants, Affiliate Robert Stavins Coauthor Report on the Economic Effects of Mandatory Energy Labeling for Buildings

March 29, 2013

Vice President Todd Schatzki, Manager Jonathan Borck, and Harvard University professor and Analysis Group affiliate Robert Stavins have released a report, "An Economic Perspective on Building Labeling Policies," that examines the extent to which mandatory energy labeling for commercial properties results in reduced energy use.

The research, sponsored by the Building Owners and Managers Association International and the Greater Boston Real Estate Board, assesses the impact of new laws throughout the United States mandating that property owners measure and publicly report buildings' energy efficiency performance through benchmarking indices. The information developed would be provided to potential buyers and renters, similar to energy efficiency labels used for consumer products, such as motor vehicles and appliances, the authors explain.

"Our assessment of mandatory building labeling policies has identified many limitations to these policies that merit full consideration before proceeding with new programs," Dr. Schatzki, Dr. Borck, and Professor Stavins write. Among their findings:

  • Building energy labels differ greatly from the energy labels currently placed on consumer products such as refrigerators and automobiles. The labels provide no information on energy costs or savings, for instance, nor any information on ways that building owners can improve a property's energy use.
  • Building labels could affect property values -- those receiving a "green" score could see an appreciation in market value while those receiving a "brown" score could experience depreciation.
  • The premium associated with building energy labels may "overvalue" the underlying energy savings, suggesting that other factors could be affecting market decisions.
  • Measuring program impacts is challenging, and mandatory requirements in U.S. cities have only recently gone into effect. Best practices, therefore, have been difficult to establish.

The research has been cited in several media outlets, including Banker & Tradesman and the Boston Globe , which reported on the city of Boston's current proposal to institute an energy labeling mandate for office buildings, apartments, and condominiums.

Read the report

Read the Boston Globe article