by Nina Boogen and Céline Ramseier| CEPE, ETH Zürich
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Il riscaldamento degli edifici incide sui consumi finali energetici svizzeri nella misura del 33 per cento. Quindi, proprio nel settore building potrebbero essere effettuati massicci interventi sul fronte dell’efficienza energetica, con positive ricadute anche in termini di minori emissioni di anidride carbonica. Nonostante questa opportunità, e l’effettiva presenza sul mercato di soluzioni tecnologiche ad alto potenziale di risparmio, gli interventi migliorativi sullo stock esistente restano ad oggi davvero limitati. |
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The heating requirement of buildings accounts for 33% of the final energy consumption in Switzerland. Therefore, a huge energy-efficiency potential lies in the building sector, and consequently also a large potential for CO2-emission reductions. In spite of this potential, the renewal rate of the existing building stock is very low. Only 1-2% of the houses in Switzerland are renovated every year and only 30-50% of them perform an energy-efficiency improving renovation of the building envelope (Banfi et al. 2008). The technologies for higher energy-efficiency levels in buildings are available in the market and are mostly cost-efficient as well. Why, then, is the renewal rate so low? What are the reasons and barriers for the slow adoption of these technologies?
To shed light on the decision making process of home owners when investing in retrofits of their buildings’ envelope, the Centre for Energy Policy and Economics (CEPE) at ETH Zurich performed two economic studies financed by the Swiss Federal Office of Energy (SFOE). The first study concentrated on the decision-making process for multi-family buildings (MFH), and the second one on the decision making process for single-family houses (SFH).
The two projects deal with renovation decisions of home owners (MFH and SHF) and analyze which energy-efficiency renovations have been performed over the past years. Special focus lies in the motivations behind the decision and the choice of particular types of renovation (maintenance or energy-efficiency renovation). We are especially interested in the factors that influence this decision.
For both studies, renovation data on household level was collected using surveys. The empirical analysis for each study presented here is based on a sample of approximately 1,500 households. In the following paragraphs we summarise the most important results obtained in these studies.
Mind the gap
The gap between the actual level of energy-efficiency (EE) renovations and the level of economically attractive energy- efficiency renovations is called the energy-efficiency gap. In the building sector this gap seems to be considerable given that the heating energy demand could be reduced by at least 33% for the existing building stock (Jakob 2006). Much research has
been conducted trying to find explanations as to why individuals pass up opportunities to make energy efficiency investments that result in energy savings in the future. From an economic point of view, explanations for the energy-efficiency gap can be divided into two categories: firstly, market barriers that inhibit the full diffusion of energy-efficiency technologies in the market, but do not require governmental intervention. Secondly, market failures that require government intervention in order to promote energy- efficiency technologies because the market does not work efficiently.Energy-efficiency renovations
are not widespread
Comparing the renovations rates of the past 15 years of the households included in our sample reveals that the renovation rate for building envelopes has increased slightly but is still at a low level. However, many renovations still consist of maintenance measures (e.g. simple paintbrush renovation for façades) rather than energy-efficiency renovations (adding insulation).
It is interesting to see that windows are retrofitted most often and most of the time in a way that improves energy efficiency.
The reason for this is the fact that due to technological progress, new windows are almost always more energyefficient than the old ones. Additionally, a new window has benefits other than energy efficiency like, for example, enhanced noise protection. On the contrary, especially for single-family homes, the rate of energy-efficiency façade renovations is particularly low, even though façades represent the most significant energy- saving potential of the entire building envelope. In contrast, for multi-family homes, we observe that about half of the renovations of the façade include energysaving measures; the overall annual rate of renovations however, is slightly above 2%, which is generally low.
Renovation motivation
The studies revealed that the most important motivations for performing a renovation of the building envelope are the conservation of the building value and the energy-saving potential (decrease of energy costs and environmental and climate protection). Aesthetic aspects play an important role for façade renovations, at least for SFH. Moreover, the improvement of comfort is an important reason for performing a renovation.
Besides, homeowners indicate a lack of sufficient funding as reasons for performing maintenance works instead of an energy efficiency renovation. As well, energy-ef- ficiency renovations are often considered as financially unprofitable or uninteresting by SFH owners. MFH owner often state that a reason for not choosing an EE renovation is that it is not necessary.
Well-informed home owners think long-term
The consultancy of an architect or engineering office is an important factor that can influence the decision for an energyefficiency improving renovation instead of doing maintenance work. The most important information source for homeowners before renovating is a craftsman, a building contractor, an architect or an engineering office. So far, only few owners use a public information centre or public utility as information source.
This fact emphasises the importance of adequate education for professionals in this area. Furthermore, preliminary empirical results of econometric models show that home owners who were consulted by a specialist (i.e. an architect, an engineering office or a consultant) during the planning stage of the retrofit chose energy efficiency retrofits more often. These findings contain an interesting message for the policy maker: the diffusion of information about technologies, the economics of energy ef- ficiency renovations and the assignment of energy efficiency renovation specialists seem to be promising policies that can lead homeowners to choose energy efficiency retrofits correctly and more often.
The relation of tenant and landlord
Investments in energy-efficiency improving measures can be passed on to tenants by 50-70% according to the Swiss rental law (Art. 14, VMWG), whereas maintenance work can not be passed on to tenants, as it should be fi- nanced through rent incomes. However, in practice, owners may not be sure whether they can fully recover their investments: the willingness-to-accept of the tenants must be high enough to pay a higher rent caused by these energyefficiency improving measures and in turn pay a lower utility bill.
This uncertainty of recovering the investment hinders the homeowners of taking action. And even if they can regain their expenses, an energy-efficiency renovation needs high upfront investment, which may
not always be available for an owner. Lacking access to capital is an important reason for both, not doing a renovation at all or just doing maintenance work instead of an energy-efficiency renovation. In the MFH study some empirical evidence was found, that homeowners who also live in their multi-family house are more likely to make an investment in an energy-efficiency renovation.
Policy outlook
The UK has recognised that something needs to be changed; in 2010, a new energy-efficiency policy in the residential sector was proposed. This so called ‘Green Deal Loan’ provides the up-front investment costs for home insulation and other energy-efficiency improvements in buildings. The idea is that homeowners get an upfront access to capital to finance the energy-efficiency measure, which will later be paid back through savings on the energy bill.
The actual investment costs of the measures (the ‘Green Deal Loan’) plus interests will then be paid back on the utility bills. In the UK (as well as in Switzerland) these bills are normally paid by the tenant, so it would be the tenant who ultimately bears the costs, as he is also the one who profits most. This mechanism may help to overcome two of the obstacles for energy efficiency: lacking access to credit and the Principle Agent problem.
To sum up, both of the studies revealed: that market failures do exist in the market for energy-efficiency retrofits of residential buildings and therefore there is a significant untapped energy-saving potential in the residential building sector since the market does not work efficiently. In addition, it is well known that prices of energy services such as heating a home are not efficient since they do not reflect all costs involved (external costs, mostly environmental).
This means that it is not guaranteed that the principle of true cost and the polluterpays- principle is applied. Based on these findings we conclude that an intervention of the state is justified to tap the full energy-savings potentials. Targeted subsidies may be used to make access to fi- nancial resources easier. To decrease the effect of a lack of information, public information centres as well as consultancy need to be promoted by public authorities. Finally, particular emphasis has to be paid on the education of craftsmen and construction experts.