6.8.5 Policy options for GHG abatement in buildings: summary and conclusion

Section 6.8 demonstrates that there is a variety of government policies, programmes, and market mechanisms in many countries for successfully reducing energy-related CO₂ emissions in buildings (high agreement, medium evidence). Table 6.6 (below) reviews 20 of the most important policy tools used in buildings according to two criteria from the list of criteria suggested in Chapter 13 (of the ones for which literature was available in policy evaluations): emission reduction effectiveness and cost-effectiveness. Sixty-six ex post (with a few exceptions) policy evaluation studies were identified from over 30 countries and country groups that served as a basis for the assessment.

The first column in Table 6.6 identifies the key policy instruments grouped by four major categories using a typology synthesized from several sources including Grubb (1991); Crossley et al. (2000) and Verbruggen and Bongaerts (2003): (i) control and regulatory mechanisms, (ii) economic and market-based instruments, (iii) financial instruments and incentives, and (iv) support and information programmes and voluntary action. The second column identifies a selection of countries where the policy instrument is applied^[20]. Then, the effectiveness in achieving CO₂ reduction and cost-effectiveness were rated qualitatively based on available literature as well as quantitatively based on one or more selected case studies. Since any instrument can perform poorly if not designed carefully, or if its implementation and enforcement are compromised, the qualitative and quantitative comparisons are based on identified best practices, in order to demonstrate what impact an instrument can achieve if applied well. Finally, the table lists special conditions for success, major strengths and limitations, and co-benefits.

While the 66 studies represent the majority of such evaluations available in the public domain in 2006, this sample still leaves few studies in certain categories. Therefore, the comparative findings of this assessment should be viewed as indicative rather than conclusive. Although a general caveat of comparative policy assessments is that policies act as parts of portfolios and therefore the impact of an individual instrument is difficult to delineate from those of other tools, this concern affects the assessment to a limited extent since the literature used already completed this disaggregation before evaluating individual instruments.

All the instruments reviewed can achieve significant energy and CO₂ savings; however the costs per tonne of CO₂ saved diverge greatly. In our sample, appliance standard, building code, labelling and tax exemption policies achieved the highest CO₂ emission reductions. Appliance standards, energy efficiency obligations, demand-side management programmes, public benefit charges and mandatory labelling were among the most cost-effective policy tools in the sample, all achieving significant energy savings at negative costs. Investment subsidies (as opposed to rebates for purchases of energy efficient appliances) were revealed as the least cost-effective instrument. Tax reductions for investments in energy efficiency appeared more effective than taxation. Labelling and voluntary programmes can lead to large savings at low-costs if they are combined with other policy instruments. Finally, information programmes can also achieve significant savings and effectively accompany most other policy measures.

The effectiveness of economic instruments, information programmes and regulation can be substantially enhanced if these are appropriately combined into policy packages that take advantage of synergistic effects (Ott et al., 2005). A typical example is the co-ordination of energy audit programmes with economic instruments, such as energy taxes and capital subsidy schemes. In addition, ESCOs can flourish when public procurement legislation accommodates EPCs and includes ambitious energy-efficiency or renewable energy provisions, or in the presence of an energy-saving obligation.

Section 6.8 demonstrates that, during the last decades, many new policies have been initiated. However, so far only incremental progress has been achieved by these policies. In most developed countries, the energy consumption in buildings is still increasing (IEA, 2004f). Although some of this growth is offset by increased efficiency of major energy-consuming appliances, overall consumption continues to increase due to the growing demand for amenities, such as new electric appliances and increased comfort. The limited overall impact of policies so far is due to several factors: (i) slow implementation processes (e.g., as of 2006, not all European countries are on time with the implementation of the EU Buildings Directive); (ii) the lack of regular updating of building codes (requirements of many policies are often close to common practices, despite the fact that CO₂-neutral construction without major financial sacrifices is already possible) and appliance standards and labelling; and (iii) insufficient enforcement. In addition, Section 6.7 demonstrated that barriers in the building sector are numerous; diverse by region, sector and end-user group, and are especially strong.

There is no single policy instrument that can capture the entire potential for GHG mitigation. Due to the especially strong and diverse barriers in the residential and commercial sectors, overcoming these is only possible through a diverse portfolio of policy instruments for effective and far-reaching GHG abatement and for taking advantage of synergistic effects. Since climate change literacy, awareness of technological, cultural and behavioural choices and their impacts on emissions are important preconditions to fully operating policies, these policy approaches need to go hand in hand with programmes that increase consumer access to information, awareness and knowledge (high agreement, medium evidence).

In summary, significant CO₂ and other GHG savings can be achieved in buildings, often at net benefit to society (in addition to avoided climate change) and also meeting many other sustainable development and economic objectives, but this requires a stronger political commitment and more ambitious policy-making than today, including careful design of policies as well as enforcement and regular monitoring.

Table 6.6: The impact and effectiveness of various policy instruments aimed to mitigate GHG emission in the buildings sector

Table 6.6b.