WASHINGTON - The challenge of climate change usually brings to mind images of industrial smokestacks or gas-hungry SUVs. But commercial and residential buildings consume nearly two-fifths of all energy produced worldwide and spit out 8.4 billion tons of CO2 emissions each year, or 30 percent of the global total. And while the price tag for reducing greenhouse gas emissions is cheaper for buildings than for transportation or hard industries, construction of more energy-efficient buildings won't pay for itself through lower energy bills. Pure market incentives aren't enough; governments must get involved.
So argues a new study, The Economics of Energy Efficiency in Buildings, issued this month by the Peterson Institute for International Economics.
Author Trevor Houser, a senior adviser to the U.S. special envoy on climate change, explains why individuals and firms won't necessarily spend the cash on their own to improve their buildings' efficiency. In multifamily residential buildings or commercial rental properties, for example, the owners bear the costs of new investments, while the occupants see the benefit of lower utility bills. These split incentives mean that sufficient investments in, say, new heat pumps or better insulation aren't likely to be made. The benefit to the climate is clear enough, but not to any single bottom line.
So what to do? Houser highlights financing innovations such as green mortgages, with lower interest rates for buyers who opt for more energy-efficient homes, and calls for stronger housing codes and standards. He cautions, however, that poorer and rural consumers spend larger shares of their income on energy, meaning that climate and energy policies should seek to ease the hit on these groups.
A focus on buildings' energy efficiency may be one of the cheapest ways to help meet global goals for reducing greenhouse gas emissions, Houser argues, and an increasingly critical way, too. So you should still worry about those SUVS roaring down the highway - just don't forget the high-rises where their drivers go to work.
CARLOS LOZADA is Outlook editor for The Washington Post.
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