Working Paper: NBER ID: w24211
Authors: Christopher D. Bruegge; Tatyana Deryugina; Erica Myers
Abstract: State-level building energy codes have been around for over 40 years, but recent empirical research has cast doubt on their effectiveness. A potential virtue of standards-based policies is that they may be less regressive than explicit taxes on energy consumption. However, this conjecture has not been tested empirically in the case of building energy codes. Using spatial variation in California’s code strictness created by building climate zones, combined with information on over 350,000 homes located within 3 kilometers of climate zone borders, we evaluate the effect of building energy codes on home characteristics, energy use, and home value. We also study building energy codes’ distributional burdens. Our key findings are that stricter codes create a non-trivial reduction in homes’ square footage and the number of bedrooms at the lower end of the income distribution. On a per-dwelling basis, we observe energy use reductions only in the second lowest income quintile, and energy use per square foot actually increases in the bottom quintile. Home values of lower-income households fall, while those of high-income households rise. We interpret these results as evidence that building energy codes result in more distortions for lower-income households and that decreases in square footage are responsible for much of the code-induced energy savings.
Keywords: Building Energy Codes; Energy Efficiency; Distributional Effects; Income Quintiles
JEL Codes: H23; Q48; Q4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Stricter building energy codes (L74) | Reduction in homes' square footage (R31) |
| Stricter building energy codes (L74) | Reduction in the number of bedrooms (R21) |
| Stricter building energy codes (L74) | Energy use reductions in the second lowest income quintile (D12) |
| Stricter building energy codes (L74) | Increase in energy use per square foot in the bottom quintile (Q41) |
| Stricter building energy codes (L74) | Decline in home values for lower-income households (R21) |
| Stricter building energy codes (L74) | Increase in home values for higher-income households (R21) |
| Stricter building energy codes (L74) | Regressive impact on home values (R28) |