Household fuel expenditure and residential building energy efficiency ratings in Ireland

Abstract

This paper examines the relationship between residential buildings׳ energy efficiency labels and household energy expenditure, complementing an existing literature comparing theoretical and actual energy use. Residential building energy performance certificates indicate a theoretical energy use based on standardised assumptions about occupancy and energy service demand and are a market signal about the energy performance of a property. This paper quantifies the empirical relationship between households’ expenditure on fuel and building energy performance using household expenditure survey data from the Republic of Ireland. The extent of this relationship, i.e. the size of the elasticity parameter, is of direct relevance to policy makers in the context of energy efficiency and climate policy targets. With building energy efficiency measured as a 15-point scale, we find that each rating decline along the scale is associated with a reduction in energy expenditure of 1.6%.