Impact of voluntary green certification on building energy performance

Abstract

Credible estimates of energy savings from green buildings are critical for policy makers to examine the cost and benefit of various incentives intended to encourage commercial buildings to go green (e.g. expedited construction permits, government grants, and property tax incentives). Yet, data limitations have hindered reliable estimations. Filling this gap, this study uses a large panel dataset on energy consumption for commercial buildings in Phoenix metropolitan area, Arizona. By tracking building occupants' monthly energy consumption before and after the building's certification as an Energy Star building, we provide new estimates of the environmental gains from private investment in green real estate. Results show that for occupants that occupy space in a certified building in both the pre-certification and post-certification periods, occupants in Energy Star buildings consume 8% less energy. This empirically robust estimate of potential benefit from green-certification provides a quantifiable benchmark against which green-promoting policies can be measured. We also document evidence of heterogeneous treatment effects. Energy savings differ by the building's initial certification points and the building's baseline energy consumption. These results are useful for policy makers to identify targets for green certification.