Neither a borrower nor a lender be: Beyond cost in energy efficiency decision-making among office buildings in the United States

Abstract

Even when the benefits seem to outweigh the costs, many building owners do not invest in energy efficiency. Here a framework is presented for understanding energy efficiency investment decisions drawing on methods from behavioral decision research. The approach begins with a normative analysis that characterizes how building owners should behave, compares this to interview and survey data from decision-makers, then concludes with policy recommendations suggesting how to bridge that gap. The framework is demonstrated with a sample of class B and C office building owners in Pittsburgh, a population believed to under-invest in energy efficiency. Interviews (n = 16) and a survey (n = 132) found that while uncertainty and a lack of information about costs and energy savings play a critical role in decision-making, a significant proportion of the respondents also express aversion to debt and a lack of sensitivity to split incentives. Based on the results, providing owners of class B and C offices cost–benefit information and resolving energy savings uncertainty through guarantees, trial periods, or grants that fully subsidize energy efficiency for a small part of a building may be a way to enhance investment. The approach can be applied to other energy efficiency decision-making contexts by anyone with training in behavioral research.