Setting the Standard: Commercial Electricity Consumption Responses to Energy Codes

The adoption rate of building energy standards in the US has been increasing since the mid1990s as a result of the Energy Policy Act of 1992 (EPAct). However, most of the evidence on the energy savings that accrue from commercial building energy standards is based on engineering simulations, which do not account for realized behavior once a standard is actually adopted. This paper uses plausibly exogenous variation in commercial building energy standard adoptions, combined with a unique state-level dataset on electricity consumption, energy prices, and the prevalence of “plus-utilities” tenancy contracts in commercial buildings, to estimate the realized electricity consumption response to commercial energy codes. The results suggest that in states with a large fraction of post-EPAct new construction under a code, per capita commercial electricity consumption is lower by about 13%. In addition, a one percentage point increase in the rate of tenancy contracts where tenants pay directly for energy utilities is associated with a 1% decrease in per capita electricity demand. The realized energy savings are less than half of predicted simulated savings. JEL classification: Q20, Q42, Q48,