Energy efficiency retrofits for U.S. housing: Removing the bottlenecks

Abstract

U.S. housing accounted for over 22% of the country's total primary energy consumption in 2009, which equated to more than $2000 per household and $229 billion in aggregate expenditure. It appears that these amounts could be reduced substantially, with benefits to both household budgets and the environment's well-being. This paper's goal is to evaluate the alternative mechanisms that could expedite energy efficiency retrofits for U.S. housing. We begin by evaluating the evidence that significant improvements in the energy efficiency of existing U.S. housing are feasible, both technologically and financially. We compare the relatively optimistic positions taken in McKinsey and Company (2009a,b), EPRI (2009), and Harcourt, Brown, and Carey (2011) versus the less optimistic appraisal in Allcott and Greenstone (2012). We conclude that significant energy savings do appear to be both technologically and financially feasible. The remainder of the paper considers the bottlenecks that hamper energy-saving investments for the residential sector. We focus on imperfect information and loan market failures as the two key factors. We evaluate the state of the art with respect to scoring and assessment tools for energy-saving investments and the On-Bill, PACE, and Solar programs to facilitate secured loans. The discussion concludes with a series of proposals to overcome the bottlenecks.