1. THE IMPACT OF STATE LEVEL BUILDING CODES ON RESIDENTIAL ELECTRICITY CONSUMPTION Anin Aroonruengsawat UC Berkeley, ARE Maximilian Auffhammer UC Berkeley, ARE/IAS Alan H. Sanstad LBNL

2. National Per Capita Consumption of Total Energy Has Been Flat since 1970

3. Residential Per Capita Consumption of Total Energy Flat since 1970

4. Growth of Residential Per Capita Consumption of Electricity has Slowed

5. …In States With and Without Significant Regulation

6. Policies are thought to matter

7. Technology-focused Efficiency and CO 2 Potential Studies “Bottom-up” engineering economics methodology – First appeared 1970s – Studies recently emerging at an accelerated rate, and gaining increasing attention – e.g., McKinsey study Traditional point-of-contention is the claim of sizable zero or negative cost energy and/or carbon reduction

8. McKinsey: Negative Marginal Costs for CO 2 Abatement from New Buildings

9. Are potential studies overly optimistic? Varying degrees of enforcement on site. Ex-Post Modifications by end-users If these improvements are free or have a positive return, why don’t households build the “correct” house?  Building codes are technical or performance standards, which may not achieve savings at least cost.

10. “Official” Savings from California Utilities

11. Ex-Post Evaluation of Energy Efficiency Programs Aggregate (national scale) studies are few, but do exist – Gillingham et al. (2006) estimated about 5% reduction in national primary consumption as of 2000 due to cumulative effects of all policies and programs, local, state, and federal – Geller (1995, ACEEE) – Jones, Norland and Prindle (1990, ASE) Econometric Studies: – Jaffe and Stavins (1995, JEEM) – Everyone speaking today.

12. Research Question How effective were state-level building codes at reducing residential electricity consumption?

13. History of Residential Building Codes Fuel-oil, gas and electricity shortages in the winter 1972/73. Closing of schools, industry and government offices created demand for regulation. NCSBCS asked NBS to develop set of standards states could use. August 1975 ASHRAE (American Society of Heating, Refrigerating, and Air Conditioning Engineers) Code 90- 1975 Revisions until 1995 known as the Model Energy Code (MEC) Current: International Energy Conservation Codes (IECC) California: Title 24 of 1978

14. What types of buildings are included? IECC 2009 covers: – construction, additions, remodeling, window replacement, and repairs of specified buildings. – The Residential portion of the Code applies to buildings that are detached one- and two-family dwellings and buildings that contain three or more dwelling units and is three stories or less in height above grade. – Commercial buildings are covered as well. A building is considered to be commercial when it is over three stories in height above grade or when it is below three stories and is not a residential building.

15. IECC 2009 Ensures the design of energy efficient building envelopes. Addresses the energy efficiency of elements that do not affect the building envelope, such as mechanical, water heating, electrical, and lighting equipment. The envelope requirements focus on insulation requirements for ceilings, walls, and floors and on thermal conductance of windows and doors.

16. IECC 2009 Varies by Climate Zone

17. California

18. Texas

19. MANDATORY STATE BUILDING CODES

20. Unconditional Event Graph: Per Capita Consumption Building Code Adoption

21. Residential New Construction und Building Code by State

22. Econometric Model Per capita residential electricity consumption, state i, year t Average residential electricity price, state i, year t Average natural gas price, state i, year t Per capita real personal income, state i, year t Heating & Cooling Degree Days, state i, year t Share of construction since 1970 permitted under building code ACEEE stringency and enforcement index

23. Econometric Model Per capita residential electricity consumption, state i, year t Average residential electricity price, state i, year t Average natural gas price, state i, year t Per capita real personal income, state i, year t Heating & Cooling Degree Days, state i, year t Share of construction since 1970 permitted under building code ACEEE stringency and enforcement index

24. Econometric Model Per capita residential electricity consumption, state i, year t Average residential electricity price, state i, year t Average natural gas price, state i, year t Per capita real personal income, state i, year t Heating & Cooling Degree Days, state i, year t Share of construction since 1970 permitted under building code ACEEE stringency and enforcement index

25. Econometric Model Per capita residential electricity consumption, state i, year t Average residential electricity price, state i, year t Average natural gas price, state i, year t Per capita real personal income, state i, year t Heating & Cooling Degree Days, state i, year t Share of construction since 1970 permitted under building code ACEEE stringency and enforcement index

26. Econometric Model Per capita residential electricity consumption, state i, year t Average residential electricity price, state i, year t Average natural gas price, state i, year t Per capita real personal income, state i, year t Heating & Cooling Degree Days, state i, year t Share of construction since 1970 permitted under building code ACEEE stringency and enforcement index

27. Econometric Model Per capita residential electricity consumption, state i, year t Average residential electricity price, state i, year t Average natural gas price, state i, year t Per capita real personal income, state i, year t Heating & Cooling Degree Days, state i, year t Share of construction since 1970 permitted under building code ACEEE stringency and enforcement index

28. Econometric Model Per capita residential electricity consumption, state i, year t Average residential electricity price, state i, year t Average natural gas price, state i, year t Per capita real personal income, state i, year t Heating & Cooling Degree Days, state i, year t Share of construction since 1970 permitted under building code ACEEE stringency and enforcement index

29. Estimation Results

30. Estimated Building Code Impacts

31. Total New Residential Construction since 1970 by State

32. Waxman Markey (ACESA, 2009) Combines Cap and Trade Program (Title III) with aggressive energy efficiency efforts (Title II). Title II, Subtitle A, Section 201 sets energy efficiency targets for residential and commercial buildings After enactment, compliant buildings will meet a 30 percent reduction in energy use relative to a baseline code (ASHRAE Standard 90.1 -2004 for commercial and 2006 IECC for Residential) By 2014 (residential) and 2015 (commercial), buildings will be required to meet a 50% reduction. The reduction requirements are tightened by 5% at three year intervals thereafter until 2029 and 2030 respectively. Option to raise state-specific standards to match or exceed new standards.